Skills-Based Hiring: The Essential Guide

Published by:
Joe Caccavale
July 19, 2021
 min read

What is skills-based hiring?

As its name suggests, skills-based hiring focuses on candidates’ key competencies and skills sets rather than credentials.

Whilst your typical process looks to test for relevant experience and academic achievement, skills-based hiring assesses the skills learned through experience, rather than for the experience itself.

Due to mass redundancies and career shifts, this approach has been picking up steam since the start of the COVID-19 pandemic.

However, this has always been our approach to hiring here at Applied and for good reason...

Why make the switch?

Hiring for skills is a more ethical and empirical means of growing your organization…

Testing skills is fairer

Unconscious bias plays a significant role in your traditional recruitment process.

Anything from a candidate’s name, address or gender can trigger biases that lead to unfair outcomes.

We, humans, have a natural tendency to resist the unfamiliar and gravitate towards those most like ourselves. 

As a result, candidates from underrepresented backgrounds are disproportionately overlooked.

Nobody likes to think of themselves as being biased but the research speaks for itself… bias is very much unavoidable unless designed out of your hiring process.
CV bias around the world

If we know that those from minority backgrounds face discrimination in the hiring process, how can we then expect them to meet extremely specific and demanding experience requirements?

Unless we break the cycle by overlooking people’s backgrounds, systemic inequality will only be perpetuated.

Skills-based hiring enables organizations to completely anonymize applications so that a candidate’s ability is the only thing being assessed.

Every candidate gets a fair shot, no matter how or where they acquired their skills.

And is also more predictive

Moving to skills-based hiring isn’t a compromise for the sake of fairness.

In fact, it’s the complete opposite!

Education and experience have some correlation with someone’s ability.

But it’s not as strong as you think.

When put to the test, these proxies have been shown to be pretty weak predictors of performance.Instead of making assumptions about candidates’ ability through these proxies, skills-based hiring tests this ability upfront.

Predictive validity chart

Instead of making assumptions about candidates’ ability through these proxies, skills-based hiring tests this ability upfront.

Anonymizing people’s backgrounds and credentials can feel like a leap of faith.

However, this information is more likely to negatively impact your decision-making rather than inform it.

By removing this ‘noise’, we’re able to be more objective and more accurate in our judgment.

You’ll also tend to find that shifting your focus to skills allows you to tap into an otherwise hidden talent pool of people who possess the skills but not the background you usually look for.

Here at Applied, for example, we’ve found that +60% of people hired through our skills-based process would’ve been missed using CVs. 

How to test for skills using data

Creating work sample questions

As you can see from the chart above - the most effective way to assess skills is to use ‘work sample tests’.

In essence, work samples are mini simulations of the job itself.

Instead of asking candidates about their skills, work samples simply get candidates to perform small parts of the job.

Here’s an example for a Product Manager role:

Question: Our engineering team has been working towards the big release of a new tool. The planned release date is the end of the day tomorrow, but there are a number of bugs in it.

What would you do?

Skills tested: Prioritization, Collaboration, Agile, Project Management

Instead of asking candidates ‘tell me a time when x happened and how you dealt with it’, work samples pose scenarios hypothetically so that the emphasis stays on skills and not experience.

You’ll notice that the work sample above has skills attached to it.

This is because we start by outlining the core skills we’re looking for and then come up with tasks or scenarios that would test these skills so that we’re able to build a clear map of where each candidate’s strengths and weaknesses lie. 

Your work samples can test a single key skill or a handful of skills like in the example above.

Here’s another example of a more creative task (for the same Project Manager role):

Question: How would you go about designing a ride-sharing app for blind people?

(note: we're interested in the process and your approach, not features)

Skills tested: Curiosity, Prioitization

These questions can be used at both the screening and interview stages:

Screening work samples

  • Use 3-5 work samples instead of CVs/cover letters.
  • Since these should be anonymous, avoid any questions that require candidates to give away their background.
  • If you’re tempted to ask about past experience, ask what candidates would do, rather than what they have done. 

Interview work samples

  • When it comes to interviewing, you can have candidates work through larger, more strategic work samples.
  • You can present candidates with a real-life project or high-level challenge that needs to be tackled (or a hypothetical one of you’d prefer) ask them how they’d approach it.
  • We’d recommend simply framing your questions as follows: Given everything you've heard about our company and our journey so far, how would you spend your first 3 months?
  • You could also use job simulation tasks - get candidates to role-play relevant parts of the job. This could be anything from a sales call to a presentation.

Although candidates with experience may have an edge over their competition, this framing allows every candidate to showcase their skills.

Experience can and often does forge the best candidates.

But this isn’t always the case.

And it’s not always industry-specific experience that makes this so.

An outsider perspective can often make someone the best person for the job.

Skills-based hiring is about leaving assumptions at the door to find genuine talent instead of screening people out simply because they don’t meet precise, proxy-based requirements. 

Data-proofing your process

Whilst there’s not much room for debate over whether or not someone has a specific degree, skills-based hiring could be subjective if not properly data-proofed.

For each of your work samples, give yourself a scale and review guide to score against.

At Applied, we use a 1-5 star scale and a simple bullet point guide.

Here’s the review guide we used for one of the work samples above:

1 Star 

- Vague, little or no effort made

3 Star 

- Some of the below points

5 Star 

- Clear reference to the current context and how to build on it. 

- A view to the big picture and how to support it

- Clear activities to get themselves up to speed, and support the mission  

As you can see, this doesn’t need to be anything overly detailed, just an overview of what a good, bad and mediocre answer might include.

If every screening and interview is given a number score, then at the end of each stage you can simply average out candidates’ scores to decide who to bring through.

For the most objective scores, we recommend having a three-person review panel at each stage.

Even when using a skill-based hiring process, individuals can still have biases.

Having multiple team members score candidates will negate these biases and has also been proven to result in more accurate judgment.

This is what the review process looks like here at Applied:

Interview question example

Overview: our skills-based hiring process

Decide on the skills you’re looking for

  • This can be a mix of 6-8 soft and technical skills.
  • Be sure to list these (instead of background requirements) in your job description.

Think of scenarios or tasks to test these skills

  • These can either be everyday tasks or rarer changes that may come up. 
  • You can draw on things that have come up in the past or that are on the horizon.
  • You can test multiple skills with one scenario.

Pose hypnotically to create work samples

  • Instead of ‘tell me a time when’ questions, lay out the context and ask candidates how they would approach the task.
  • You can ask candidates to explain their approach, prioritize from a list or simply perform the task is possible (most relevant for writing tasks).

Give yourself scoring criteria 

  • You’ll need to create a scale to score against.
  • Write a few bullet points for each end of the scale.

Use multiple reviewers

  • Three has been proven to be the magic number.
  • The more diverse the panel, the fairer the scores will be.
Debiased Hiring Bundle

Applied is the essential platform for debiased hiring. Purpose-built to make hiring empirical and ethical, our platform uses anonymized applications and skill-based assessments to identify talent that would otherwise have been overlooked.

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