Skills based hiring: An ultimate guide
4 minutes
Ben explains what skills based hiring is and how it allows you to open up your roles to a larger, more diverse applicant pool
Unless you've been living under a rock for the past few years, I'm going to bet you've heard the term "skills-based hiring" or skills based recruiting in your HR and TA circles by now. But what does it even mean? "Yes, I would like my candidates to be skilled, please", have we not been recruiting for skills this whole time?
I'm sure you've hired people that looked great on paper - strong degree, work experience, top university - but then they end up being a bit meh.
Instead of using CVs to infer if they have the necessary skills for the role, you directly assess whether they do. Simple. Why weren't we always doing this?!
Skills-based hiring prioritises selecting candidates based on specific skills, not their experience
Skills-based hiring means identifying the specific skills required for a role and assessing candidates directly on those skills, rather than using experience or qualifications as your hiring basis.
Most employers have been doing the opposite. Using years in a role and other CV-related info as the basis of whether or not someone is fit for the job. A 2:1 is often a hard requirement for early-careers roles, assuming this is sufficient evidence of potential and competence. But if a candidate chose not to go to university, left with a 2:2 (aka Desmond, aka Dezzie), or acquired an unrelated degree then it's assumed they lack what's needed.
Which is a big assumption.
Skills-based hiring says: instead of assuming, just find out. If the role needs someone analytically sharp, commercially aware, and a strong communicator, then let's assess for those things directly.
Your job description will change from "must have a 2:1 in a related subject and four years' experience." To simply describing the skills needed "you'll need to be analytically minded, adaptable, and a strong communicator", and then you use assessments to actually find out if they have those skills (cognitive assessments, structured interviews, skills tests, etc.).
What are the "skills" being assessed in skills-based hiring?
Skills are things that people are good at, and aren't the same as qualifications or years of experience. Just having experience in something doesn’t necessarily make you good at it. What skills-based hiring is trying to do is find the best person for the job based on what they can actually do - right now, today - rather than what they've experienced in the past.
Skills based hiring is not just about skills like coding or excel
- 2 minutes
Skills based hiring looks at a breadth of skills, not just hard technical skills.
Skills in hiring typically fall into three different buckets:
1. Cognitive skills are someone's natural mental aptitude
This is how they think, learn, and solve problems. Things like numerical reasoning, verbal reasoning, critical thinking, and pattern recognition. These can't be learned or trained; they reflect someone's innate ability.
When you combine scores across several cognitive aptitudes, you get a measure of general cognitive ability, and it's worth knowing that this is the strongest single predictor of job performance across almost every role type. Smart people learn faster, solve problems faster, and generally figure out the right thing to do, which feeds into everything an employee does.
2. Hard skills are specific technical knowledge or learned ability
Think coding languages, software packages, financial modelling, industry-specific expertise. These skills can be taught and developed, but they can also become outdated surprisingly quickly.
Let's think about Excel, for a second.
A few years ago, advanced spreadsheet skills were a genuinely sought-after hard skill. Now you can describe what you need in plain English and AI will build it for you in seconds. There's very little value in prioritising Excel skills or seeking "Proficiency in Excel" as a requirement.
The same is happening across a lot of technical domains. And it's one of the reasons that for most roles, the ability to learn new hard skills quickly is more valuable than having existing knowledge of them. Hard skills that genuinely matter from day one tend to be limited to specialist roles — surgeons, engineers, roles with very specific technical requirements. For everyone else, cognitive ability is a better proxy for hard skill acquisition than the hard skills themselves.
3. Soft skills are personality traits, behaviours, and values
These are traits like resilience, conscientiousness, attention to detail, drive, and adaptability. Unlike hard skills, these are relatively fixed in adults. You are largely who you are. That's exactly why hiring for soft skills matters: you can't train conscientiousness into someone who doesn't have it, and you can't coach someone into being genuinely driven if they're not.
The right combination of soft skills is often what separates your superstar employees from the ones who burn out and leave early. I'm sure you've noticed it's not always the most technically capable who thrive, but the one whose personality is the right fit for how the role actually works.
Pro Tip
Of the three, cognitive and soft skills are relevant to every role. Hard skills only become essential for genuinely specialist positions. For most hiring, if you focus on cognitive and soft skills, the hard skills tends to follow quickly with time in the role.
None of these skills can be measured directly via CV-sifting, you're purely inferring they possess these skills. That's why skills-based hiring relies on specific assessments for each skill type.
We have a piece on how to implement a skills-based hiring approach where we talk through how you would actually identify and assess these skills. Once you understand the best ways to assess certain skills, skills-based hiring starts to make sense.
Skills-based vs experience-based hiring, a head-to-head comparison
| Experience-based hiring | Skills-based hiring | |
|---|---|---|
| Primary filter | CV, degree, years in role | Skills assessments, work samples |
| Interview approach | Probing past experience and work history | Structured questions assessing skills needed for the role |
| Bias risk | High (name, university, background) | Lower (scored objectively) |
| AI vulnerability | High (CVs easily optimised/exaggerated) | Lower (assessments harder to fake) |
| Predictive validity | Low (education 0.10, experience 0.07) | High (GMA 0.65) |
| Fairness | Advantages privileged backgrounds | Levels the playing field |
| Scales with volume | Poorly | Highly scalable |
When you see it laid out like that it's quite obvious why skills-based hiring became popular.
How skills based hiring differs from experience based hiring
- 5 minutes
Ben explains the key differences between both approaches and what makes skills based hiring the better choice
What experienced based hiring gets wrong is that instead of measuring cognitive ability directly, it goes "they made it through university, have a 2:1, worked at x company for 2 years... they must be very smart, they'll be able to do this role".
