Hire more for skills, less for industry experience

December 17, 2020COVID-19 has forced companies to rapidly adapt to changing talent needs. More than 70 million U.S. workers filed for unemployment insurance from March through December. Now, more organizations are converting what were furloughs early in the pandemic to permanent job losses.

While many companies have parted ways with workers, others—from e-commerce firms to grocery stores—are looking to bring more on. Many are struggling to fill open roles. This should spark organizations to rethink how they bridge the gap between talent demand and supply.

Enter skills-based matching: an approach that assesses candidates based on their holistic skill set (including adjacent skills across industries), rather than just industry experience or certain educational credentials. Assessing candidates based on skills, instead of their last job title, can help fill critical roles with the best talent. The benefits of skills-based hiring include:

1. Accessing new talent sources by thinking beyond educational requirements. Too often, educational requirements create an unnecessary barrier to in-demand jobs. According to recent McKinsey research, nearly 90 percent of postings in growing industries like technology, healthcare, and business management require a bachelor’s degree, even though many of these jobs can and should be viable options for those without advanced education. Skills-based matching significantly expands the available talent pool for open roles.
2. Reducing unconscious bias in the recruiting process. According to McKinsey’s 2017 Women in the Workplace report, unconscious biases are one reason for the “leaky pipeline” in which women are less likely to get promoted than their male colleagues. Women, Black, and Hispanic/Latinx workers are better represented in “gateway” occupations, and skills-based matching would help them shift to “destination” roles. A more objective assessment of the relevant skills for any given job could help mitigate systemic disadvantages.
3. Facilitating internal moves to respond faster to new demands. All organizations had to adapt to COVID-19, and those that adapted better recognized how employees’ skills could transfer to other parts of the business. For example, one retail and commercial bank moved many branch employees to its call center to meet increased demand through skills-based matching.

For organizations considering skills-based hiring, next steps include:

1. Assessing where the organization is long and short on key skills. Pinpoint internal skill pools that are critical to the value agenda and those that are declining in relevance. Identify adjacent pools where talent is ripe for reskilling to retain employees and reduce hiring costs. While it’s possible to move to skills-based hiring for open roles without taking this step, assessing skill needs can help fully harness its potential.

   A Fortune 500 technology company conducted a workforce planning initiative to map talent needs to specific business goals. This led to the decision to reskill more than 6,000 employees for new roles and upskill over 20,000 employees in existing roles, thus filling 80 percent of its identified skills gap.

2. Building internal capabilities and tools to fuel skills-based hiring. Talent acquisition teams and hiring managers must make mindset and behavior shifts when moving to skills-based hiring, and recruiting needs new tools like skills-based assessments. HR should partner with the business to discuss critical skills required to be successful based on the jobs to be done and then define the assessment approach to match candidates to the role.
3. Using AI to find adjacent skill pools for in-demand roles. Use a talent-management system that can infer adjacent skills to eliminate guesswork. For example, Career Exchange, a digital talent marketplace, allows companies to look outside typical talent sources through an AI-based algorithm that matches people to jobs based on their skill fit.

The pandemic has required substantial changes to how we live and work. The same should be true for how we hire and look for employment. A skills-based approach helps companies, job seekers, and the broader communities that rely on critical roles being filled with the best talent.

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Career Exchange is a COVID-19 response initiative offered at no cost to companies hiring, furloughing, or laying off individuals. It is a digital talent marketplace that aims to address the mismatch of labor supply and demand, helping organizations and individuals. McKinsey & Company supports the platform as part of our commitment to safeguarding livelihoods. Learn more or visit the Career Exchange website to sign up.