Why Skills-Based Hiring is Good for the Economy and Your Team

With millions of job openings and the national unemployment rate just under 4%, many employers are scrambling to fill open roles.

They’re faced with two options: spend significant resources to source and interview the limited supply of qualified candidates, offer them an above-market rate salary, and then still spend months training them – or, adjust the required applicant qualifications to expand the pool of potential candidates.

Today’s blog will dive into why the latter, often referred to as skills-based hiring, is the best option for businesses and our economy.

Even the state of Massachusetts is jumping on board. Governor Healey recently announced a new executive order that aims to eliminate unnecessary education requirements from all state government job postings. The initiative, titled “Lead by Example” instructs all executive departments and agencies to utilize skills-based employment practices when hiring, training, and retaining employees.

“This Executive Order directs our administration to focus on applicants’ skills and experiences, rather than college credentials. It will expand our applicant pool and help us build a more inclusive and skilled workforce than ever before. Our administration is leading by example, and we encourage the business community to join us by adopting similar skills-based hiring practices.”

-Governor Laura Healey

A New Era of Upskilling Calls for Skills-Based Hiring

Facing limited applicant pools, more and more businesses are rethinking what actually makes a qualified candidate. With college more expensive than ever, fewer Americans are able to shell out the cash for a 4-year degree – but that doesn’t mean they aren’t ready to work.

In fact, upskilling is now more accessible than ever. Many online programs enable individuals to expand their skill sets from the comfort of their own home. Take Google for example. Their Grow with Google program, offers training, tools, and resources to help you grow your skills, career, or business. From cybersecurity to data analytics, these types of programs offer faster tracks to acquiring technical skills than a traditional 4-year university degree.

RapidAscent is another example of a fast-track online training program. This accelerated job readiness training program partners with Boeing and prepares individuals who want to enter the cybersecurity field.

Why Skills-Based Hiring Benefits the Economy

Skills-based hiring not only benefits candidates by expanding their career prospects, it also has far-reaching positive effects on the overall economy. By prioritizing skills over traditional markers of qualifications, such as educational background or work history, skills-based hiring creates a more equitable landscape for job seekers. This shift in hiring practices fosters upward mobility and opens doors for individuals who have previously faced significant barriers to entry.

Consider the case of individuals with a criminal record. Despite the abundance of open positions (9 million in December alone), the unemployment rate for those with a criminal record is about 30%. Many people struggle to secure employment due to their past. However, skills-based hiring presents an opportunity to tap into this underutilized talent pool. While it’s not about placing individuals with a criminal past in highly-sensitive roles, there are ample training programs available to equip folks with the necessary skills for various modern jobs. This approach focuses on providing opportunities for growth rather than dwelling on past mistakes.

Legislation like the clean slate laws passed in states such as New York,  Colorado, California, and Michigan further supports this inclusivity by sealing certain criminal records after a specified period, enabling individuals to move forward with a clean slate.

Skills-based hiring also boosts our economy by reducing income inequality. By assessing candidates solely based on their abilities to perform the job, rather than their educational or professional backgrounds, skills-based hiring levels the playing field for individuals from diverse socio-economic backgrounds. Reducing these barriers not only narrows the income gap but also pumps more money back into the economy, fueling economic growth.

Lastly, diversity in the workforce, fostered by skills-based hiring, drives innovation. A wider pool of applicants brings a broader range of perspectives, experiences, and ideas to the table. This diversity of thought leads to increased innovation within companies, spurring economic development.

In summary, embracing skills-based hiring practices is a win-win for candidates and our economy. Now, you may be wondering what it means for businesses. More on that next.

Why Skills-Based Hiring Pays Dividends for Your Businesses

In light of Massachusetts’ recent executive order, it’s clear that skills-based hiring is gaining momentum, and for good reason—it’s not only beneficial for the economy at large but also largely advantageous for businesses. Here’s how:

First and foremost, companies that prioritize skills-based hiring unlock deeper access to highly skilled and specialized talent. By focusing on the specific skills and competencies required for the job, businesses more easily bring in employees who can hit the ground running and contribute meaningfully from day one. This not only boosts productivity but also fosters a culture of excellence across their teams.

Additionally, skills-based hiring promotes employee retention and loyalty. When companies invest in hiring individuals based on their skills and abilities rather than just their previous job titles or backgrounds, they’re more likely to attract candidates who are genuinely interested in the work and committed to the company’s mission. This leads to less job-hopping and reduces the need for constant recruitment efforts, ultimately saving time and resources.

Lastly, embracing skills-based hiring leads to tangible improvements in business performance. By assembling teams composed of individuals with diverse skill sets and areas of expertise, firms can better tackle challenges and innovate more quickly. This not only enhances a company’s competitive edge but also positions it for long-term success in an ever-evolving business landscape.

Reskilling: the Most Important Skill for the 21st Century

As we’ve covered above, skills-based hiring represents a paradigm shift in the way we evaluate and harness talent, but it also offers a chance for individuals to reimagine their career trajectories.

In an era defined by rapid technological advancement and AI, traditional job roles are changing quickly. As such, it’s high time that we all reassess our skills and adapt them as needed to stay relevant and meet the demands of emerging roles.

With automation and AI reshaping industries across the board, skills-based hiring offers individuals the opportunity to break free from traditional career paths and explore options they never thought possible. Exciting, right? We certainly think so.

For example, a customer service representative armed with strong communication skills and a knack for problem-solving may find new and more promising opportunities in roles that require training AI-driven chatbots or virtual assistants. By honing their ability to effectively communicate with both human and AI counterparts, they can carve out a niche in emerging fields and forge a new career path.

So there you have it. Skills-based hiring is good for you, good for businesses, and good for the economy. Want to learn more about this triple threat? Schedule time with one of our Skillcentrix experts to learn more about building a comprehensive skills strategy in your business.