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What is skills-based hiring?

Get an overview of skills-based hiring, and how this strategy can help you fill your pipeline with technically trained, diverse early talent.

Are you finding it difficult to compete for skilled technical talent? You’re not alone.

Many companies are facing tough hiring hurdles today. It’s been reported that 9 in 10 leaders think their organizations currently face skills gaps, or expect to in the next 5 years.

But you want to be prepared, regardless of the economic climate. SHRM and Harvard Business Review estimate that there could be 97 million “jobs of the future,” or new roles that will be created as a result of the shift from human to machine labor.

And this is during our lifetime!

Across all industries, hiring for roles such as robotics engineers, energy engineers, and manufacturing was 24% higher in 2022 compared to 2021. So how do you hire for roles that:

a) don’t exist yet, or

b) are growing so fast that it’s hard to keep up, and fill your funnel with top talent for your most in-demand roles—today?

Look to Gen Z.

Learn the benefits of skills-based hiring, and how this approach can help you uncover skilled early talent and update your talent acquisition strategy starting…now.

What is skills-based hiring?

Traditional role-based hiring screens for education, credentials, and experience. Skills-based hiring is an approach that screens for specific competencies. Skills-based hiring goes beyond majors and focuses on the candidates' skills that are applicable to the role (i.e. the candidate may not have a computer science degree, but they possess Python skills).

According to Handshake survey data, skills-based hiring is a good approach for recruiting Gen Z talent. Why? Early talent today is a generation of up-starts with passion, purpose, and potential to lead employers through digital transformation. They’re looking for professional development, opportunities to get promoted, and career pathways. And as the class of 2023 plans to apply to a wider range of industries and sectors, you can reap the rewards.

Among the benefits of skills-based hiring, this approach can help employers:

  • Diversify your talent pool
  • Expand your school strategy
  • Cultivate students with non-traditional majors
  • Strike equilibrium between supply and demand

Skills-based hiring is 2.5x more predictive of future performance than hiring on work experience.

What is the skills gap?

The skills gap is the difference between what a job requires and a candidate’s background and experience. Currently, the skills gap is most pronounced with STEM roles. Why?

One reason is that there aren’t enough people entering the workforce with STEM education and training. For instance, while 77% of jobs in the next decade will require tech skills, today only 13% of schools offer computer science courses.

Take cybersecurity as an example, with an estimated shortage of around 3.4M workers. Eric Patterson, Executive Director at SANS Institute, shared with Handshake that there aren’t nearly enough traditional CS graduates to fill the 700,000 vacant cybersecurity jobs in the US today—even if they all went into the cybersecurity field.

“It turns out there’s a lot of correlation between problem solving, and even things like musical ability, that correlate well to that technical mindset of being a good cybersecurity practitioner.”

Eric Patterson, Executive Director at SANS Institute

Alternate workforce training providers like SANS Institute are building talent pipelines to address talent shortages in technical fields. These training providers help underserved and overlooked students to transcend educational and financial barriers by earning skills and certifications, while helping employers fill skills gaps.

Just don’t assume Gen Z is tech savvy just because they’ve grown up with access to the internet. Instilling a culture of learning and developing new skills is a key retention lever for your entire multi-generational workforce.

What is an opportunity gap?

Some workforce development experts believe there isn’t a skills gap but an “opportunity gap.” Underrepresented groups face barriers for pursuing a 4-year degree, often lack access to professional networks, and are confronted with conscious and unconscious hiring bias, among many other systemic societal hurdles.

But hiring for skills and competencies can reveal a hidden talent pool and help close the opportunity gap. If you’re only hiring technical talent with associated 4-year degrees, you’re unintentionally narrowing your talent pool.

88% of hiring managers report that they’re hiring candidates with strong soft skills and upskilling them on the job.

For example, bootcamps provide hands-on experience for students to grow their technical skills by working on real projects. But many bootcamp learners don’t have a 4-year degree. There’s ample data to support that removing the barrier of a degree can increase equity for underrepresented groups to access job opportunities—while helping you diversify your pool.

What is reskilling?

Reskilling is about training employees for new job functions or newly formed roles. For instance, industries undergoing digital transformation and job automation may need to reskill employees.

There are predictive models like McKinsey’s that suggest massive reskilling will be needed to plug skills shortages so that the tech talent shortage doesn’t get worse. In fact, many name brand companies are already innovating on how to attract and retain talent, starting from entry level—and those that aren’t risk losing out on the competition on critical tech talent.

What is upskilling?

Upskilling is about improving on your existing skills and learning new skills. Why is this important for talent acquisition? 65% of workers say upskilling very important when looking for a job.

The good news is that technology is lowering barriers to learning. For example, have you met students who’ve earned their college degree in humanities, but plan on taking intensive courses—such as in digital marketing or coding, highly in-demand skills—through a bootcamp, or receiving on the job training? As they explore their career paths, when, how, and what someone chooses to learn can evolve.

Internships are a strong way to upskill your pipeline to meet the demands of your organization. Elizabeth Diley, Campus Talent Acquisition Leader at General Mills, shared with Handshake: “Over the last couple of years, we have welcomed over 85% of our past interns with full-time offers to General Mills, even reaching as high as 94%.”

Lifelong learning is another trend that shows a shift away from attaining higher education in a linear fashion, where a student may start college, leave for a job, get a credential, get another job, and may or may not ever get a 4-year degree.

Next steps

Handshake data has found that taking a skills-based approach results in a 2.3X increase in technical candidates. And now more than ever, non-tech industries have an opportunity to recruit skilled tech talent. Industries like government, construction, and finance/professional services are increasingly posting jobs on Handshake for entry level software and computer engineers.

To grow and diversify your candidate pool, and your business, you need to cast a wider net to compete for skilled technical talent. Recruiting from the same set of schools, relying on the same screening criteria, recycling the same interview process will only net you the same types of candidates—who can’t check all your boxes. Modernizing your hiring practices with a skills-based hiring approach is one way to close the skills and opportunity gaps.

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