Skills-Based Hiring Failed Fast: 5 Reasons & Solutions

Skills-based hiring was an outstanding idea to fill talent gaps.

But so far, skills-based hiring failed — more talk than reality.

Many employers in the past five years have pledged to ditch the degree requirements and hire based on candidates’ set of skills. But very few have moved the needle. At. All.

According to a Burning Glass Institute and Harvard Business School study, there has been just a small shift from degree hiring to skills-based hiring. It basically translated into new opportunities for about 97,000 workers out of the 77 million hired every year. All told, only .14% of hires were non-degreed for roles that formerly required a degree — just about 700 hires.

Where Skills-Based Hiring Failed

What’s more, the small shift is primarily due to changes in a small percentage of companies. The researchers found there were three types of companies that declared they’d move toward skills-based hiring:

• Skills-based hiring leaders: 37% of companies made changes after they committed to change hiring practices. They’ve increased the share of workers without degrees by about 20%.
• In-name-only: Forty-five percent of companies said they’d do more-skills based hiring, but haven’t made any real changes in their hiring practices.
• Backsliders: Eighteen percent of companies actually made short-term gains when they dropped degree requirements. But they didn’t stick with it. In the long-term, they hired a smaller share of workers without degrees.

“Our analysis makes clear that successful adoption of skills-based hiring involves more than simply stripping language from job postings,” the researchers noted in the study. “To hire for skills, firms will need to implement robust and intentional changes in their hiring practices — and change is hard.”

Roadblocks to Skills-Based Hiring

Most companies had the right intentions when they committed to skills-based hiring. They truly wanted to prioritize abilities and competencies relevant to jobs instead of looking at traditional education creds. They even recognized that degrees often don’t have much to do with the actual ability to do a job.

Still, nearly 90% of the Fortune 500 companies didn’t ask job candidates about skills so they could align people with job openings, according to Phenom’s State of Candidate Experience Report.

As in most business decisions, roadblocks come up between idea and implementation. Here are the top five reasons many companies have failed to get skills-based hiring off the ground:

1. Integration. Companies with a skills-first approach might focus on career pathing and internal mobility, which are ideal. But getting skills integrated into the existing data sets and HR processes can be a challenge.
2. Diversity. Skills-based hiring has the potential to increase diversity in hiring, but many organizations have dropped or reduced their DEI initiatives in recent years for a variety of reasons. So HR pros and hiring managers struggle to make a dent in both initiatives as they’re pulled in more than one direction.
3. Speed. Many companies just can’t adopt skills-based hiring fast enough to meet their internal and market needs, according to a General Assembly report. So rather than try to scale up skills-based hiring, they fill gaps — especially in the tech industry — with in-house training, and learning and development opportunities to upskill existing employees.
4. Habit. Skills-based hiring felt complex to the people who had to actually implement it. Executives might have revamped the hiring policies, but the hiring managers often fell back into the ways they always thought and acted when they came to the hiring table.
5. Technology gaps. Some organizations continued to use their existing hiring tools and technology without adjusting to screen more for skills and less for degrees. Even if they adjusted how they used their technology, it can’t screen for candidates’ ability to learn, adapt and grow into a new rule. And even though a degree can’t ensure that either, it was a starting point for screening.

Solutions to Effective Skills-Based Hiring

Despite the roadblocks and slow progress, there’s proof that when skills-based hiring is done right, both companies and employees benefit.

“Skills-based hiring boosts retention among non-degreed workers hired into roles that formerly asked for degrees. At skills-based hiring leader firms, non-degreed workers have a retention rate 10 percentage points higher than their degree-holder colleagues,” the researchers found. “Workers benefit as well. Non-degreed workers hired into roles that previously required degrees experience a 25% salary increase on average.”

So forge ahead with more skills-based hiring.

Here are four tips from the researchers to become more effective:

• Celebrate successes. Share examples of successful skills-based hires. For instance, companies such as Dell and Grainger showcase leaders in their organizations who rose from the ranks without a degree. These success stories shape corporate culture and give hiring managers a license to cast a wider net.
• Learn from the successes. Study your success stories to find candidates’ potential for high achievement. Consider:
  • Common backgrounds or prior work histories
  • the roles they were initially hired to fill
  • the path they traveled to higher positions, and
  • common work, training or professional development.
• Throw away existing job descriptions. Instead of tinkering with what exists, talk with employees about the skills they really need to do the job. Focus especially on the skills they needed initially, as those are what will be most important to finding the right hires through skills analysis.
• Redesign onboarding and support. Skills-based hires don’t have the background of degree holders so they might have different experiences with learning and adaptation. You’ll want to adjust onboarding and job support for this. For example, you might send onboarding materials two weeks ahead of their start date to help cut anxiety and early turnover. To help them acclimate, offer peer support groups with experienced leaders and common group dynamics. Give them role-specific skills roadmaps with progress check-ins.

Future is Bright for Skills-Based Hiring

The good news: Skills-based hiring isn’t DOA. The researchers said: “Skills-based hiring should continue to gain momentum, despite its slow start. By our analysis, skills-based hiring practices could be readily implemented in a minimum of another 250,000 jobs each year, ranging from construction managers to web developers.”