Skills-based hiring is the new hiring way to hire skilled candidates. A 2023 TestGorilla report shows that 73% of companies have adopted skills-based hiring, cutting mis-hires by 90% and improving retention rates by 91%. This inclusive approach focuses on practical competencies, making recruitment more efficient and diverse. Keep reading to explore the future of hiring!
What is Skill-Based Hiring?
Skill-based hiring focuses on assessing candidates by their skills and competencies rather than their academic or professional backgrounds. For instance, if you’re hiring a marketing executive, you’ll focus on the ideas and strategies a candidate presents rather than whether they hold a marketing degree.
This recruitment strategy evaluates both hard skills, like coding and data analysis, and soft skills, such as communication and problem-solving. With a large number of graduates entering the workforce each year in India, but many lacking practical skills, the skill-based hiring method is especially relevant.
A NASSCOM report found that 50% of Indian graduates are unemployable due to a skill gap between academic curricula and industry needs. This mismatch drives companies to prioritise practical skills over degrees.
Why Skill-Based Hiring is Gaining Momentum in India?
Reason #1: The Evolution of Work
The advent of automation, artificial intelligence (AI), and digitisation has transformed jobs into work roles, across industry sectors. As a result, traditional degrees no longer assure that a candidate is equipped with the set of skills required to successfully operate in a high-speed industry environment such as tech, finance, or healthcare. Employers have begun seeking candidates in work roles – who are able to adapt to the new technology and workflow quickly.
Reason #2: The Growth of the Gig Economy
The gig economy in India is on an upward trajectory, and ASSOCHAM has calculated that by 2025 India’s gig-worker population will represent 56% of the global workforce. In most cases, they have trodden different paths and thus evaluation of these freelancers or contract workers on their skills rather than having taken the normal steps is essential.
Reason #3: Talent Mobility
Younger segments of employees, particularly millennials and the Gen Z cohort, are generally less ‘fixed’ on pathways to roles in carried interest to building a portfolio of skills through learning gained by internships, apprenticeships and various online courses; In fact, a study conducted by Coursera in 2022 revealed that 82% of the learners in India assessing online learning were there, via free platforms or paid to up-skill and enhance their identification to work. The trend of developing skills out of evolving educational pathways therefore validates skill challenged evaluation methods.
What is the Difference Between Skill-Based Hiring and Traditional Hiring Methods?
Traditional hiring methods typically involve screening candidates based on their education and work experience. Recruiters assess whether a candidate fits the role well based on their resume and cover letter. This method is outdated and prone to biases based on work history or personal factors.
Skill-based hiring, on the other hand, prioritises a candidate’s skills and competencies. It involves skill tests and specific performance-based assessments to identify qualified candidates. This method helps you recruit the right talent and lowers unconscious bias by focusing on the candidate’s skills instead of their background.