Skills-Based Hiring: A Primer
Our friends at General Assembly recently published a policy briefing worthy of a read by every business. Here are a few of the most salient points.
Explosive job growth in high-tech fields is creating unprecedented opportunity for social and economic mobility. But it also creates unprecedented risk of exacerbating income gaps and inequality if new categories of jobs exclude a generation of talent because they didn’t attend the right schools or have the right initial job experiences. Skills-based hiring isn’t about abandoning the college degree, but it is about using data to identify job candidates that can succeed, without regard to signals like college ranking or social networks. Innovate+Educate defines skills-based hiring as “the act of incorporating a tangible and objective measure of skills and skill level into the hiring process.” It’s not a new idea, but it’s a powerful one.
Building “a global community of individuals empowered to pursue the work they love” starts with developing the skills and competencies to launch a career. It’s about cultivating the talent that exists in unexpected places, and creating a more diverse workforce that draws upon our nation’s collective skills and perspectives. But it also means addressing the “last mile” challenge of bridging education and employment that leads to diversity gaps in high-growth fields and hybrid jobs.
Large employers know that a more diverse workforce is a more talented workforce, but often struggle to identify candidates from diverse social and educational backgrounds. The use of predictive analytics in the hiring process is in its infancy. As a result, employers often fall back on sorting mechanisms like college rank or degree that make the hiring process manageable—but risk excluding hidden talent.
“Employers are the most important piece of the skills-based hiring puzzle,” said Jamai Blivin, founder and CEO of Innovate+Educate. “Employer demand has the power to impact every other component of the ecosystem, from which competencies job-seekers must demonstrate, to the process by which they can do so.”
Skills-based hiring is particularly relevant to technology jobs, where skills (quality of code, for example) are easier to assess. It is no surprise that investors have been drawn to skills-based hiring startups focused on technology skills. In fact, VC funding for recruiting technology startups was $219 million in 2014, double the investments seen in 2009.
“Employers are eager to use practical assessments because they are strong predictors of success on the job,” said Kieran Luke, General Manager of Credentials at General Assembly.
Assessments for workplace competencies allow employers to more quickly identify individuals with important skills, saving time and money. According to a report by Innovate+Educate, skills-based hiring practices can lead to reductions in turnover (25-75% improvement), reductions in time-to-hire (50-70% improvement), reductions in cost-to-hire (70% improvement), and reductions in time needed to train employees (50% improvement).