For more than a century, traditional hiring practices have prioritised experience above skills. Managers compare a series of similar CVs and recruit based on qualifications, job titles and industry track records. But as the world of work rapidly evolves – influenced by digital transformation, globalisation and changing business models – conventional recruitment methods could erode your competitive edge.

Adecco research shows that 45 per cent of organisations believe that most roles needed by 2030 do not yet exist. To remain agile and productive, SMEs need to grow future-ready expertise without knowing exactly how they will put it to work. It’s a complex Catch-22 situation, particularly for smaller businesses with limited recruitment and development resources.

To complicate matters, many companies are unsure of their existing skill base. A McKinsey study found that less than half of respondents have a clear sense of their organisation’s current skills. Additionally, recent PwC research shows that more than 35 per cent of workers surveyed said they have skills that are not obvious from their CVs or job histories.

Skills-based hiring bridges the gap, offering a forward-looking approach to talent acquisition. Evaluating candidates based on relevant skills and abilities – instead of education or past positions – means companies can drive innovation and create a capable workforce, prepared for whatever the future brings.

The benefits of skills-based hiring 

Traditional recruitment methods favour candidates who hold the suitable qualifications or experience, but may not actually be right for the job. By contrast, skills-based hiring finds best-fit employees by sourcing core capabilities for current and future needs.

At the interview stage, it uses techniques such as skills assessments, simulations and job-related tasks to spotlight applicants’ practical know-how and potential to succeed in a role, often with impressive results.

According to McKinsey research, hiring for skills is five times more predictive of job performance than hiring for education and twice as predictive as hiring for work experience. Focusing on candidate capabilities offers a range of benefits across the recruitment cycle, helping organisations cut costs and boost staff loyalty.

According to a TestGorilla survey of 1,500 companies using skills-based hiring:

• 88 per cent of businesses reduced mis-hires
• 74 per cent reduced their cost-to-hire
• 82 per cent reduced total time to hire
• 89 per cent increased employee retention

Skills-based hiring also significantly widens the talent pool by eliminating barriers such as industry-specific experience, personal networks and rigid qualification prerequisites. This broader candidate supply helps businesses engage with well-suited yet excluded individuals and cultivate a more inclusive, diverse workforce.

From traditional hiring to transferable skills

Recognising the value of transferable skills is an important first step towards capability-based hiring. According to the World Economic Forum’s Future of Jobs Report 2023, transferable skills – from self-awareness to analytical thinking – dominate the top 10 most sought-after skills, outpacing traditional qualifiers such as job history or sector experience.

Here are five ways to shift your focus to maximise candidate potential and ready your business for future requirements:

1. Know the skills you have and the skills you don’t

Before you hire, scope out skills within your business and identify learning and development opportunities. A skills ontology can help. This structured framework logically organises your employees’ skillsets according to three intersecting areas:

• Which skills relate to each role
• How these skills relate to each other
• How the skills relate to different roles

Skills ontologies quickly highlight your organisation’s skill hierarchy and those required for individual roles. They can also pinpoint gaps, allowing you to hire, plan and manage more strategically.

2. Re-engineer job descriptions

To make your job descriptions work harder, engage with hiring managers to identify indispensable skills for new recruits. Define what they need to perform effectively in the advertised role and establish a realistic timeline for demonstrating these skills.

Once you have this, rewrite job descriptions to focus on critical capabilities, rather than “nice to haves” or those that demand extensive on-the-job experience. Avoid exhaustive lists of requirements, which could deter potentially favourable candidates.

3. Identify and target transferable skills

When interviewing, ask a combination of competency-based questions and open-ended behavioural questions that reveal how candidates react in certain situations and their potential team fit. You can also create accessible opportunities by recruiting for transferable skills. This broadens the talent pipeline and promotes a more flexible and dynamic workforce.

Top transferable skills include:

• Analytical thinking
• Curiosity and lifelong learning
• Dependability and attention to detail
• Technological literacy
• Resilience, flexibility and agility
• Empathy and active listening
• Creative thinking
• Motivation and self-awareness
• Leadership and social influence

4. Implement skills assessments

Applying employee assessments as part of the hiring process can effectively screen candidates for the skills and capabilities required for a particular role. These evaluations can vary from written tests and practical exercises to behavioural interviews.

By conducting assessments, hiring professionals can ensure that candidates are screened based on their abilities rather than solely on educational background or previous job titles. This approach enhances the likelihood of selecting candidates with the necessary skills to excel in the role.

5. Adopt a dynamic approach to skills development

Large-scale upskilling programmes can be costly and time-consuming for SMEs. Instead, aim to create flexible learning paths based on your staff’s specific needs. A personalised approach accelerates skills acquisition while enhancing employee satisfaction and retention, so allow your team to choose training modules tailored to their knowledge gaps and career goals.

Prepare for a skills-centric future

Traditional recruitment methods are no longer fit for purpose, holding businesses back from genuinely innovative, inclusive and adaptive workforces. To stay agile, companies need to adapt their hiring processes.

Skills-based hiring is set to become an essential element of corporate strategies. By embracing a capability-based recruitment ethos, you can intelligently navigate today’s talent shortages and confidently prepare for tomorrow’s challenges.

Niki Turner-Harding is the UK and Ireland country head at Adecco.