Skills-based hiring: How to bridge the skills gap

A growing skills gap

According to Future Lean, the skills gap is generally considered the difference between the skills required to do a job and those available. While it’s ubiquitously appreciated in HR circles that there’s a prevalent skills gap, the genuine business impacts are perhaps less acknowledged. Here in the UK, there is a reported 40% of UK workers who do not possess the right qualifications, which will have serious repercussions, namely:​

• A sustained loss in productivity​
• Significant employee churn​
• Poor employee morale​
• Lower-quality work​
• Business stagnation ​
• Revenue loss

And this isn’t far-fetched. Backed up by recent research by Robert Half, these ramifications are coming to fruition as:

• 75% of employers continue to be concerned about their ability to attract new talent
• 69% of employers are only somewhat confident of annual company growth
• 75% of employers are concerned about keeping hold of their employees

A perpetual crisis?

We can acknowledge that the skills gap is indeed growing, thanks in part to the advancement of technology. However, before we hit panic mode, it’s worth looking back at this thorny issue to help us seek some clarity. ​

The skills gap and its well-trumpeted presence are not something new. As we’ve already stated, it’s almost an annual clarion. For example, here’s one or two headlines sourced from quick internet searches:

1. UK jobs market set for upbeat 2015, but skills shortage remains – Guardian, 2015​
2. Skills shortage threatens builders’ high workload – Construction News, 2002​
3. As of 2022, the occupation most affected by skills shortages in the UK was Skilled Trades – Statista, 2022

4. In 1965, British industry offered 125,000 craft apprenticeships; they have now all but disappeared. The result is a skills shortage which is harming our economic recovery – UK Parliament, 1995​
5. It is widely alleged that the UK economy suffers from a chronic shortage of        skilled labour –  Oxford Economic Papers, 1993

Based on this evidence, a skills crisis has undoubtedly existed for some 30 years. However, it’s far more likely that every decade suffers from a significant skills gap, and always has done. What changes, perhaps, is the type of skills required in each decade.

Yet, as technologies change and advance, rather than panic, can HR look to see what candidate skills are transferrable instead? ​To do so, HR must ask, in the light of our most recent technological skills gap, who out of a considerable candidate pool is ready to:

1. Be willing to change direction
2. Adapt to change
3. Try something new
4. Be prepared to upskill

But how does HR seek to extract this information? Since this information isn’t easily gleaned from a rigid CV-based hiring methodology, HR must consider a skills-based hiring approach. 

Skills shortages in the UK 

​Having established that we suffer a perpetual skills shortage, the question of what skills are required in this current crisis is pertinent. We’ve already mentioned AI and its advancement. So, one can imagine a significant gap in this sphere. However, when consulting GOV.UK, the shortage list holds considerable surprises…​

Listed below are the sectors and the top three roles in each sector that are in demand:

What does the skills gap mean for your business? 

In the UK, 27% of employees feel growth opportunities are lacking due to a depreciating skillset, consequently, 69% of employees are investing in training to upskill their current workforce to improve output, engagement, morale and, ultimately, productivity. 

Here are some of the ways a growing skills gap is affecting your business:

1. Loss in productivity

A loss in productivity is a relatively obvious consequence of a prevalent skills gap. Indeed, if there’s a lack of experience in any workplace, the quality of output usually plummets.​ Once that happens, you can expect the following:​

• Deadlines will be dropped​
• Delays will lengthen ​
• Mistakes will multiply​
• Consumer confidence will fall

2. Poor morale

A Skills gap can affect more than your profit. It can affect employee morale too. For example, a skills gap can mean your existing employees shoulder additional duties, causing:​

• Increased stress levels​
• Potential burnout​
• Reduced motivation​
• Increased job dissatisfaction​
• A lack of career advancement

3. High wages and bloated training budgets

If there are fewer skilled workers, those who are skilled will come at a premium.​ For example, in 2022, wages in construction rose by 6.3%​. Other sectors that have seen exponential wage increases are:​

1. Hospitality​
2. Wholesaling​
3. Retail
4. Public

​Skilled worker shortages also run the risk of inflating training costs too. ​

• Hired talent may quickly jump ship in search of better pay​
• Turnover rate means high investment for little return​
• Create a state of continuous recruitment and training

4. Reduced Innovation and growth

If HR struggles to attract candidates with the right skills, reduced innovation and growth are often the outcomes.​ The right people bring ideas, they bring innovation, and they bring business growth.​ Therefore, struggling to hire candidates with the right skill set can lead to:​

