Why Skills-Based Hiring is the Future of Recruitment

According to an OECD study, more organizations in the Philippines prefer to recruit people with abilities over those with formal education or experience. 38% of businesses prefer to recruit applicants with technical capabilities above traditional qualifications such as education and experience. Only 12% of employers feel that education and experience are more important than skills.

Furthermore, according to the inaugural edition of the Future Talent study from the world's biggest professional network, more organizations in the Philippines would like to select applicants with talents above characteristics like education or experience. When hiring new staff, nearly nine out of 10 Philippine firms choose soft talents such as problem-solving, flexibility, and cooperation.Let's take a look at why the most forward-thinking employers are adopting skills-based recruitment.

A Shift from Degrees to Competencies

Skills-based hiring is becoming more popular because there is a move away from prioritizing degrees and academic qualifications. Although education possesses undeniable value, it is important to note that possessing a degree does not always accurately portray a person's practical skills or their level of preparedness to truly excel in a certain role. Employers have come to realize that possessing a degree does not automatically ensure a candidate's expertise in essential tasks or job-specific skills. In previous times, the primary determinant of a candidate's suitability may have been their qualifications; however, present emphasis is now placed on their competencies instead.

The use of skills-based hiring enables employers to pinpoint individuals who can make an instant and valuable contribution to the organization's objectives. Recruiters judge whether a candidate has the necessary practical skills for the job instead of just considering their educational background. This change in emphasis guarantees that the workforce is provided with skilled professionals who can immediately start their work, thereby preserving time and resources that would otherwise be allocated to training and adaptation processes.

For example:  tech companies are shifting away from mandating a computer science degree and instead focusing on hiring candidates based on their proficiency in specific programming languages or technology skills. One might come across job advertisements seeking a "Python Developer" or an "AWS Certified Solutions Architect," highlighting the importance of being skilled in a specific technology or framework.

There is an interesting shift in hiring patterns in recent times. While earlier companies preferred to hire skilled employees, the trend has now shifted, and now the employers focus on hiring professionals with job-relevant skills as well as investing in upskilling their current employees, Says Robin Bhowmik, Chief Business Officer of Manipal Global Education Services.

More Inclusivity and Diversity

Traditional hiring methods frequently receive criticism due to their inherent biases. When placing excessive focus on degrees, pedigree, and alma mater, there is a risk of unintentionally excluding candidates from diverse backgrounds who possess the necessary skills and potential to succeed in a position. Skills-based hiring helps to reduce this bias by focusing on the abilities and contributions that candidates can offer.

Employers are more inclined to assess candidates on their skills, thus increasing the possibility of considering a wider pool of individuals from diverse backgrounds, including those who may have lacked opportunities to attend prestigious institutions. The use of this method encourages equality and variety in the work environment, enabling individuals from various socio-economic, cultural, and educational backgrounds to compete on an equal footing. Consequently, organizations have the opportunity to access a broader range of talented individuals and gain advantages from novel viewpoints and concepts, ultimately augmenting their ability to innovate and compete successfully.

Adaptation to Rapid Technological Advancements

With its advent, the digital age has revolutionized our work environment and necessitated a whole new set of skills to flourish in the contemporary workplace. The best fit for addressing these fast-paced changes is skills-based hiring, which focuses on evaluating up-to-date and applicable skills rather than outdated qualifications.

The demand for specific skills fluctuates as industries evolve and new technologies emerge. Organizations can enhance their competitiveness and innovation by prioritizing skills over credentials when hiring candidates. By doing so, they ensure that they employ individuals with the most current and relevant competencies. In a constantly changing job market shaped by automation, artificial intelligence, and other technological disruptions, adaptability is of utmost importance.

The key to successful adaptation in the face of rapid technological change is a culture of innovation. Organizations must foster an environment where employees are encouraged to experiment, learn, and adapt in order to stay ahead of the curve. Says Prof. Rajesh Gupta, Business Strategy Expert, Northwestern University  Kellogg School of Management, Mumbai.

Enhanced Employee Engagement and Satisfaction

Skills-based hiring has numerous advantages for both employers and employees. When individuals are selected for positions based on their skills and capabilities, they have a higher probability of being placed in roles that match their strengths and interests. As a consequence, employees of this nature typically experience greater job satisfaction and engagement.

Employees who are engaged and satisfied in their roles are inclined to make positive contributions to the organization. Additionally, they possess a stronger inclination to remain loyal to the company over an extended period, thereby mitigating turnover rates and the subsequent expenses incurred in recruitment. Skills-based hiring creates a win-win situation for employers and employees by ensuring a better alignment between the skills of the workforce and the job requirements.

"Employee engagement is a strategic imperative, not just an HR responsibility. It should be on the agenda of every C-suite executive."  Says Rajesh Kapoor, Business Leader,Goldman Sachs Bangalore.

Demonstrable Results and Improved Productivity

In the pursuit of recruitment, the overarching objective is to discover individuals who possess the ability to propel the organization forward and yield desirable outcomes. This objective is closely aligned with skills-based hiring. Employers can enhance their ability to choose individuals who can make an immediate impact on the company's success by assessing candidates' proven skills.

By adopting this approach, the chances of attaining the desired outcomes and meeting important performance indicators are heightened. Instead of putting all our faith in qualifications and assuming that a candidate’s educational history guarantees their success, skills-based hiring provides a more concrete and dependable method of forecasting an individual’s performance. Organizations witness a boost in productivity and profitability as a consequence.

Skills-based hiring has transitioned from being just a passing fad to becoming the definitive path of recruitment in the foreseeable future. In this era of intense competition and constant change in the job market, employers are realizing the importance of assessing candidates based on their abilities and competencies rather than solely relying on traditional qualifications. By making this shift, organizations can unlock a broader talent pool, embrace technological advancements, boost employee satisfaction, and deliver tangible outcomes.

There are clear advantages to adopting a skills-based hiring approach, which makes it a valuable and progressive method that can be advantageous for both employers and job seekers. By promoting a fair and inclusive recruitment process, it guarantees a stronger alignment between candidates and roles, thereby driving the organization's ultimate success. Skills-based hiring is crucial in today's fast-paced world to maintain a competitive advantage in the recruitment process and attract top-notch talent.