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The Shift Towards Skills-Based Hiring: A Strategic Imperative for Modern Workforce Management
Traditional methods of evaluating employees are no longer fit for purpose. The fast pace of technological advancements, changing workforce dynamics, and the sustained prevalence of remote working necessitate a more precise and adaptable approach to workforce management. Skills-based assessment has emerged as a crucial strategy for organisations to identify, measure, and develop the specific skills required to stay competitive.
The Evolution of Skills-Based Assessment
The concept of assessing skills dates back to the early 20th century with the advent of educational and psychological testing. The introduction of aptitude tests during World War II, used to assess soldiers' skills for appropriate role placement, marked a significant milestone. The rise of industrial and organisational psychology further emphasised matching employees' skills to job requirements.
The competency movement became commonplace from the early 2000’s when we saw a shift from traditional CV screening to acknowledging the need to understand someone’s knowledge, skills, attitudes and behaviours. Whilst psychologists never agreed on one single definition of ‘competency’, that put forward by Boyatzis (1982) became widely accepted: “an underlying characteristic of a person which results ineffective and/or superior performance in a job”.
Organisations and individuals must prepare to transfer skills across roles, upskill to remain productive, and reskill as necessary. Assessing for skills rather than education or experience becomes vital in this context.
Why now?
Several factors have driven the transition from broad competencies to a more detailed understanding of skills:
Technological Advancements
The rise of digital technology, automation, and AI has created new skill requirements. A McKinsey (2018) report predicts drastic changes in workplace skill demand by 2030. We are already seeing a rise in social and emotional skills and a decline in physical and manual skills. Higher cognitive skills are on the rise, whereas basic cognitive skills are expected to decline. Organisations and individuals must prepare to transfer skills across roles, upskill to remain productive, and reskill as necessary. Assessing for skills rather than education or experience becomes vital in this context.
Changing Workforce Dynamics
The gig economy, remote work, and lifelong learning have highlighted the need for continuous skills development. The COVID-19 pandemic's "great resignation" saw many people reconsidering their careers based on personal values and lifestyle needs. Skills-based hiring allows employers to focus on candidates' transferable skills, often more relevant than a traditional degree. This shift helps organisations make long-term, beneficial changes in response to crises like the pandemic.
Remote or Hybrid Work
With geography becoming less important in many roles, skills-based hiring expands access to a wider talent pool. However, this necessitates implementing remote hiring processes effectively. Whole-person assessments focused on key skills for the role are vital for efficient candidate sifting, as traditional CVsbecomes less effective.
Concerns with Traditional Hiring Practices
Despite the rise of the competency movement, many employers remain attached to CVs and experience for candidate sifting. This approach often fails to align with the values and expectations of Gen Z workers, who prioritise equitable and unbiased assessment methods. Skills-based hiring offers a fairer and more accurate way for these workers to demonstrate their abilities.
Defining and Measuring Skills
Although there is no universally agreed-upon definition of ‘competency,’ and similarly, no single definition of ‘skills,’ one common thread is their observability. Skills are attributes learned through life experience, work experience, and both formal and informal education, closely related to underlying behaviours and drives. For instance, teamwork might be described as an ability to work cohesively with others, developed through various experiences and personal tendencies.
In a skills-based organisation, people no longer need to be defined by their jobs; instead they are regarded as an entire person with skill sets that can be leveraged across different roles and fluidly developed towards work that matches their interests and the organisational priorities(Deloitte, 2002).
Organisations are increasingly viewing roles as collections of skills rather than simply as their job titles. This approach allows individuals to be assessed holistically, aligning their capabilities with both current and future organisational needs.
In a skills-based organisation, people no longer need to be defined by their jobs; instead they are regarded as an entire person with skill sets that can be leveraged across different roles and fluidly developed towards work that matches their interests and the organisational priorities(Deloitte, 2002).
The movement towards skills-based hiring represents a strategic imperative for modern workforce management. By focusing on specific skills rather than traditional qualifications, organisations can better adapt to the changing job market, ensuring they remain competitive and resilient in the face of future challenges. It can help to find the right people more effectively.
By focusing on what candidates and employees can do rather than just their qualifications, organisations can better adapt to changes in the job market, stay competitive and ensure a robust and fair recruitment process.