Skills-First Hiring Guide

A degree is no longer the only path to landing a great job. As companies relax their degree requirements, our skills-first hiring guide explores how to redefine employment criteria to build a more diverse and capable team.

What is Skills First Hiring?
Getting Started With Skills-First Hiring
Benefits of Skills-First Implementation
Workplace Impact

For generations of workers, the formula for career success was clear: earn a degree, land a good job, and climb the corporate ladder. However, this equation is becoming increasingly outdated as skills-first hiring becomes more common.

According to a Boston Consulting Group (BCG) report, over 20 states have already relaxed degree requirements for government jobs. At the same time, the private sector has increasingly adopted hiring that prioritizes experience and expertise over formal education.

As this shift unravels, our skills-first hiring guide helps answer key questions, including:

What is skills-first hiring, and what are its benefits?
What’s causing this change, and how will it impact the workplace?
How can companies adopt this recruitment practice?

What is Skills First Hiring?

Also known as skill-based hiring, it’s a recruitment approach that prioritizes a candidate’s competencies and abilities over traditional factors like educational background, a degree, or prior positions. As a result, companies can tap into a broader and more diverse talent pool.

Why is it happening now?

In part, it comes as an overdue correction to a dependency on college degrees in hiring, which, as HR Legalist observes, has led to disparate impact discrimination, especially among employees in communities of color and rural areas.

In fact, between 2000 and 2019, non-degreed skilled workers lost access to 7.4 million jobs that previously offered economic mobility and now require a degree (e.g., nurses, managers, administrative assistants).

At the same time, the convenience and rise of technology are making the hiring process much more manageable.

Nowadays, leveraging ATS and recruitment software allows for faster and more efficient identification of qualified candidates. Hiring teams can automatically match exact job requirements to a candidate’s skills, ensuring a more accurate fit.

This isn’t to say that employers are entirely disregarding traditional hiring factors. Instead, they emphasize practical skills more, regardless of how or where employees attain them, while acknowledging that specific industries may require formal education or certifications.

For example, the approach is well-suited for jobs where practical experience and abilities can be directly demonstrated, like in tech, creative fields, skilled trades, and customer service.

At the same time, industries like healthcare, engineering, law, or aerospace still require formal education, certifications, and licenses due to regulatory and safety standards.

Therefore, while skills-first hiring is gaining traction in many fields, it’s unlikely to eliminate the need for traditional qualifications in others.

Getting Started With Skills-First Hiring

The U.S. Department of Labor (DOL), in collaboration with the U.S. Department of Commerce, released the Skills-First Hiring Starter Kit to help employers adopt skills-based recruiting practices. Announced at the White House’s “Classroom to Career” Summit, the document promotes employing based on skills and knowledge, helping employers create more inclusive workplaces.

This kit and related research serve as a blueprint for our skill-first hiring guide, which examines four main aspects, from pre-hire planning to post-hire development.

Rethink Job Requirements

Getting started requires a complete overview of the recruitment process.

Historically, employers have heavily emphasized formal education and years of experience, often overlooking candidates who may have the right skills but lack the “typical” credentials.

Unfortunately, these requirements often exclude talented individuals, especially those from underserved communities or non-traditional career paths.

Therefore, the first step of our skills-first hiring guide is to rethink role criteria, which is usually followed by removing four-year degree requirements where possible and replacing them with skills that best fit the job description.

Removing Degree Requirements

Hiring Lab by Indeed found that formal educational requirements are gradually disappearing from job postings in nearly every sector. Their data shows that 52% of Indeed’s listings no longer mentioned formal education, up from 48% in 2019.

Another study by the same company also reveals a difference in tenure requirements. Namely, less than a third of U.S. job postings now require a specific number of years of experience, a decrease from nearly 40% in 2022.

A degree and long tenure may indicate some level of proficiency, but they’re not always a reliable indicator of a candidate’s ability to perform in a specific role. By removing them as a requirement, companies open their hiring process to a broader and more diverse talent pool.

Before doing so, the U.S. Department of Labor suggests the following recommendations:

Involve leadership, hiring managers, HR, workers, and unions early to support the skills-first approach
Define a clear goal (e.g., faster hiring) and track results to keep everyone aligned
Start with a role that has defined skills and responsibilities, avoiding complex or changing duties
Ask workers or their representatives to identify the key skills needed for the role
Be aware of roles with licensing or degree requirements that may not fit a skills-first strategy

Essential Skills vs. Trainable Skills

The other aspect of rethinking job requirements involves a deeper reflection on the role’s specific needs.

What is the core purpose of the job?
Which skills are necessary for success?
How critical is each skill to the role’s overall performance?
Which skills can be developed through training or on-the-job learning?

Essential skills are non-negotiable. They are fundamental abilities needed to perform core tasks from day one, like knowledge of specific software or technical expertise.

Trainable skills, on the other hand, are great-to-have skills that candidates can learn on the job with proper guidance.

Differentiating between the two early on helps employers target applicants who possess the core competencies for the job while also offering room for development in other areas.

Screen: Finding Skilled Candidates

After thorough pre-hire planning, the next step is candidate screening.

Traditionally, this process involves reviewing resumes, evaluating previous work experience, and matching qualifications to job requirements. It begins by filtering candidates based on education, tenure, and job titles, then progresses to interviews or assessments for cultural fit or specific skills.