• Poor growth​
• Sustainability issues​
• Loss of business to competitors
• Bridging the Skills gap

Believe it or not, CVs have been around since 1482 when a certain Leonardo da Vinci sought employment at the court of the Duke of Milan. Outlining his skills and experience, the young Leonardo, unbeknown to him, gave the world a template for what we’ve come to acknowledge as the Curriculum Vitae – the primary aid for recruitment.​

Good enough for the Duke of Milan; the question is – is the CV still good enough for your business? ​

Reasons for its longevity:​

1. CVs are an excellent selling pitch for the candidate​
2. They showcase and summarise employment history and progression ​
3. CVs actually save recruiters time since they quickly summarise key skills​
4. CVs demonstrate suitability

However, there are certain CV pitfalls:​

1. CVs open the door to unconscious bias​
2. CVs can’t accurately assess emotional intelligence​
3. CVs fail to describe an individual accurately​
4. They haven’t kept pace with 21st-century skill demands​
5. CVs don’t account for potential​
6. It’s easy for candidates to elaborate on their experience, including outright fibs​
7. There is a worrying rise in AI-generated CVs

Are we witnessing the slow death of the CV?

Yet, increasingly, HR is concluding that CVs are not the sum total of hiring. In fact, most hiring managers will tell you there’s much more to hiring than a good CV. ​For example: ​

• Cultural alignment – how do you glean that from a CV?​
• Soft skills – these are hard to make apparent on a CV.​
• Experience – does a CV convey all the relevant nuances?​
• Personal motivators

Can AI bridge the skills gap?

As the AI boom continues, business owners are struggling to source the right talent to help them navigate this technology’s lightning-speed development. In fact, according to a recent Korn Ferry analysis, by 2030, over 85 million jobs globally could remain unfilled in this new sector alone. ​

If this is the case, AI won’t affect an already cavernous skills gap; if anything, it has the potential to widen it further. For example, as roles remain unfilled, senior management, in a bid to handle a mounting workload, could lean more and more on AI to cover the gaps. But that’s not a bridge; it’s a tightrope liable to snap.​

Is skills-based hiring the answer? 

So, if AI isn’t the means to bridge the skills gap that it has the potential to be, what other options does HR have to help tackle this omnipresent issue? ​

CVs can lack the capacity to highlight candidate skills, especially soft ones, and candidates are able to exaggerate facts. Candidate assessments, on the other hand, bring a fresh element to the hiring process.​

How so? Well, for one, if a business utilises a skills-based hiring approach, they’re better placed to assess the broader aspect of a candidate’s skills rather than basing a hiring decision on background or place of study. Indeed, opting for a skills-based hiring approach helps tackle the perennial issue of skills shortages by widening the talent pool – considerably.

But that’s not all. According to the Aberdeen Group, of those companies that already use candidate assessments as part of their hiring processes, 39% have reported lower turnover. ​How? ​

Presumably, because candidate assessments can highlight transferrable skills far better than a CV could and are helping companies close a gap that just above the surface looks impossible to bridge. And because of that, they’re lowering turnover, too. A win-win?

Screening ‘Out’ or screening ‘In’?

Screening ‘out’ candidates elongates the entire hiring process with two interviews:​

1. CV screening​
2. Phone screening interview​
3. On-site interview​
4. Background check

Screening ‘in’ using skills-based testing is far more streamlined. For example, interviews aren’t conducted twice…​

1. Skills-based testing​
2. CV screening​
3. Interviews​
4. Background checks

Screening out

There is a big difference between screening candidates ‘out’ and screening them ‘in’, though the former has been the preferred method for decades.​

Usually, hiring managers have set criteria and look for opportunities to eliminate candidates whose professional background or education does not match them. In fact, it’s quite often the case that screening ‘out’ can quickly become an exercise in looking for reasons not to hire someone. 

At this juncture, bias, conscious and unconscious, kicks in. Too often, without knowing it, recruiters can take information irrelevant to the job description and use it to screen out a particular candidate. ​

In so doing, not only are recruiters potentially screening brilliant candidates out, but equally, they may, and often do, use the wrong metrics to hire an incompatible candidate.

