Why Organizations are Hiring for Skills Over Experience

In a new report, McKinsey & Co. delves into how organizations can better bridge the gap between talent demand and supply through skills-based matching, which assesses candidates based on their holistic skill set rather than just industry experience or educational credentials. Veteran search professionals from Right Executive Search, Shelli Herman and Associates, CIO Partners, ZRG, and Alexander Hughes International weigh in. It is a Friday exclusive!

April 23, 2021 – COVID-19 has forced companies to rapidly adapt to changing talent needs. More than 70 million U.S. workers filed for unemployment insurance from March through December last year. Now, more organizations are converting what were furloughs early in the pandemic to permanent job losses, according to a new report by McKinsey & Company. “While many companies have parted ways with workers, others—from E-commerce firms to grocery stores—are looking to bring more on,” the report said. “Many are struggling to fill open roles. This should spark organizations to rethink how they bridge the gap between talent demand and supply,” the report concluded.

Enter skills-based matching, an approach that assesses candidates based on their holistic skill set (including adjacent skills across industries), rather than just industry experience or certain educational credentials. According to McKinsey, assessing candidates based on skills, instead of their last job title, can help fill critical roles with the best talent.

The benefits of skills-based hiring include:

1.) Accessing new talent sources by thinking beyond educational requirements. Too often, educational requirements create an unnecessary barrier to in-demand jobs. According to recent McKinsey research, nearly 90 percent of postings in growing industries like technology, healthcare and business management require a bachelor’s degree, even though many of these jobs can and should be viable options for those without advanced education. Skills-based matching significantly expands the available talent pool for open roles.

2.) Reducing unconscious bias in the recruiting process. According to McKinsey’s Women in the Workplace report, unconscious biases are one reason for the “leaky pipeline” in which women are less likely to get promoted than their male colleagues. Women, black, and Hispanic/Latinx workers are better represented in “gateway” occupations, and skills-based matching would help them shift to “destination” roles. A more objective assessment of the relevant skills for any given job could help mitigate systemic disadvantages.

3.) Facilitating internal moves to respond faster to new demands. All organizations had to adapt to COVID-19, and those that adapted better recognized how employees’ skills could transfer to other parts of the business. For example, one retail and commercial bank moved many branch employees to its call center to meet increased demand through skills-based matching.

For organizations considering skills-based hiring, McKinsey says that the next steps include:

1) Assessing where the organization is long and short on key skills. Pinpoint internal skill pools that are critical to the value agenda and those that are declining in relevance. Identify adjacent pools where talent is ripe for reskilling to retain employees and reduce hiring costs. While it’s possible to move to skills-based hiring for open roles without taking this step, assessing skill needs can help fully harness its potential. A Fortune 500 technology company conducted a workforce planning initiative to map talent needs to specific business goals. This led to the decision to reskill more than 6,000 employees for new roles and upskill over 20,000 employees in existing roles, thus filling 80 percent of its identified skills gap.

2) Building internal capabilities and tools to fuel skills-based hiring. Talent acquisition teams and hiring managers must make mindset and behavior shifts when moving to skills-based hiring and recruiting needs new tools like skills-based assessments. HR should partner with the business to discuss critical skills required to be successful based on the jobs to be done and then define the assessment approach to match candidates to the role.

3) Using AI to find adjacent skill pools for in-demand roles. Use a talent-management system that can infer adjacent skills to eliminate guesswork. For example, Talent Exchange, a digital talent marketplace by McKinsey, allows companies to look outside typical talent sources through an AI-based algorithm that matches people to jobs based on their skill fit.

Essential Leadership Skills for Challenging Times
As the economy continues its rapid transition toward automation, the customer experience field requires strong leadership to keep customers engaged. Soft skills, such as communication and emotional intelligence, will be the skills that set the best leaders apart from the mediocre, according to a new report by Christopher Rios of Blue Rock Search.

“The pandemic has required substantial changes to how we live and work. The same should be true for how we hire and look for employment,” McKinsey & Company said. “A skills-based approach helps companies, job seekers, and the broader communities that rely on critical roles being filled with the best talent.”

Veteran Search Consultants Weigh In

Why are so many organizations today focusing on skill sets rather than experience? Elisa Sheftic, president and managing partner of Right Executive Search (RES), said that “focusing on skill sets vs. a very specific candidate profile widens the talent pool dramatically, potentially shortening both the recruitment period and onboarding process for companies that want to move quickly. Using skill sets as a baseline is often a better indicator of the candidate’s qualifications and potential than past job titles. But it often extends the new employee’s initial learning curve since these newbies may lack industry or specific role experience.”

“For more junior roles, clients often provide training programs, mentoring, etc., but for mid- to senior-level roles, we still find that although clients want to assimilate candidates into their culture and way of doing things, they are often looking for candidates from similar industries with experience in similar functions,” she said. “They not only want to shorten the learning curve beginning from day one, but also benefit from new and innovative ideas that an industry insider can bring to the table.”