But even at the most prestigious universities and the most sought-after companies, cognitive ability is normally distributed. There are high performers and low performers at every institution and every workplace. Someone who spent three years at a well-known consultancy or a FTSE 100 company might have been exceptional, or they might have been quietly average and good at staying out of the way. Using an institution's reputation as a proxy for an individual's ability is what psychologists call the "ecological fallacy" - assuming that what's true of a group is true of every member of it. It's bad logic and applies just as much to where someone worked as to where they studied.
And studies back this up. A century of research into what actually predicts job performance found that years of experience correlates with performance at just 0.07, and educational attainment at 0.10 (on a scale where 1 is a perfect predictor and 0 is no relationship at all). Both sit comfortably in "unlikely to be useful" territory.
That said (and I want to be clear about this, as I have been harsh on "experience" so far), skills-based hiring isn't arguing that experience and qualifications never matter. For some roles, specific credentials or a track record in a particular area are genuinely important requirements. The point is to make sure every requirement on your job spec is there for a real reason, not because it's always been there or because it feels like a reasonable filter. Arbitrary requirements unnecessarily narrow your talent pool and reduce fairness.
AI and fairness have been big reasons for the shift towards skills-based hiring
A few big changes have recently occurred in the employment market which have necessitated a change in recruitment strategy.
AI's worldwide takeover
If you had been living under that rock, then you might be confused as to why everyone online sounds the same, how every—sentence—now—has—an—em—dash—in—it, or why most of the population seem to have outsourced their thinking to a French guy called "Claude" who's a "Gemini".
Well, it's actually something called AI, which has arrived into everyone's homes and pockets and caused a stir in many industries (including TA and recruitment).
AI generated content is everywhere, including your application and CV pile. Organisations simply no longer trust CVs, cover letters, and application form responses - and rightly so. Almost anyone can draft the perfect CV and cover letter for any give role in seconds without any effort except telling the AI to do it (I guess it shows good delegation skills!).
AI has also replaced a lot of entry-level roles, so the amount of applicants you'll receive for your roles has likely increased and may keep increasing as AI grows stronger. So manual selection methods like CV-sifting are a no-go for any medium-to-high levels of applications.
Growing movement against educational requirements in selection
Historically, candidates from prestigious universities, or with high degree classification, were given preferential treatment in the recruitment process. Increasingly, research has shown this to be ineffective as a recruitment tool, and for many reasons:
- A huge number of high-potential candidates attend less glamorous universities.
- Targeting prestigious universities disproportionately impacts minority candidates, who are often underrepresented.
- The cost of university has skyrocketed, and many high-potential candidates are actively avoiding university, and would rather join the workforce immediately without crippling debt (and too right, let's not burden the youth with "graduate taxes" just so they can compete for jobs).
Shift towards remote and hybrid working
Working from home unsupervised takes a very particular set of skills (à la Liam Neeson). Skills such as communication, self-discipline, self-motivation, problem-solving which are not assessed in experienced-based hiring. If your hybrid/remote employees lack these skills then they won't be as productive as you'd hope.
So hiring based on these skills is important - if only there was a name for this...
Skills-based hiring produces better hires and a bigger, more diverse talent pool
The table earlier showed a few of the many reasons why skills-based hiring is being adopted, but I think there are three main benefits that outshine the others.
Higher predictive validity
Most importantly, it allows employing organisations to maximise what psychologists call "predictive validity" i.e. the organisations ability to predict real-world performance from their selection process.
HR practitioners and hiring managers often forget that selection and recruitment is simply a predictions market, whereby the employer predicts which candidates will make the best employees. - Ben Schwencke
General mental ability assessments come in at a validity of 0.65 with job performance. Structured interviews designed to assess specific skills aren't far behind. Compare that to education at 0.10 and experience at 0.07, and the gap is not subtle.
So, by measuring the skills that actually matter in the role, you get better information. And better information leads to better hires.
It expands your talent pool dramatically
On the face of it, this might sound like a problem: "I already have too many applicants, I don't need more!!". It's only a problem if you're using manual unscalable methods, but with scalable methods it's actually a huge benefit.
Let's say you have stringent requirements like a particular degree classification and certain years of experience, a target university list - and that results in 500 applicants. Dropping most of those requirements (that you were using as a proxy for ability) and using assessments designed to target the skills you need for the role might increase your applicant pool to 5000. The top 10% of 500 is a decent shortlist. The top 1% of 5000 is a genuinely exceptional one. That's an order of magnitude difference in the quality of candidates you're drawing from, just by removing barriers that weren't predicting performance anyway, and replacing them with methods which are more effective and more targeted.
Fairness and objectivity
Experienced-based hiring benefits candidates from privileged backgrounds who have greater access to social contacts, prestigious universities, and can afford to seek unpaid opportunities for experience. Candidates without those advantages are more likely to be filtered out under experienced-based hiring, regardless of their actual ability.
Skills-based hiring pays no heed to these advantages, and provides a level playing field for everyone, regardless of their background. Ultimately, all that matters are the candidate's skills in the present moment, not their experiences in the past, representing a fairer and more meritocratic way of hiring.
Conclusion and next steps
The research making the case for skills-based hiring has been around for decades, but certain changes have forced people to catch up. AI has exposed a CV's unreliability. Degree inflation has made qualifications less meaningful. Remote working has made a new set of skills more important. And the pressure to hire fairly and reduce bias has made the old approach less viable.
If you're ready to move from understanding skills-based hiring to actually building it into your process, our step-by-step implementation guide walks through exactly how to do it - including our free toolkit.
Primary author
Ben Schwencke
Chief psychologist at Test Partnership. MSc in Organisational Psychology with over ten years experience in psychometric testing.
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