What is skills-based hiring?

- Skills-based hiring is a transformation in how we look at employee value. It encourages us to look past through traditional requirements related to titles, education, and experience, to instead focus on what skills an individual has that can be applied today. This approach will also help with your retention efforts. The highest rate of turnover occurs in the first 90 days of employment. If employees don't have the skills needed or can't be trained quickly, then they'll most likely be out of the door in short order. A skills-based hiring approach will help to ensure that you're hiring qualified people, thereby lowering your turnover and keeping employees in roles they're most suited to. When you're getting started, put skill testing at the beginning of the hiring process. For example, years ago, I helped a real estate investment firm hire a new chief financial officer. Since the applicants were all CFOs, we first tested them on their knowledge of general accounting principles otherwise known as GAP, and guess what? Half of them tested better on GAP than the other half. Without doing this testing we would've not known their GAP skills. We would've guessed at them. We may have hired somebody in the bottom 20% of those skills and not even known it until it was too late. Those who passed our top 20% threshold moved on. There's a wide range of skill testing available. Hundreds of providers have both online and physical testing programs. There are tests for technical skills as well as substantive knowledge. You can take people through case scenarios. If it's a physical skill, you can have them build or repair something. Every position has skills that can be tested for. If you cannot find an online test that fits your precise need, you could sit down and create one. You could start by identifying 10 questions that every one of your current employees should be able to answer. Knowledge is often an employee's greatest skillset. When designing a hiring test, just be sure to consider skills measurement. What grade or percentile ranking is required as a minimum to go through the application process? Do you simply need to get a passing grade of say, 65, or do you want them to test in the top 10% of all rankings, which may be a grade of 90? In round two of that CFO search, we tested them again but this time on their ability to use Excel spreadsheets where most of the financial planning for their real estate deals was done. Again, half of the applicants tested better than the other half did. Those who passed the 20% threshold moved on again. We then gave the top three testers a case study to go through using Excel spreadsheets. After this, we had the two finalists do a personality assessment to help us with our interviewing. My client hired a great CFO, and that experience was an eye-opener for all of us. It was the last time I valued title or experience over testing specific skillsets. Even if you don't currently have an opening, you can use a skill test to challenge potential applicants. For example, you could say, take this skill test and see if you're good enough to work at our organization. If you pass the threshold, we'll be in touch. If there's no current openings, we'll get in touch with you as soon as there are. A small note about remote assessments. We must watch out for people trying to hack the tests or gaming it somehow. Many test providers have what's known as video proctoring. Make sure any remote testing has some integrity to it. Right now, I encourage you to make a list of how a skills-based hiring approach can benefit your organization. Also, consider what tests you can use with your next hire to begin the hiring process.