Discover how skills-based hiring unlocks access to a wider range of skilled individuals, helping organizations build more agile and effective workforces. Read about the strategies and benefits of this transition, supported by data showing 86% of leaders are ready for change.
We're at a turning point in how we build our workforces. The old rules of hiring—overemphasizing degrees, past job titles, and years of experience— aren't just outdated; they're holding us back. The good news, according to our latest skills research, is that 86% of business leaders report that they would be comfortable hiring someone based on their skills profile.
To bridge the gap between traditional practices and this new mindset, organizations are taking advantage of the latest developments in AI to start structuring work around skills and embrace the latest skills-based strategies. In fact, over half (55%) of the organizations we surveyed worldwide have already started the transition.
This strong and growing consensus signals a powerful shift—a move away from simply checking boxes on degrees and resumes, and towards truly valuing what people can do.
Keep reading to learn more about why organizations are making the shift to a skills-based hiring approach, and what that means for how we think about development and skills as a society.
Traditional hiring practices rely heavily on formal qualifications like degrees and past job titles. While these qualifications seem like a convenient way to screen candidates, they often create unnecessary barriers to opportunity—especially for those without a four-year bachelor's degree.
Degrees are often treated as a proxy for skills, a method that favors traditional qualifications. This can save time but often lead to biased thinking that results in individuals who have gained valuable skills through alternative routes being overlooked.
For example, consider someone who had to support their family instead of pursuing a degree. Their motivation to excel, ability to thrive in the face of adversity, and capacity to juggle multiple priorities are all essential skills that organizations value.
This group of individuals is also known as STARs, which stands for Skilled Through Alternative Routes. STARs are defined as individuals at least 25 years old, currently active in the workforce, and having a high school diploma, but not having a bachelor’s degree.
Rigid hiring practices that emphasize pedigree over ability can exacerbate existing skills shortages, and lead organizations to consistently overlook valuable talent pools, including:
Individuals without university degrees: Many skilled individuals have gained expertise through alternative pathways, such as vocational training, apprenticeships, on-the-job experience, self-study, or community programs, demonstrating that valuable skills and expertise can be acquired through diverse avenues.
Individuals returning to work: This includes stay-at-home parents, veterans, career changers, caregivers, people recovering from an accident or long-term illness, and older workers. Instead of penalizing candidates for gaps in their resumes, organizations can match candidates with existing business needs based on their lived experiences.
Individuals with disabilities: Skills-based hiring shifts the emphasis from what an individual cannot do to what they can do. By focusing on the specific skills and abilities required for a job, employers can assess candidates based on their capacity to perform at work, rather than being deterred by preconceived notions about their limitations.
By embracing skills-based hiring, organizations can increase their access to skilled candidates who understand the importance of adapting in the face of change and embracing lifelong learning and development.
Skills-based hiring fundamentally diverges from traditional hiring by shifting the focus from credentials to capabilities. Here's how it works in practice:
Skills-First Job Descriptions: Skills-based hiring starts with a detailed breakdown of the specific skills needed to succeed in a role. This includes both technical and soft skills.
Targeted Assessment Methods: To evaluate these skills, organizations can make use of a variety of targeted assessment methods:
Skills assessments: These can include standardized tests, simulations, or practical exercises designed to measure a candidate's proficiency in specific skills.
Work samples and portfolios: Candidates can provide examples of their work, such as writing samples, code repositories, or design portfolios, to demonstrate their abilities.
Scenario-based interviews: These interviews focus on how candidates would apply their skills in realistic work situations, rather than just asking about past experience.
Behavioral interviews: These interviews assess soft skills by exploring how candidates have demonstrated certain behaviors in the past.
This emphasis on direct assessment allows individuals to showcase their capabilities effectively, regardless of their background or how they acquired those skills. Some of the skills that business leaders consider most important include industry expertise (93%), role-specific skills (91%), and interpersonal skills (86%)—highlighting the importance of both soft and hard skills, according to our research.
Skills-based hiring fundamentally diverges from traditional hiring by shifting the focus from credentials to capabilities.
Research from Opportunity@Work reveals there are 70+ million STARs in the U.S. workforce who have the skills for higher-wage work today. A focus on degree requirements not only limits the economic mobility of this group, it also hampers the growth potential of organizations seeking to address skills gaps—resulting in lower levels of overall economic productivity.
Hiring for skills is also five times more predictive of job performance than hiring for education and more than two times more predictive than hiring for work experience, according to research.
Our own experience of skills-based hiring has reinforced the validity of these findings on the hiring front. At Workday we’ve seen a 32% decrease in time-to-hire, and an 11% increase in offer acceptance as a result of adopting skills-based hiring within our sales organization.
Hiring for skills is five times more predictive of job performance than hiring for education.
Organizations can play a crucial role in creating more opportunities for overlooked talent by embracing alternative pathways into the workforce. This not only benefits individuals but also strengthens organizations and society as a whole by embracing strategies such as:
Apprenticeship Programs: Apprenticeships offer a structured approach to on-the-job learning, especially for those at the beginning of their careers. These programs combine practical experience with classroom instruction, providing individuals with the opportunity to earn while they learn, and gain valuable skills and industry-recognized credentials. By partnering with educational institutions and industry associations, organizations can develop apprenticeship programs that align with their specific needs and create a pipeline of skilled workers.
Return-to-Work Programs: Individuals who have taken career breaks often face challenges when re-entering the workforce. Return-to-work programs are designed to provide these individuals with the training, mentorship, and networking opportunities they need to successfully transition back into employment. These programs recognize the skills and experiences that individuals have acquired through lived experience, and how they can benefit the organization.
By prioritizing skills-based approaches and supporting alternative pathways like apprenticeships and return-to-work programs, organizations are paving the way for a skills-first future.
Skills-based hiring is more than just a trend, it's a fundamental shift in how organizations and broader society think about talent acquisition and mobility. By moving away from an over-reliance on degrees and past job titles, organizations can tap into a wealth of potential talent that is perfectly suited to navigating uncertainty through continuous learning and development.
This not only addresses the growing concerns about talent shortages but also creates a more level playing field for individuals from non-traditional educational backgrounds. Ultimately, this shift benefits both businesses and society, fostering a dynamic and adaptable workforce ready to embrace the opportunities of tomorrow.
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