Skills-Based Hiring Is Becoming More Popular with Employers

In the past year, there was a 12% increase in the adoption of skills-based hiring. Since May 2024, 28% of job listings have since phased out specific educational requirements in favor of hiring based on skills instead. While this hiring practice is traditionally seen in blue-collar jobs, the shift to skills-based hiring is now becoming more predominant in white-collar jobs.

This Pacific Prime CXA article will discuss the shift from specific educational requirements-based hiring practices to skills-based hiring for employers.

What is Skills-Based Hiring?

Skills-based hiring is a hiring practice that examines evidence of a candidate’s skills rather than specific information such as their prior experience or educational history. Using an educational-based hiring practice might result in the following:

Narrow Talent Pool: When the requirements for a role are too specific, employers might miss out on great candidates who may not exactly match all the requirements but at least have the right experience and could be trained for the role.

Large Skill Gaps: When companies only consider candidates with specific college degrees, they may be making the skill gaps larger.

Increased Chance of Mis-Hires: While a college degree may show a candidate’s educational experience, it does not show what skills that candidate possesses, increasing the likelihood of mis-hiring once the candidate proves unsuitable for the role.

With skills-based hiring, employers focus on specific skill requirements rather than mandating educational qualifications, evaluating candidates based on their demonstrated abilities.

Benefits of Skills-Based Hiring

Some notable benefits of skills-based hiring include fewer mis-hires, lower hiring costs, improved workplace diversity, and better talent retention. Below are brief descriptions of each of the core benefits of skills-based hiring.

Benefit #1: Fewer Mis-Hires

Mis-hires occur when companies hire unsuitable candidates for a particular role, to which they end up leaving soon after an appointment. Beyond employee compensation costs and resuming the hiring process, mis-hires can severely disrupt team morale and productivity. Skills-based hiring will help employers by clearly indicating any warning signs of mis-hiring early on.

Benefit #2: Lower Hiring Costs

Hiring costs include internal and external recruiters as well as advertising on job boards or career pages and creating and maintaining brand information to attract potential candidates.

Skills-based hiring can help lower hiring costs by eliminating the need to pay department leaders and hiring managers to assess candidates on their skills, pay external recruiters for candidate selection, and the need to use resume screening software to filter out candidates.

Benefit #3: Improved Workplace Diversity

By hiring based on skills rather than specific educational requirements, companies can improve workplace diversity by ensuring every employee gets the right opportunity that not only matches their skillset, but also allows them to further learn and improve those skills, as well as reducing personal bias during the decision-making process when hiring.

Benefit #4: Improved Talent Retention

By assessing your employees’ skills, you get a better sense of what other roles they would be suitable for or have the aptitude to effectively learn and develop. In doing so, you can provide them with opportunities for internal growth and mobility, so they do not need to go elsewhere for fulfilling careers, allowing you to retain skilled employees.

The Reason for a Shift Towards Skills-Based Hiring

A shift from resume or educational-based hiring in favor of skills-based hiring can be attributed to employers finding it difficult to seek skilled candidates and validate their skills using only resumes and cover letters.

Hiring based on skills is much more predictive of job performance than hiring based on work or educational history, to which 92% of employers agree that hiring based on skills is much more effective in finding the right employees.

Conclusion

As employers phase out educational-based hiring practices in favor of skills-based hiring, employees now have a greater chance of landing their desired jobs. As for the employers, skills-based hiring can greatly contribute to improved workplace diversity and talent retention overall.

In addition to foregoing the educational-based hiring practice in favor of adopting the skills-based hiring practice, employers can further contribute to improving talent retention with a health insurance plan for their company. Having the right group health insurance plan can safeguard employees’ finances in the event of overwhelming medical bills from unexpected injuries or illnesses.

While finding a suitable plan may be daunting, it doesn’t always have to be a nightmare, and that is where we come in.

As an experienced health insurance broker and employee benefits specialist, Pacific Prime CXA can not only help you with finding the right health insurance plan such as business or property & casualty insurance and more, but also effective employee benefits solutions to ensure your employees feel as equally valued as they are protected from overwhelming medical bills in the event of unforeseen illnesses or injuries.

Whether you’re an expat or local citizen seeking health insurance in Singapore or a company looking for effective employee benefits solutions for improved talent retention, we will be more than happy to help you out.

What’s more, we can also help you with completely impartial advice at no additional cost. And if you have any further questions, please get in touch with us. Or, if you are interested in plan comparisons, get a free quote with us.

Wish Sutthatothon (Nickname: Guy) is currently a content writer at Pacific Prime Thailand, an insurance broker that connects individuals and businesses with insurance providers worldwide. He creates and edits blog articles, guides, reports, webpages, and other types of digital content.

He graduated with a Bachelor’s Degree in Communication Arts, Media & Communication major (concentration: Creative Content) from Mahidol University International College (MUIC). During the compulsory major elective period in the summer of 2021 and voluntarily during the summer of 2022, he also interned as a video and photo editor at Mbrella Films.

He has experience working as an English Content Writer at a real estate buying/renting/selling platform in Thonglor. There, he crafted company blog posts on a multitude of topics. Topics include market trends, legal issues and disputes in property businesses, financial guides, expat guides, home insurance, home decoration and maintenance, and weekly real estate news quick-recaps. Occasionally, as part of the blog-writing process, he would also translate existing Thai blogs to English.

In his free time, Guy enjoys doing scriptwriting and storytelling for comic strips, watching movies, and listening to music (particularly film scores).

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