Skills-Based Hiring: What is it, and Why it matters

Skills-Based Hiring: What is it, and Why it matters

It appears the recruitment landscape is undergoing a massive transformation. Could it be? A shift from degrees to demonstrated skills, where what you can do can speak louder than what’s on paper?

For decades, employers leaned on rigid degree requirements and minimum years of experience to determine which candidate was most qualified. Move over fancy framed degrees, there’s a new litmus test for hiring in town. Wow, that was a bad joke, I’ll see myself out. In all seriousness the rise of skills-based hiring is changing how organizations identify, attract, and retain talent and to me, this is exciting.

It’s redefining what qualified truly means. Back in February 2022, Harvard Business Review highlighted that many companies were already moving away from degree requirements and toward skills-based hiring, particularly in what they consider middle-skill jobs, a shift proving beneficial for both employers and employees. So, what is it?

Skills-Based Hiring

Skills-based hiring is a recruitment approach that prioritizes a candidate’s capabilities over credentials. Instead of focusing on degrees, job titles, and years of experience, employers evaluate candidates based on what they can actually do. For all the old school recruiters in the room, think of this as a refresh on evaluating KSA’s. To measure this, employers are using a series of tools:

-       Skills assessments

-       Candidate work portfolios

-       Certifications and micro-credentials

-       Real-world work samples and simulations

Through shifting the focus from credentials to capabilities, skills-based hiring opens doors for diverse talent, supports equity and inclusion, and helps employers find the right people faster in a rapidly changing workforce. According to the Human Resources Professionals Association (HRPA) in June 2024, nine out of ten Canadian jobs will require digital skills within the next decade. What’s interesting, and going to be difficult for many of us to get our heads around, is that many of these skills aren’t coming from formal post-secondary programs, candidates are increasingly turning to online learning, certifications, and self-directed upskilling.

Isn’t This Just Behavioural Event Interviews?

Well, yes… but also no. As one of my professors (soft credential dropping?! wups) used to say, “It depends.” It drove me crazy at the time, but in this case, it’s true, and on the surface, it feels a little like splitting hairs. While both approaches aim to uncover what a candidate can do, the way they get there is very different:

In short:

-       Behavioural interviews ask candidates to describe what they’ve done in the past.

-       Skills-based hiring asks candidates to demonstrate what they can do through measurable examples.

The Evolution: Then vs. Now

Fifteen-plus years ago, as millennials entered the workforce in droves, recruitment success was almost always tied to having a diploma. Employers leaned heavily on university and college credentials as the primary measure of capability, followed secondly by your ability to interview well.

I can remember sitting with hiring managers in the early 2000s and 2010s who not only placed post-secondary education as the prime driver for selecting candidates, they leaned toward a university grad over a college grad, even when the latter often had more relevant work experience. They simply felt the “right” credential carried more weight.

But we now know this approach risks overlooking high-potential candidates. One of my favourite TED Talks, Regina Hartley’s talk on “Why the best hire might not have the perfect resume” highlights that when organizations only hire people who start with inherent advantages, they miss out on candidates who grind it out to succeed. I’ve shared this TED Talk often, and while it sparks great conversations, feedback has been mixed, it may hit a nerve for some.

Fast-forward to today: Gen Z is entering the workforce with a completely different mindset. Many have pursued alternative education paths, online certifications, boot camps, micro-credentials, or built their skills through freelancing, side projects, and self-directed learning, or the ever-present side hustle.

At the same time, employers are facing talent shortages and rapid technological change. The result? Competencies now matter just as much as, and often more than, credentials alone.

Impact on Entry-Level Hiring

One of the biggest disruptions is happening at the entry level. If we can take a moment to say, thank goodness, it’s about time!

Job postings that once demanded “2+ years of experience” for entry-level roles are becoming outdated. And let’s be honest: candidates have been asking for years, “How do I get experience, if no one will give me the experience?”

Skills-based hiring flips the script:

-       Employers define the specific skills needed to succeed rather than relying on arbitrary experience requirements.

-       Candidates can demonstrate their skills through projects, portfolios, or assessments, not just resumes and interviews.

-       Opens doors for career changers and early-career professionals who have the tools but lack “traditional” experience, and new immigrants.

This shift makes recruitment more inclusive, efficient, and competitive, especially for roles in fast-changing industries.

Why This Matters for Employers

In November 2022, McKinsey found that adopting a skills-based approach can help employers widen their talent pools and improve retention, even during periods of economic uncertainty. Companies adopting skills-first strategies benefit in multiple ways:

-       Access larger talent pools by removing outdated barriers

-       Improve diversity and equity by valuing unconventional paths

-       Reduce unintended hiring bias

-       Hire faster and smarter by aligning capabilities directly with business needs

-       Shorten training timelines by hiring candidates who already demonstrate core competencies

-       Build more defensible recruitment practices valued by boards, shareholders, and regulators

This isn’t a passing recruitment trend, it’s a structural shift reshaping the future of work.

Final Thoughts

Organizations that adapt now will be better positioned to attract and retain top talent in an increasingly competitive market. According to LinkedIn’s 2025 Talent Insights report, skill requirements for the same roles have already shifted by 40% since 2016, and are projected to change by 72% in the next 5 years.

Organizations who cling to outdated, credentials-first hiring practices risk missing out on the candidates who can help them innovate, grow, and stay ahead of the curve.

And although this article highlights benefits for Gen Z, the advantages of skills-based hiring extend far beyond one generation. Whether you’re redefining your career, changing paths, entering the workforce for the first time, immigrating to a new country, or returning after time away as a stay-at-home parent, this shift should have a major impact for candidates and organizations.

Skills-based hiring is opening doors for talent at every stage of life. Employers who embrace this shift will be the ones who win the talent race.

Ready to rethink your recruitment strategy and how you can weave skills-based hiring into your practices?

Reach out to Temple Leadership Consulting Inc. to see how we can help you revamp your recruitment tools, employer brand, and hiring practices to stay ahead in the skills-based economy.

Email us: hello@templeleadershipconsulting.com