The Credentialization of Skills-Based Hiring

Deprioritizing college degrees was a good start, but emphasizing credentials has its problems when hiring for skills.

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Jun 29, 2023

According to a new initiative between the Society for Human Resource Management and the Charles Koch Foundation, skills-based hiring is the future of work. “Businesses looking to succeed going forward must continue to evolve their hiring practices,” said Wendi Safstrom, president of the SHRM Foundation. “The U.S. has entered a skills-based economy. And to fit this new environment, employers will need to adopt skills-based hiring practices in their HR departments.”

SHRM’s Skill-Based Hiring Initiative

Doing many jobs doesn’t actually require degrees or licenses, but companies will use such traditional credentials as proxies for skill. SHRM Foundation’s aim, however, is to “engage employers to adjust hiring attitudes and processes toward individuals pursuing credentials and certifications instead of two- or four-year degrees.”

Indeed, in 2022, SHRM found that 45% of U.S. workers already have some sort of alternative credential (such as a SHRM-CP certification), while 49% of people without an alternative credential are interested in obtaining one.

Such certifications appear regularly on resumes, and recruiters must determine the value of these certifications to evaluate the candidate. As SHRM points out, they are “ any certification, microcredential, badging, apprenticeship, or other assessed learning opportunity beyond a 2- or 4-year college or university degree that formally indicates a worker has acquired specific skills or competencies.”

But such formal credentials are not the sole way of assessing candidates when it comes to skill-based hiring. Merely replacing degrees with credentials does not constitute hiring for skills.

For organizations looking to diversify their employee population, basing candidate evaluation on skills beyond credentials can help. SHRM found that 81% of executives, 71% of supervisors, and 59% of HR professionals believe doing so can “uncover untapped talent.”

How Recruiters Are Using Skills-Based Hiring Today

Tamara Olson, workforce development chief at the Small Business Administration, explains, “I work in IT, and while certifications are helpful to see on a resume, skills assessments are the best tool we have identified thus far. Some assessments are more basic, and others are very sophisticated, especially for cyber professionals. I have found the bigger challenge is managers understanding how to prioritize staffing needs when balancing a rapidly evolving IT landscape with long-range planning and strategic priorities.”

Helping managers understand their hiring needs and helping them evaluate candidates is a core function of the skill-based hiring trend. It cannot be done easily or overnight.

“There needs to be an investment in training on effective interviewing,” says Jennifer Powell, former director of people and culture at The Dupont Circle Hotel. Powell asks, “How many managers know how to conduct a strong interview and assess responses?”

In other words, you cannot just tell managers to evaluate skills and expect them to understand how. Talent acquisition professionals must be at the forefront of training managers on hiring.

Amy Renhard, CEO of Trillium Hiring Services, a consulting company that helps startups learn to hire, wants people to undergo project-based skill evaluations. She’s not looking for “random trivia knowledge in the skill” but a “project similar to our work.”

The key is to find a project that is similar to work a candidate will do (could even be a recent project if it’s not sensitive), won’t take more than an hour, and has a lot of ways it could be done,” Renhard explains. She adds, “Then create a scorecard to measure the success of the outcome,” notably pointing out that the goal should not be to gauge whether it was done the way a hiring manager would necessarily expect it to be done.

Skills-Based Hiring Toolkit

Putting aside credentials, SHRM also created a 42-page toolkit that you can download for free. It discusses a 12-step plan to increase skills-based hiring.

  1. Aligning job duties with skills. This includes revamping job descriptions, identifying core competencies, and eliminating unnecessary credential requirements.
  2. Changing your sourcing channels. This shift in sourcing requires recruiters to look outside traditional talent pools.
  3. Assessing hard and soft skills. Before you can evaluate if a candidate has the necessary skills, recruiters and hiring managers must complete Step 1 and then “construct or purchase predictive assessments to effectively measure” the skills.
  4. Current job-market trends. Recruiters must be on top of what is happening in their industry and the job market as a whole.
  5. Industry-specific employee value propositions. This is to create a compelling reason (beyond salary) for job seekers to join your company.
  6. Formal upskilling programs. This is not just an external recruitment tool; it also looks toward career progression and filling roles internally. SHRM recommends doing a skills-gap analysis and creating training programs around that.
  7. Differentiated job postings. Job postings must “consider the realities of the current job market.” This means looking at how your job postings can be better than your competitors and more accurately reflect the job and the company culture.
  8. Interviewing scorecard. Use a scorecard approach to ensure that you evaluate the candidates fairly and accurately.
  9. Compelling employee benefits. While the other steps are in the clear purview of recruiters and hiring managers, recruiters are rarely the decision-makers regarding employee benefits. Knowing what a robust benefits program looks like can help recruiters advise decision-makers.
  10. Behavioral interview guide. SHRM writes: “A behavioral interview guide provides a structured process that helps interviews avoid making decisions based solely on a gut feeling.” Using this can help avoid illegal hiring discrimination.
  11. Accelerating the hiring process. By reducing the hiring time, you can help retain highly qualified candidates who may be interviewing in multiple places.
  12. Case studies of successful skills-mindset adoption. Don’t just push forward without looking at successes and failures in other organizations. See what works and what does not.
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