70% of Companies Chose Skills-Based Hiring Methods Last Year. Should You?

Skills-based hiring has gained popularity in recent years as a fresh approach to recruitment. Promising an end to degree requirements, proponents said it would lead to more reliable and equitable hiring practices. In today's competitive job market, where critical skills are scarce, and the workforce is increasingly global, this approach allows companies to find the best talent based on proven abilities, not just resumes or college degrees. But has the new trend really taken hold, and does it deliver on its promises?

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Strong Results for Companies Embracing Skills-Based Recruitment

Research into the skills-based approach has shown clear benefits for both employers and job seekers. Companies that use this method report a faster, fairer, and more cost-effective hiring process, leading to fewer bad hires. A survey conducted by Test Gorilla found that 88.8% of employers believe that skills-based hiring leads to better success in the role than resume-based hires.

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Delving into the reasons for this success, the same survey reported that employers using skills-based hiring have seen a dramatic reduction in mis-hires, time-to-hire, and cost-to-hire. Additionally, 89% of these companies saw an increase in how long their employees stay with the company. All of these statistics point to savings in recruitment and training costs as well as a stronger, more committed workforce. 

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Is This the End of the College Degree?

The rise of skills-based hiring marked a response to the recent era of “degree inflation.” As educational attainment surged in the United States, so too did the degree requirements in job postings. Employers started demanding degrees simply because they could, not because they were actually required for the job. 

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This meant that talented people who didn’t have a degree were automatically shut out — leading to bias against groups that couldn’t afford or access higher education. A 2017 study showed that marginalized people, women and younger people were less likely to have the required degrees and experience.

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For job seekers, the chance to be hired based on their skills without being blocked by degree requirements opens doors to exciting new possibilities. As McKinsey partner Bryan Hancock explained in a recent interview, “If [a college degree] is not needed for a job, not having one shouldn’t be a barrier to somebody getting the job.” This unlocks potential for millions of people, creating a more diverse workforce and giving companies the talent they need to be successful in the future. 

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However, there's still work to be done to fully reap the benefits of this approach. While the data shows a positive trend, companies need to take concrete steps to ditch outdated practices and fully embrace skills-based hiring. There is evidence of a shift — between 2014 and 2023, the number of jobs where companies dropped degree requirements nearly quadrupled. But not every company that removes degree requirements from their job ads actually hires more people without degrees. 

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Research from Harvard Business School shows that about 45% of companies seem to be simply making a change on paper, not in their actual hiring practices. “Simply dropping stated requirements seldom opens jobs to those who don’t have a college degree,” the report states. This signals that hiring managers are still cautious in taking on workers solely based on skills. It may also indicate that having a college degree is correlated to the building of more job-specific skills, either through studies or later work experience.

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Should Your Company Adopt Skills-Based Hiring?

The success stories of companies that truly embrace skills-based hiring are inspiring. Companies leading the way in this approach have seen significant benefits. When they hire non-degreed workers for jobs that previously required a degree, these employees stay with the company 10% longer than their colleagues who have degrees. 

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Skills-based hiring may work best in certain sectors, such as technical industries where talent scarcity overlaps with rapidly evolving needs. Take, for example, Boeing's experience in addressing the challenges of cybersecurity talent acquisition. Despite the allure of college graduates with degrees in computer science, Boeing found that traditional educational pathways often fell short of meeting the real-world demands of cybersecurity roles. Seeing the need for more focused training in practical skills, Boeing created a highly competitive cybersecurity apprenticeship program that prioritized skills over formal degrees.

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Developing reliable hiring practices to find, assess, and validate skills as part of the interview process is not easy, though. As educational writer Derek Newton explained in an article for Forbes, there are “major business costs of moving to skills-based hiring. Developing and deploying good, fair, and safe tests is not easy or cheap.” So ditching the college degree altogether might not be the right move for every company.

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Conclusion

There is powerful evidence that skills-based hiring offers real advantages to companies and job-seekers alike. This shift has the potential to unlock talent pools that were previously overlooked, creating a diverse and innovative workforce that's ready for the future. Though obstacles remain and skills-based hiring is not appropriate for every role, it is a strategy worth investigating. By embracing skills-based hiring in the right situations, businesses can not only secure the best talent available but also contribute to creating a fairer and more inclusive job market for everyone.

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Sources

Test Gorilla

McKinsey & Company

Harvard Business School

Forbes

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