What is skills-based hiring?

Michael Stull, ManpowerGroup UK’s Talent Solutions Director, proposes a new emphasis on skills and potential over traditional hiring practices in 2024

Today we released our ManpowerGroup Employment Outlook Survey for Q1 2024, in which we see an inhibiting paradox afflicting the UK job market – namely, a loosening of hiring demand on one hand contrasting with record long-term job vacancy volumes on the other.

The persistent mismatch between the skills employers are looking for and the abilities candidates have – for specialist positions, in particular – presents employers across Britain with a stark choice: either continue fishing in the same pond in the same way for skills that are scarce or try a new approach by adopting skills-based hiring.

What is skills-based hiring?

Skills-based hiring has the potential to alleviate talent shortages, drive innovation and create more diverse workforces – even in the face of stiffening economic headwinds. As much a ‘state-of-mind’ as a practice, as many companies finalise their hiring plans for H1 next year, I encourage managers to adopt this four-point approach:

1. Focus on essential skills vs job titles (reskilling and upskilling where necessary)

The World Economic Forum estimates that 50% of current jobs will require new skill sets by 2027, with poor digital skills affecting +33% of the entire UK labour force. As many employers have poor understanding of the current and transferable skills within their own organisations and are often unable to discern which type of training programmes they need, I suggest starting your skills-based recruitment journey by asking two questions:

• What are the priority technical and/or human skills needed to support your business goals in 2024?
• Where are these needed across your operations?

Starting with a skills audit rather than a job title potentially delivers a clearer picture of your actual needs versus a generic or siloed job description.

Net-net: Prioritise the skills essentials your business needs versus the ‘nice to haves’ and proceed from there.

2. Value experience over formal qualifications

A degree or formal qualification indicates competency but isn’t necessarily the full story – particularly when it comes to much-needed human skills like empathy, collaboration and resilience (all of which are highly prized by employers).  According to McKinsey, current university graduates are woefully underprepared, with 60% of employers saying that new graduates coming through the system are “unprepared for a commercial career”. Forty percent of employers also state the biggest reason they cannot fill entry-level vacancies “isn’t a lack of people, it’s a lack of adequate skills”.

Our solution:  Redefine what we mean by ‘experience.’ A new matrix of technical and human skills criteria is needed, one that better bridges professional and personal competencies. Relevant experience can then inform the development of skills better aligned with business-critical needs. With this in mind, I encourage companies to stop looking for the ‘perfect’ candidate and instead, based on the results of their skills audits, focus on the motivational, learnability and employability quotients of their employees (both existing as well as prospects).

Here’s a thought: Is it time to disrupt the CV as we currently know it and evolve it away from a shopping list of job titles towards a focus on relevant experience and skills?

New year, new technologies, new ways of working

Digital transformation is reshaping job functions, required skill sets and even entire sectors at an ever-increasing rate. New technologies such as generative AI, chatbots, machine learning and robotic process automation (RPA), as examples, can potentially deliver greater efficiencies and innovation for many businesses. Do any of these have a place at your company? If so, have early, open and transparent conversations with your employees to determine the optimal tech stack needed alongside the skills required to see them successfully deployed. This will help with change management, drive career development opportunities and quell job loss fears.

Our Experis Academy can help if you need assistance with analysing your tech skill needs and overcoming  talent shortages by enabling you to better build sustainable talent pipelines.

3. Skills-based hiring + values-based employment = winning combination

This move away from a restrictive, qualifications-based view of competency to a more dynamic, inclusive and business-relevant definition of experience and job ‘fit’ will not only open up more opportunities for current employees and prospective hires but is also an important catalyst in evolving your employee value proposition (EVP) – particularly with Gen Z and Millennials. Creating clearer professional development opportunities meshes nicely with these demographics’ emphasis on company mission, vision, values, diversity and inclusion. Taken together, skills-based hiring and creating ‘net positive’ work environments will be a winning combination over the coming year.

The shift towards skills-based recruitment isn’t a solo act. Employers spanning all sectors, government agencies, the wider recruitment industry as well as educational and training institutions all need to join the conversation.

My view is this: If we can collectively articulate a vision for UK plc which better aligns skills with available roles, then we will likely see increased economic participation rates, more engaged and inclusive workforces and an uptick in innovation and investment – all with the aim of ensuring increased success and productivity for companies and employees throughout 2024 and beyond.