Skills-first hiring flips this approach.

Instead of relying on conventional indicators, the focus should be on the specific skills a candidate brings to the job and their potential for growth in the role.

Employers should use clear, simple language in their job postings, disclosing that skills take priority over educational background and how they’ll evaluate applications. They should also encourage candidates to share relevant experience and be transparent about the hiring process, including timelines and salary ranges.

Identifying Transferable Skills

Look for potential even in unexpected candidates.

Identifying essential vs. trainable skills from the previous stage is a good foundation for this one. However, candidates often bring valuable experience from roles in different industries, volunteer work, personal projects, or alternative routes—which might not be obvious at first glance.

For example, an applicant with a background in retail might bring exceptional problem-solving skills and a deep understanding of customer needs, even if their experience doesn’t perfectly match the role.

These are transferable skills or individual abilities and qualities that employees can apply across various jobs, industries, or career paths. They are not specific to a particular role or field but are valuable in many different contexts.

Opportunity@Work calls these individuals STARs (Skilled Through Alternative Routes), revealing that they represent over 70 million workers, or 50% of the U.S. workforce, spanning industries like healthcare, retail, IT, manufacturing, and more. They are well positioned for middle and high-wage jobs, with millions ready for higher-paying roles like software developers and customer service reps.

Therefore, as part of the screening process to find skilled candidates, employers can vastly broaden their talent pool by looking beyond industry-specific experience and considering transferable skills.

This approach can help them find STAR candidates who may be a great fit despite not having a direct background in the field.

Using AI Technology for Matching

Advancements in technology, especially artificial intelligence, can be instrumental when screening for skilled candidates.

AI-powered tools can analyze resumes and cover letters to match applicants’ skills with the company’s job requirements. Employers can quickly surface candidates who may be a good fit by leveraging machine learning algorithms, even if their resumes don’t match the traditional expectations for the role.

AI in the workplace can also help reduce unconscious bias by focusing solely on skills and experience rather than background characteristics that may unintentionally affect hiring decisions.

However, while technology can significantly enhance the matching process, recruiters should use this powerful tool alongside their best judgment and expertise.

Assess: Skills Evaluation Methods

After identifying candidates with the right skills on paper, the next step would be to observe those skills in action.

DOL’s Starter Kit suggests using a combination of two or more of the following evaluation methods:

Structured interviews involve asking skill-based questions to assess a candidate’s problem-solving abilities, helping to reduce bias and ensure consistent data collection.
Hands-on skills tests require candidates to complete tasks, such as coding exercises or using a tool needed for the role, to demonstrate their abilities in a practical setting.
Job simulations recreate job-relevant scenarios to observe how candidates handle them in real-time.
Written tests evaluate a candidate’s technical knowledge or how they respond to scenarios in writing.

The U.S. Department of Labor further advises reviewing the applicant tracking system to ensure it does not unintentionally filter out high-quality candidates.

Additionally, employers should stay compliant with Equal Employment laws, such as Title VII of the Civil Rights Act, which prohibits discrimination based on race, color, religion, sex, and national origin.

Advance: Post-Hire Development

The final step of our skills-firs hiring guide explores post-hire development.

Effective employee integration is a strong component of a successful hire.

In fact, onboarding statistics show that the first 45 days of employment account for up to 20% of worker turnover.

A well-designed onboarding program can increase new hire performance by 11%, and 33% of employees feel more engaged than those in organizations with ineffective onboarding.

Mentorship, training, clear expectations, and resources to address barriers can all improve retention and productivity, especially for underrepresented hires.

Therefore, in the post-hire stage, employers should regularly assess their hiring and onboarding processes, gather feedback, and make improvements to ensure continued success.

Benefits of Skills-First Implementation

The 2024 State of Skills-Based Hiring report shows a notable rise in adoption, with 81% of employers now using this method, up from 56% in 2022. The increase is directly linked to the advantages it offers, including:

Savings of $7,800 to $22,500 per hire by reducing mis-hires
Time savings of 412 to 792 hours for senior management hires and 339 to 660 hours for non-senior roles
Better benefits across all metrics with multi-measure testing (combining skills-based tests and assignments)

Candidates also increasingly prefer it, as 90% believe skills-based hiring increases their chances of securing their dream job. Another 84% agree that it helps reduce hiring bias, while 81% say it has provided access to new employment opportunities.

Workplace Impact

According to BCG’s report, the U.S. is leading in embracing skills-based hiring, with large employers like Dell, Accenture, IBM, and Amazon driving the trend.

This shift shows that skills, not degrees, are becoming the new currency in the job market.

Specific industries are consistently decreasing degree requirements, especially those facing talent shortages, like community and social services, healthcare, and hospitality.

The change isn’t just happening at the employer level—job seekers themselves are calling for it.

A 2021 Indeed survey revealed that 65% of candidates favor skills assessments over degrees, signaling an explicit demand for employers to evolve.

As companies customize their hiring processes in response to this demand and their unique needs, the key takeaway remains employees are more than their resumes. They are the heart and soul of a company, each bringing unique potential and experience.

Acknowledging this lies at the core of our skills-first hiring guide.

Written by tamara jovanovska

Content Writer at Shortlister

Sources

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