Screening in 

With so much of the current candidate journey geared toward screening candidates ‘out,’ many HR professionals discovered during the pandemic that screening candidates ‘in’ was a far more viable option. For one, screening ‘in’ is a more inclusive approach. ​

Operating in what was an employee-led market, considering candidates who could bring experience, enthusiasm, and energy despite not fitting the exact criteria proved hugely successful. It opened a broader talent pool at a time when companies were struggling to attract top talent in a tremendously competitive candidate market. Ultimately, the screening ‘in’ process allows candidates to showcase their skills and provide far more insightful recruiter metrics such as:

• Culture fit
• Critical thinking
• Triubleshooting 
• Personality

A renewed focus on skills-based hiring 

Skills-based hiring has been hitting the headlines more frequently as of late. But to understand its rise to prominence in HR news circles, it’s necessary to take a closer look at the cause and effect. For this, we need to take a glance back at the recent pandemic. 

Necessary because the pandemic ended the era of fixed-job roles, linear promotions and rigid hiring. And in its stead, a whole new reality of flexible/remote working and, more importantly, mass job migration. ​

What was termed ‘The Great Resignation’ sent the HR world into a spin. Here’s Ryan Roslansky, LinkedIn CEO, on how the world of work was turned on its head:

If you take the same job role from 2015 to 2022 that existed in the world, roughly 25% of the skills needed for that role will have changed. When the labour market is moving much quicker, we really need something to focus on. I think that alternative, flexible, accessible path is really going to be based on skills.

LinkedIn CEO, Ryan Roslansky

With the pandemic now in the rearview mirror, its effects on HR are still tangible. Despite the market returning to a more ‘business as usual’ employer-led one, a skills-based hiring approach supported by Roslansky has begun to surface.​

And perhaps in the nick of time. With the proliferation of AI and the plethora of jobs this sector will bring, HR, now more than ever, must look toward ‘potential’ and ‘transferable skills’ in a candidate rather than the ‘finished product.’ Particularly since Dell Technologies predicted in 2023 that 85% of the jobs in 2030 hadn’t been invented yet…​

Clearly, if HR is going to meet the challenges of today and tomorrow, it needs to evolve its hiring processes. ​Time for the era of skills-based hiring?

Prioritising accuracy in hiring

The cost of a poor hire can be astronomical. According to REC, a poor hire on a wage of £40,000 can cost a business upwards of £132,000, thanks to recruitment costs, training, onboarding, and an overall loss in business productivity. ​

With a skills-based hiring approach, businesses can better match candidates to their roles based on core skills. Rather than seeking to hire a candidate based on their prior experience or formal education, businesses are increasingly looking to soft skills and how they can be applied to the vacancies they have.​

Enter candidate assessments.​ With candidate assessments, HR possess data right at the very beginning of the hiring process to better understand:​

1. Overall ability and aptitude​
2. Culture and values fit​
3. Personality traits​
4. Situational judgement​
5. Candidate core skills ​
6. Level of transferrable skills​
7. Causes for motivation​
8. Levels of resilience ​
9. Learning agility​

Armed with this data, HR has a better chance of hiring the right talent the first time around. Since this information just isn’t available on even the most detailed CV, having quality data to hand before HR even sits down to interview can only help to improve hiring accuracy and, thus, lower turnover. ​

Three reasons why skills-based hiring is accurate AND effective…​

1. It uses data​
2. It reduces bias​
3. It offers realistic job previews

Understanding candidate assessments

1. Recruitment and selection​

The tests HR can utilise at any point in the recruitment and selection process could vary depending on the desired outcomes. For example, for a vacant managerial position, HR might want to use a ‘Logical Reasoning Test’ to ascertain the level of a candidate’s critical thinking capability.​

However, opting for a test at the beginning of the hiring process not only broadens the talent pool but also allows candidates who perhaps lack experience to demonstrate their capability to achieve in the advertised role. ​

Utilising any number of assessments, such as numerical and verbal reasoning and personality tests, will give HR an independent measure of potential, removing unconscious and conscious bias.​

Types of tests HR might want to use to broaden the talent pool:​

1. Ability and aptitude tests​
2. Knowledge assessments​
3. Culture and values fit exercises​
4. Candidate motivation assessments​
5. Candidate verification assessments​

2. Personality questionnaires​

​Personality questionnaires are dynamic behavioural assessments designed to help HR ascertain whether a candidate is the right cultural fit for an organisation. They can also collect data on whether an individual has the right traits to succeed in the role they’re applying for. 

For example, you may have two similar roles, perhaps even sharing competencies, but each with very different management pressures and targets. 

