Skills-based recruitment: How to hire based on employee potential

One of the tenets of skills-based hiring is that decisions are not based on what a candidate has done before, but what they could do with the skills they have or could learn easily.

These are the words of Autumn Krauss, chief scientist at SAP SuccessFactors, as skills-based hiring gains more popularity in workplaces across the world.

"As the future of work continues to evolve, hiring individuals based on their potential is crucial in building a dynamic and competitive workforce to stay ahead," Krauss added.

But how can HR leaders effectively assess a candidate's potential for success during a skills-based hiring process?

"We can infer the potential for success in a job from existing skills and potential skills: the future skills that a candidate could learn easily based on the skills they already have today," Krauss told HRD.

From a recruitment perspective, she said this requires two things: clear understanding and communication of the skills required for a job, as well as accurate skills assessments for candidates.

AI helps with skills assessments

But these include traditionally manual tasks that will require hours of human labour, according to Krauss. This is where artificial intelligence comes in, which frees recruiters from manual work so they can perform high-value tasks.

"AI technology can now help to identify the right skills for each position, craft tailored job descriptions, enhance applicant tracking, and identify those potential adjacent skills," she said.

"Technology can also integrate advanced analytics to provide a holistic view of past hires, allowing companies to understand what skills and traits translate to success on the job."

With technology streamlining these processes, Krauss said recruiters will get more time in assessing a jobseeker's potential for success during hiring. This includes "conducting behavioural interviews to identify candidates with the necessary skills and personal attributes to grow into a new role."

Beyond the recruitment process, it is also important that organisations know what they want when it comes to talent to find success in skills-based hiring.

"When we get more specific in identifying the potential skills we care about (i.e., answering the question 'potential for what?'), we can better assess who has potential and determine how that potential could be best deployed in the organisation, and we can avoid the biased decision-making that often comes from acting on vague concepts."

Boosting adaptability

Krauss said hiring based on potential can also help organisations become a "lot more agile" when facing market changes or global disruptions.

"This adaptability is crucial in today's volatile business context, where technology itself can quickly alter the skills required for success," she said.

"And for employees, getting opportunities to grow their skills, succeed in new ways, and feel their organisation's investment in their future will lead to greater satisfaction and retention."

Popular skills-based hiring

Skills-based hiring is a new recruitment practice that is further gaining momentum across the world. SAP SuccessFactors data recently showed that HR leaders, managers, and employees believe hiring should be 70% based on skills and 30% on traditional criteria.

"This demonstrates a shared recognition of the potential value of taking a more skills-based approach to hiring," Krauss said.

Putting a greater priority on skills comes as unemployment remains low and many HR leaders face persistent talent shortages when trying to find jobseekers using traditional hiring practices.

"As a result, HR departments have targeted a broader pool of talent — beyond the traditional college graduate — to include self-taught or non-college-educated workers," Krauss said.

According to the chief scientist, skills-based hiring not only fills persistent skills gaps, but also creates opportunities for a more diverse range of candidates to apply for positions.

Hiring based on education achievements and previous job titles can be a barrier to entry for many candidates, and employers will miss out on candidates from non-traditional career paths that have skills to perform the role.

"And these candidates are likely to be more innovative than someone who has done the same type of job for their entire career," Krauss said.

"So, by focusing on skills instead of those traditional criteria, we remove those barriers and bring those candidates into our talent pools."

Shifting to skills-based hiring

Transitioning to a skills-based hiring approach will require a "mindset shift" for organisations, according to Krauss, as she pointed out that a fully skills-based model of hiring is "unlikely to work or even impossible" in some segments of the workforce.

"But there are ways to become more skills-based that can exist within legal, cultural, or practical limitations related to hiring," she said.

"Companies who want to start implementing skills-based hiring will need to challenge long-held assumptions about what the 'best' candidate may look like, based on standard hiring practices and traditional criteria," she said.

The first step will be an audit of open roles to critically evaluate which roles still require the traditional criteria versus those where technical experience may have more value.

"Technology can make this even easier by inferring skills from resumes, aligning skills to job requisitions, facilitating skills-based candidate evaluations, and giving skills-based insights to hiring managers," Krauss said.

"Ultimately, the move towards skills-based hiring is systematic and requires both careful planning and buy-in from leaders, hiring manager, and employees."