Despite the surplus of young jobseekers, the Indian job market is marked by a perennial shortage of skilled employees in many sectors. Traditional hiring strategies have proven inadequate in providing a solution. Faced with similar issues, employers around the globe are switching to more unorthodox approaches like skill-based hiring to attract diverse talent.

In this blog post, we explore the definition of skill-based hiring, and look at the ways in which you can implement it in an organisation. We also highlight some of the benefits of skill-based hiring for employers.

What Is Skill-Based Hiring?

Traditionally, recruiters rely on two major criteria when assessing a candidate for a job position – their educational qualifications and years of work experience. Skill-based hiring takes an altogether different approach, focusing instead on an assessment of the candidate’s skills, knowledge, and abilities.

This approach is also called competency-based hiring. Having no relevant degrees or work experience does not automatically disqualify a candidate in this process, if they have the key competencies and skills that are essential for success in that particular job.

Due to increasing challenges in acquiring and retaining highly skilled workers, employers around the globe are slowly relaxing their traditional recruitment standards. According to a 2023 report by TestGorilla, 70 percent of employers in the US chose to adopt some form of skills-based hiring methods.

Relevance Of Skills-Based Hiring In India

From a candidate skills perspective, the current state of the Indian labour market looks pretty bleak. Despite having one of the world’s largest population of young workers, India has a chronic shortage of skilled talent.

According to the Business Standard reports, at least half of all graduates in the country are unemployable due to lack of essential skills. Deficiencies in the education system are a major reason for this lamentable state of affairs.

When educational qualifications are no longer a reliable indicator of skill, employers have no option but to get more creative. A switch to more skill-based hiring tactics could be beneficial in India, where there is clearly no shortage of talent due to the country’s demographic dividend.

How To Attract Diverse Talent Through Skills-Based Hiring

As an employer, embracing skills-based hiring requires some degree of adjustments and changes all along your recruitment pipeline. The following are the steps involved in implementing skill-based hiring, outlined in a logical order of progression:

1. Pick A Role And Identify The Skills

There are usually certain roles and job positions that work well with a skill-based hiring process. Typically, you want to focus on roles that require high proficiency/core competencies in specific sets of skills. Examples can include copywriters (grammar and writing skills), customer service executives (communication and people skills), software engineers (coding skills), and so on.

Select the roles in which you want to implement skills-based hiring. Look for those positions where you are having difficulty in finding enough applicants using traditional approaches. Once you have identified such roles, clearly identify the specific skills you want to look for in potential candidates.

The skills could be soft skills/people skills, problem-solving abilities, or relevant hard or technical skills, industry-specific knowledge, etc.

2. Develop Focused Assessment Methods For The Selected Skills

In a skills-based hiring process, there is a heavy emphasis on the use of tests, simulations, and other methodologies to accurately measure a candidate’s competencies and overall suitability for the job. For a comprehensive evaluation, you need an ideal mix of tests, focused interviews, and other practical demonstrations.

You will have to develop specific assessment methodologies and criteria for each job position in skills-based hiring. There are two main avenues here – develop the assessments in-house, or rely on third-party testing service providers. Your choice will depend on factors like the size of your organisation, recruitment budget, and the availability of skilled HR specialists.

3. Train Your Recruiters And Evaluators

After developing an objective assessment criteria, you have to ensure that the people in charge of evaluating the candidates know how the system works. You have to train them in conducting proper skill-based interviews and tests, using the selected assessment tools and methodologies.

Care must also be taken to ensure that your recruiters know exactly the type of skills and competencies to look for. Proper training is of utmost importance, since many recruiters tend to be familiar only with the traditional approaches to hiring. Training reduces the risk of unnecessary bias creeping into the process.

4. Communicate The Approach To Your Target Candidates

To successfully attract the right type of candidates, you need to start with clear job descriptions that provide detailed information about the skills and competencies you are looking for. Try to be as specific as possible when writing your job descriptions to include the skill-based aspect.

Try to provide detailed guidance for candidates throughout the application process, through email advisories, FAQs, and chatbots regarding the actual selection process and testing methodologies. Using digital tools to relay such critical information can significantly improve the candidate experience. 

5. Conduct Consistent Interviews And Provide Feedback

Use strict monitoring to ensure that all the assessment tests are carried out in a consistent and objective manner by your recruiters and interviewers. Provide constructive feedback to the candidates who were not selected after the assessment.

As for the selected candidates, look for any skill gaps that may require additional training or upskilling. Provide the necessary support and keep track of their progress within your organisation. This ongoing monitoring process will give you a clearer idea about the effectiveness of skill-based hiring.

The Advantages Of Adopting A Skills-Based Hiring Process

If implemented carefully after adequate preparation, skills-based hiring can help bridge the talent-supply gap in your organisation and bring a host of other benefits in terms of diversity, equity, and inclusion as well.

More Effective In Finding Skilled Candidates

Educational qualifications alone are not a reliable indicator of skill level, particularly in a country like India, where the education system has many flaws. By focusing on the actual skills that matter for the job, skill-based hiring can ensure that you only consider individuals who are more likely to be a good fit for the job.

Reduces Risk Of Mis-hires And Overall Cost Of Hires

Hiring based solely on resumes can increase the risk of being saddled with employees who are a poor fit for your organisation. Skill-based hiring reduces this risk of mis-hires and can also reduce your overall recruitment costs by finding you the best fits faster.

Improves Diversity And Inclusion In Your Workforce

Skilled individuals from underprivileged communities are often forced to give up on traditional degrees and other formal certifications due to financial or other social reasons. Using skill-based hiring gives deserving candidates with resume/experience gaps and other issues a chance at employment, while also making your teams more diverse.

Facilitates Internal Recruitment Opportunities

Skill-based hiring can also be used to boost your internal talent pipelines. For example, individuals thriving in a sales position often have the required skills to excel in customer service or other client-oriented positions. Using skill-based hiring, you can often fill critical vacancies using people who are already working for you.