With personality tests, HR can tailor personality tests specific to the role, thus identifying more readily the necessary competencies to meet each role’s specific challenges.​

3. Reskilling​

With such a yawning skills gap, many companies must reskill their employees to help meet recruitment challenges. Those who do operate an active reskilling program often see improvements in their retention, too…​

​However, before a company invests in people development programs, it’s prudent to understand how each individual learns and what types of programs your people need to develop their skills. 

Using psychometric assessments to ascertain this information helps businesses establish tailored training programs that have a lasting impact on the individual and the business as a whole.​

​Future-proof your organisation in five easy steps…​

1. Encourage virtual L&D​
2. Create tailored learning journeys based on psychometric testing ​
3. Implement E-learning programs based on individual learning styles​
4. Incentivise learning​
5. Run mentoring programs

4. Upskilling​

Like reskilling, upskilling is one of many ways to combat a perpetual skills gap. As we’ve just explained, psychometric assessments can be used to good advantage to help tailor specific learning programs based not only on the skills needed but also on the learning styles each employee prefers. ​

The benefits of using assessments to help tailor a specific learning program are huge…​

To your business:​

• Increased retention​
• Budget savings as you promote from within​
• Business growth as you close skills gaps​

To your employees:​

• Tangible career investment​
• New skill set​
• Potential for salary increases and promotions​

5. Situational judgment assessments​

Situational judgment assessments can be used when recruiting for a new role, particularly a managerial one, or they can be given to existing managerial employees to help develop observation and decision-making techniques in realistic workplace scenarios. ​

Using such assessments can greatly impact a business’s capacity to attract top talent, nurture internal talent, and anticipate problems before they manifest.​

For example, most people, if they’re honest, leave their jobs because of a manager. A good manager, on the other hand, can have the opposite effect. Utilising these kinds of psychometric assessments, HR can develop inspiring leaders who can:​

• Identify ambition​
• Predict skills gaps – and help plug them​
• Create a productive atmosphere​
• Inspire employees​
• Improve retention​
• Generate employee resilience and optimism​
• Demonstrate understanding and empathy

6. Tailored assessments using knowledge transfer​

When you combine multiple perspectives, you get a more diverse skill set. Plainly put, established employees benefit from numerous life experiences, while newer employees bring a willingness to address new challenges and embrace new technologies. ​

Using various candidate assessments, particularly personality-based ones, to extract such collective knowledge, HR can formulate tailored training programs that actively benefit every cross-section of your organisation. Taking advantage of the experience already residing within your business, HR can use multi-generational workforces to their advantage.​

Utilising tailored training programs that make the most of the vast experience your business already possesses will help:​

• Increased learning opportunities
• Bridge potential gaps in knowledge 
• Narrow the company skills gap
• Increase internal opportunities 
• Save money on recruitment and training
• Increase business productivity 
• Improve engagement and retention

The benefits of candidate assessments 

There’s a whole range of reasons why businesses should consider candidate assessments a valid part of their hiring process. Not least because they provide a means to bridge the skills gap and make very tangible improvements to every facet of the process…​

1. Utilising candidate assessments can reduce employee turnover by 5-10%* since they help a business hire the right people accurately the first time.​
2. Reduce hiring costs by up to 30% as you improve the efficiency of your hiring processes.​
3. Increase candidate engagement thanks to realistic assessments, job simulations and custom job-centric behavioural assessments.​
4. Reduce bias – both conscious and unconscious thanks to standardised forms of hiring that provide neurodiversity-friendly test experiences. ​
5. Effectively reduce your time-to-hire since candidate assessments streamline the screening process, actively speeding up the recruitment funnel.​
6. Collect accurate assessment data using reliable tests and assessments that can be used to refine future role requirements, highlighting the necessary core skills.

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Access candidate assessments with Talos360

At Talos360, we understand the benefits of skills-based hiring for modern businesses. However, most assessment providers charge HR per assessment, which can quickly become excessively expensive when recruiting for multiple roles. ​

As a result, we’ve teamed up with award-winning candidate assessment provider Talent Strengths to provide HR with accessible candidate assessment packages. ​

Using Talos ATS, you simply pay a fixed, low-cost monthly fee to access as many candidate assessments as you need. ​

With budgets remaining tight, using Talos ATS to access our candidate assessment packages as part of the wider candidate journey makes sound financial sense. Whether your organisation requires ability and aptitude tests or personality-based assessments, our tailored packages allow you to access both for one cost.