Now that more and more organizations are prioritizing skills-based hiring to close skills gaps and attract more talent, what “skills” in tech are most in-demand? And how do those skills rate? Is there less focus on specialized qualifications, and more hiring based on general skills? Skills–based hiring has become the growing trend across many HR departments and has been shown to better retention rates, widen the talent pool, and increase performance. As tech companies shift towards skills-based hiring and modifying traditional hiring approaches, the skills needed to work in tech are adapting.
The Landscape of the Labor Market
It’s well-known that there is a continual shortage of talent in the U.S. labor market. As of 2024, reports show that 7 out of 10 employers are having difficulty finding qualified candidates to fill open positions. One of the most striking reasons for this shortage is that many positions still require a 4-year college degree, which can limit the labor pool and hinder many candidates without a degree from even applying to the position.
This is where skills-based hiring comes in. Skills-based hiring focuses on candidates who possess all the necessary skills required to perform the duties of the job, regardless of whether they have a 4-year college degree. It’s sometime viewed as a “risky move”to switch from traditional hiring to skills-based, however skills-based hiring has been shown to bring positive results. Fast Company reports that In a Generation Study conducted in 2023, 84% of global companies found that skills-based hires performed the same or better than candidates hired for their degree qualifications. Further, skills-based hiring impacted longevity as the Burning Glass Institute found that skills-based hires stay in their roles almost 20% longer than degreed hires. By making the switch to skills-based hiring, not only can employers widen the talent pool, but you can also increase performance in your company and better the retention rate among employees.
What Kind of Tech Skills Should Companies Look For?
When adopting a skills-based hiring approach, the first step is to learn the skill requirements for the positions to be filled. For example, many tech companies hire computer science graduates. Many of these graduates who obtain this degree are proficient in programming languages, familiar with algorithms, working with large amounts of data, and understand database management. So, when looking for someone to fill a position that requires a computer science degree, it is essential to add those skills to the job description.
This methodology can be applied to nearly every position in an organization trying to be filled. Think about the skills that are normally associated with a given degree and apply those to a job description to attract the specific talent you are looking for. Adopting skill assessments to look for candidates that are capable for the position is another component, like for example, implementing a coding assessment for software developers or engineers. By adopting skills-based hiring it allows candidates from diverse backgrounds to enter the talent pool, especially those who may not have the financial ability to obtain a 4-year degree but possess the skills that the job requires.
Skills-Based Hiring as a Catalyst to Growing Diversity in Tech
While some progress has been made, diversity in tech, or lack thereof, is still a top concern. Not only from a direct representation of diverse individuals in tech roles, but even when factoring in wage brackets and the disparity of higher paying tech roles across diverse groups. When we look at hiring by skills, and through testing those skills, versus concentrating on education levels, we can create straightforward comparisons of candidates based on the skills they directly bring to the table. This opens up new talent pipelines, and creates a more inclusive hiring approach as there is still a significant percentage of adults who do not possess a college degree but may have training and hands-on experience that is applicable to a role.
The Role of AI As We Shift Towards Skills-Based Hiring
As generative AI begins to infiltrate the workplace and replace certain skillsets, organizations and leaders have an opportunity to allocate human priorities accordingly. Skills-based hiring is an effective way to shift skillsets to what is needed in the organization and to promote innovation and organizational agility.
The key to achieving this is to learn what skills and tasks can be automated and replaced by generative AI and what skills will not be impacted by AI. From there, employers can guide training, hiring practices, and upskilling. It also creates an opportunity to focus on humanity in the workplace, where employees can use the skills that make them uniquely human.
Skills-Based Hiring Is the Growing Trend
Skills-based hiring is quickly becoming a go-to strategy for the future of hiring. Understanding what the required skills are in the positions you are trying to fulfill is essential in adopting this hiring practice. Many businesses are moving towards a skill-based hiring approach to combat the labor shortage, obtain top talent, increase performance and widen their talent pool. Working with an expert in recruiting tech talent helps expedite the hiring process, as they are trained and have the insight to know what to look for in candidates and how unique skillsets can be applied to various positions. This opens more possibilities of essentially finding that talent that may not have been hire for a particular role but who may be a great fit for another.
