What Is Skills-Based Hiring?

Talent Acquisition

6 minutes

September 15, 2025

Written by Hirex

Companies face unprecedented hiring challenges in today's rapidly changing job market. A staggering 90% of business leaders acknowledge existing or anticipated skills gaps within their organizations over the next five years.

With industries evolving astonishingly, traditional hiring methods are proving inadequate. The rise of automation, artificial intelligence, and digital transformation is shaping the workforce, and businesses must adapt to stay ahead.

The Rise of New Roles and the Need for Change

It’s estimated that nearly 97 million new jobs will arise from technological advancements and the shift from human to machine labor. Positions like robotics engineers, energy analysts, and manufacturing specialists are seeing exponential growth—24% higher in 2022 compared to 2021 alone.

But how do you recruit for positions that don’t yet exist? How do you keep up with emerging skills while ensuring your talent pipeline remains robust? The answer lies in a forward-thinking hiring strategy: skills-based hiring.

What is Skills-Based Hiring?

Skills-based hiring is a recruitment approach that focuses on a candidate's practical abilities instead of traditional points such as degrees and previous job titles or experiences.

Governments and corporations are acknowledging the effectiveness of skills-based hiring. For example, Maryland has eliminated degree requirements for numerous positions, opening doors for capable individuals who lack formal higher education.

This strategy supports the idea that skills can be acquired through various methods—such as on-the-job experience, online courses, certifications, boot camps, and even self-directed learning. A paradigm shift enables organizations to explore a wider, more diverse talent pool.

Industry leaders such as Walmart, IBM, and Boeing have adopted this strategy, emphasizing skills over credentials.

Why More Companies Are Adopting Skills-Based Hiring

In contrast, skills-based hiring evaluates a candidate’s ability to carry out tasks relevant to the position.

The limitations of traditional hiring are increasingly clear. Resumes typically emphasize educational backgrounds and years of experience—elements that don’t always align with job performance.

Combating Talent Shortages

Due to a lack of qualified workers, an estimated 85 million jobs may remain unfilled by 2030. While the technology, healthcare, and manufacturing sectors face the most significant shortages, companies worldwide struggle to fill critical positions.

Skills-based hiring enables businesses to address these gaps by focusing on practical competencies instead of strict educational requirements.

Creating New Opportunities

Many talented individuals are frequently overlooked simply because they lack a specific degree. Skills-based hiring levels the playing field, allowing capable professionals to showcase their expertise. This approach benefits job seekers and improves workplace diversity, fostering innovation and productivity.

Addressing Skills Gaps

Jobs that didn’t exist a decade ago—such as AI prompt engineers and TikTok marketers—now require specialized knowledge. Hiring based on skills allows businesses to identify and cultivate essential talent.

Industries are experiencing significant skills shortages, with one in four organizations hiring for roles that demand new competencies.

How to Implement Skills-Based Hiring

Transitioning to skills-based hiring doesn’t happen overnight, but starting with small changes can yield significant results. Here’s how companies can begin:

1. Remove Degree Requirements

Start by eliminating degree requirements from job descriptions where they aren’t necessary. Instead, outline the specific skills required for success in the role.

2. Utilize Skills Assessments

Pre-employment tests can provide objective insights into a candidate’s abilities. These assessments help companies gauge technical skills, problem-solving abilities, and adaptability more effectively than traditional resumes.

3. Revamp Interview Strategies

Shift interview questions to focus on problem-solving and practical scenarios. Instead of asking about past job titles, ask candidates to demonstrate how they would handle real-world challenges relevant to the role.

4. Implement Continuous Learning

Encourage professional development within your workforce. Providing upskilling opportunities ensures employees stay ahead of industry trends and continue to add value to the organization.

5. Leverage Technology in Hiring

Companies can benefit from AI-driven hiring platforms that analyze candidates’ skills and match them with the most relevant positions. Platforms like Toggl Hire, for instance, help businesses streamline hiring by focusing on practical competencies rather than traditional resumes.

The Benefits of Skills-Based Hiring

Adopting a skills-based hiring approach offers numerous advantages for both employers and job seekers:

For Employers:

• More Effective Hires: By assessing real-world competencies, businesses can find the right fit for each role and reduce turnover rates.

• Streamlined Hiring Process: Pre-employment testing and competency evaluations expedite hiring decisions, cutting down on lengthy recruitment cycles.

• Higher Retention Rates: Employees hired for their skills are more likely to excel and stay engaged, improving job satisfaction and retention.

• Diversity and Inclusion: By removing unnecessary barriers, companies can attract a broader range of candidates from different backgrounds, fostering a more inclusive workplace.

• Workforce Flexibility: A skills-based approach enables employees to transition across different roles within the company, ensuring adaptability in a changing job market.

For Job Seekers:

• More Opportunities: Individuals without formal degrees gain access to positions previously out of reach.

• Career Growth: Employees can advance based on their capabilities rather than just tenure or credentials.

• Smoother Career Transitions: Workers looking to shift industries can leverage their transferable skills to secure new opportunities.

• Better Job Security: Employees with specialized skills are more likely to remain in demand, reducing the risk of job displacement.

Real-World Success Stories

Several organizations have already witnessed the benefits of skills-based hiring:

• Google has removed degree requirements for many technical roles, focusing instead on candidates’ coding and problem-solving abilities.

• Proxify, a tech recruitment firm, used a skills-based approach to reduce its hiring time to 12.5 days. This approach helped it efficiently process thousands of applications.

• IBM’s New Collar Jobs Initiative emphasizes hiring workers based on skills rather than degrees, opening doors for candidates with alternative education backgrounds.

The Cultural Shift: Changing Mindsets in Hiring

To successfully implement skills-based hiring, organizations must embrace a cultural shift.

Hiring managers and talent acquisition teams must agree to evaluate candidates based on demonstrated abilities rather than traditional resume benchmarks.

This approach requires investment in technology, data-driven assessments, and a commitment to fair and objective hiring practices.

A report from Fortune revealed that 92% of companies find skills-based hiring more effective than traditional resume screening.

Businesses unlock a vast pool of untapped talent by focusing on candidates' abilities rather than their education or work experience.

How Can Hirex Help You Through Your Skills-Based Hiring Journey?

Hirex is an all-in-one hiring platform where you can find the top talent. 🚀 The platform has many useful features, such as the Candidate Scorecards feature, which is mainly designed to rate candidates according to their skillsets and suitability for the role you are searching for.

With the Hirex team’s professional help and guidance through your hiring journey, you will have minimum chances to miss the candidate with the most suitable skill set based on your profile search.

The Future of Hiring is Here

As technology reshapes the job market, businesses must adapt to remain competitive. Skills-based hiring is not just a trend—it’s a necessary evolution that ensures companies can meet workforce demands and foster innovation.

Businesses can build stronger, more resilient teams prepared for tomorrow's challenges by shifting hiring practices to focus on capabilities rather than credentials. The time to embrace skills-based hiring is now.

Conclusion

Like technology, businesses and hiring practices are evolving rapidly. Therefore, staying current with best practices and implementing changes when necessary is crucial. Otherwise, your business could be at risk of not complying with the new regulations.

Skills-based hiring is a new trend where recruiters focus primarily on skills rather than educational requirements or other factors like certifications or prior experience. A candidate may possess all the necessary skills for the job but might lack sufficient expertise or education. So, should that result in a no? If you embrace skills-based hiring, it shouldn’t!