Skills-Based Hiring In The IT & Technology Sector
The tech industry faces critical skill shortages. Enterprise organizations, as well as startups, are struggling to find qualified talent, causing project delays, stifling innovation – and hampering growth.
Digital transformation is driving the demand for technical skills in almost every organization — and, with global spending on digital transformation set to reach nearly $4 trillion by 2027 (according to IDC), competition for tech talent is absolutely not limited to companies operating only in that industry.
In the US, the demand for tech talent will grow to 7.1 million tech jobs by 2034, from an estimated six million in 2023. (CompTIA)
The demand for specialized skills is growing, and the specific skills tech companies actually need are changing more quickly than ever (with no signs of slowing down) – largely due to the emergence of new technology.
For example, job postings in the United States requiring skills in “generative artificial intelligence” jumped more than 1,800% during 2023. (Lightcast)
Rapid technological advancements are outpacing traditional education and workforce training, leaving many graduates unprepared – but workforce training is also slow to keep up.
That’s why more and more organizations in the tech sector (and beyond) are embracing skills-based hiring, in order to find people that can not only fill a role, but support the growth of the business – even as its needs and priorities change.
What is skills-based hiring? 🤔
Skills-based hiring is a recruitment approach that focuses on assessing and prioritizing the specific skills and competencies required for a particular job… and then matching people to work on this basis.
Rather than relying on criteria such as education, experience or tenure, skills-based hiring looks at a candidate’s actual and potential capabilities, based on the skills they have, are likely to have – or could pick up.
“We are trying to help our managers understand the need to hire based on skills; hire based on potential and ability to learn and develop.” – Tami Wolownik, Siemens Mobility
How does skills-based hiring work? 🔋
Update role requirements
To adopt skills-based hiring, companies must start by breaking down the work into constituent tasks, identifying the skills needed to complete those tasks, and establishing who is best equipped to provide those skills – from the available talent pool.
Build skills intelligence
Data about the skills of employees, candidates, previous applicants and alumni should be collected and enriched, and then kept up to date (this can be done dynamically with the right technology partners) in one place, to make it easy to action.
Connect your roles to the skills you have, with a (dynamic and contextual) Job Architecture.
Consider adding external labor market insights, to ensure your data set is as useful and usable as possible.
Together, this Skills Intelligence is the key ingredient that makes skills-based hiring possible.
“Using skills as that currency allows you to hire faster; and hire better, because you're looking at the skill, not necessarily the individual or the jobs that they had before. It allows you to be relevant in the market and to move with pace.” – Andi Zyka, Director, Employee Success Product Management, Salesforce
Deploy skills assessments
With skills-based approaches to hiring, interviewers would ask applicants to explain how they might demonstrate a particular skill.
Use objective assessment methods to establish if someone has what is needed to succeed – working with the common language of “skills” to reduce human bias, and ensure the highest quality candidate is selected.
Promote learning & mobility
Develop and promote a culture of continuous learning within your organization. Provide opportunities for professional development, training, and upskilling to keep tech professionals on top of the latest advancements and innovations.
This isn’t just about retention and employee engagement. The half-life of some technology skills is as low as 2.5 years, which could be further shortened by advances in gen AI. (Harvard Business Review) If your business isn’t thinking about reskilling workers to close skills gaps, it’s going to be left behind.
“The future is really putting them into a cauldron of skills matching and then picking the best and the brightest with a skills-based approach that really does help reduce any sort of bias to be your standard of how you recruit and grow your talent within the organization.” – Elin Thomasian, UKG
Benefits of skills-first hiring in the tech industry 💡
Closing the skills gap
Skills-first hiring directly addresses the pervasive skills gap in the technology sector. By focusing on specific skills and competencies required for a role, organizations can identify candidates who possess the exact qualifications needed.
This not only reduces the time and resources spent on recruitment, but also ensures that new hires can really add value to the business, when they take on their new roles.
Shifting to an AI-driven, skills-first approach helps HR teams to make better decisions about hiring, planning and outsourcing – plus the all-important upskilling and reskilling that will be essential for a fast-changing industry.
It also makes it possible to share personalized job or training recommendations (at scale), encouraging ideal candidates to apply and – more importantly for the tech industry – helping guide existing talent towards the learning and development opportunities that will set them up for future success.
Skills intelligence delivers the win-win scenario for employers and employees: providing data-driven career paths, mobility opportunities and training courses that prepare your workforce for the future, while helping you retain and empower employees to maintain and improve productivity levels.
Facilitating agility & engagement
Skills-first hiring encourages a more flexible and adaptive workforce. Understanding the skills of your entire talent universe – including employees and anyone who applies for roles – gives you a lot more scope to help folk make lateral moves within your organization.
This allows individuals to explore different roles and enhance their career, while also sharing knowledge, retaining top people, and getting the right skills where they are most needed.
This adaptability is crucial in a rapidly evolving technology landscape, where the demand for certain skills can shift quickly – and new needs are emerging all the time.
“We talk about skills, but you tend to talk a lot about skills at the hiring stage… Actually starting to think about: what are the critical skills within your entire organization? Because if you then start to think about critical skills, you start to talk about critical roles. And I think that just starts to help you be much more planful and prepared for the direction of travel that your business is going through.” – Katharine Rooney, VP Talent Attraction & Acquisition, Mimecast
Enhancing efficiency
One of the significant advantages of skills-first hiring is improved operational efficiency. By accurately matching skills to job requirements, organizations can streamline their recruitment processes. This leads to quicker and more effective hiring decisions, reducing the time it takes to fill critical roles.
Moreover, employees hired based on skills are likely to require less time for onboarding and training, accelerating their contributions to projects – and overall business objectives.
Looking at everyone through the lens of skills (and potential skills) should also mean you are better able to reskill or redeploy employees, in order to fill gaps quickly and cost-effectively.
Reducing bias and enhancing fairness
Skills-first hiring promotes a more inclusive and unbiased recruitment process. By emphasizing capabilities over factors like job history or tenure, organizations reduce the potential for bias in hiring decisions.
In a survey by Deloitte, 80% of executives surveyed said that making talent-related decisions based on people’s skills rather than their job history, tenure in the job, or network, would reduce bias and improve fairness.
Anticipating and responding to change
The survey by Deloitte also found that skills-first organizations were 57% more likely to anticipate change and respond efficiently, and 107% more likely to place talent effectively.
In the dynamic landscape of technology, where innovation is constant, this ability to stay ahead of the curve is invaluable. Skills-first hiring aligns the workforce with evolving industry demands, ensuring that teams are equipped to tackle emerging challenges and capitalize on new opportunities.
A skills-first view also aids in strategic workforce planning:
“We truly do believe that resilience and relevance for the future is critical, because I honestly believe that the roles we have now are not the roles we're gonna have in the future.” – Tami Wolownik, Siemens Mobility
Embracing skills-first hiring in the technology sector is a strategic imperative. It not only addresses the immediate challenge of skills shortages but also positions organizations to thrive in a rapidly changing environment. By prioritizing skills, organizations can build resilient, adaptable teams that drive innovation and success in the digital era.