How can organizations reduce unconscious bias in the recruiting process? “I think the first step is acknowledging that it happens, despite best intentions,” Ms. Sheftic said. “Then, review the interview process to see where in the cycle it is occurring. As this frequently occurs unconsciously, I believe it is more effective to bring in an outsider–such as a diversity professional– to evaluate. I often find that companies are interested in hiring different candidate profiles and see diversity as a plus but end up hiring their usual candidate profile. They are simply following a pattern that has worked in the past. Hiring someone who may have different experiences than the typical candidate may feel different and a bit riskier to the hiring manager but try and embrace it. Diversity brings new ideas and innovation.”

COVID-19 has highlighted the importance of resourcefulness, adaptability, and resilience, she noted. “In the workplace, the ability to pivot, and sometimes to reinvent yourself or your work routine, has been necessary,” said Ms. Sheftic. “Fintech sales professionals is a good example of a group that has had to change their business strategies. Prior to COVID, the role was very face-to-face, with frequent in-person meetings, dinners, industry conferences, etc. They now have to embrace a new way of doing business – think outside the box to connect with prospects, clients, and internal stakeholders.”

“As we are coming out of one of the most devastating periods in modern history, organizations are now seeing immediate demand for competent staff who can get the work done with some urgency,” said Shelli Herman, president, and founder of Shelli Herman and Associates. “The luxury of waiting weeks or months to find the candidate with the right experience could be harmful to a business or an organization where the work has to get done.” Candidates who have the right skills vs. the right experience appears to be one more COVID-19-driven change that could have undeniable long-term benefits, she added.

“I have seen non-profit organizations consider out-of-the-box candidates with skills in sales, business development, and relationship building for president/CEO positions because there are simply not enough leaders who have fundraising acuity at the level that is urgently needed in the sector,” Ms. Herman said. “Today, boards that hire my firm are open to considering a candidate who has a defined set of skills and competencies over someone who has done the exact same job before. This is an enlightened and refreshing separation from the past that is both healthy and forward thinking. The pandemic has created opportunities for assessing talent in an entirely new way, changing and reshaping our working world rapidly.”

“Finally, we tell candidates to use this time of uncertainty to be prepare for the next era of work,” she said. “This includes devoting time to what I call upskilling and learning; a strong candidate should be able show a willingness to learn and grow their knowledge base through upskilling.”

“Engaging in and cultivating an ongoing and sustainable awareness are the key components to limiting unconscious bias creep, which requires constant monitoring through the organization’s processes, practices, and policies,” Ms. Herman said. “Left unaddressed, unconscious biases affect hiring, compensation, performance, succession planning, retention, and other critical talent decisions. To counter these influences, teams need effective training. Intentional bias awareness is gained through identifying bias and achieving deeper insights and authentic understanding of where our inevitable biases come into play.”

“Simply stated, organizations challenge unconscious bias through a process of critical reflection that starts by looking introspectively,” Ms. Herman said. “This is often best achieved by ‘putting in the self-work’ that is required to gain perspective and understanding of our potential biases, pinpointing areas where they may have an inadvertent impact and perhaps even uncovering the biases’ origins. Thankfully, there is a plethora of solid, well-researched resources to help in this journey of exploration, as well as a multitude of trainings to support this awareness that helps mitigate and limit the influence unconscious bias has on the search process.”

“We are finding that the skills utilized within technology are becoming more transferrable across industries,” said Joe Gross, president of CIO Partners. “Security is a good example of this, where the experience of someone in a particular industry has grown less important, and the skill sets to protect and mitigate risk have become paramount. Our firm focuses exclusively on technology leadership searches, and the importance of those types of roles for organizations to survive and grow has been particularly underscored since the initial onset of the pandemic – and that continues to be the case.”

Relatedly, technical ability across all functions of the business has also become extremely significant. “More specifically, while the rise of the importance of digital transformation pre-dates the pandemic and has different meanings for different industries and organizations, it has certainly in many cases accelerated and deepened the need for digital technology to be incorporated throughout businesses and has prompted forward-thinking employers to take action sooner rather than later with regard to acquiring talent possessing those skills,” he added.

“Not surprisingly, along with the increase in and importance of digital commerce, we have also seen a spike in searches for security roles – both for chief information security officers (CISO) and for the positions that support that function,” said Mr. Gross. “In addition, in the current environment, it is critical for candidates to possess the skills that yield flexibility and adaptation in order to meet the changing needs of their current or prospective employers. Conversely, organizations must also exhibit flexibility to attract the candidates with the skills that they most desire but who may be in short supply.”

“There clearly has been a shift in organizations changing their view on this topic,” said Larry Hartmann, CEO of ZRG. “Traditionally, direct experience relative to the job at hand was the key, but with evolving industries and the digitalization of most businesses, organizations are looking for the skills sets often from other industries to facilitate faster evolution and transformation. This has been a great shift as our clients now can be exposed to amazing leaders who are successful but out of their direct industry area.”

More organizations now are having to address talent shortages in many critical functional areas with new ideas and solutions that require development of their own team. “In past years, organizations did not have the patience to train and develop talent and many of the great academy companies that did amazing training no longer are creating the future talent pool, so this vacuum certainly does exist and progressive organizations are returning to a model of development,” said Mr. Hartmann.

And what about reducing unconscious bias in the recruiting process? Mr. Hartmann said that search firms can encourage bias towards the skills and competencies clients need in a role and through meeting a slate of options, and helping a client open their minds to different options. “In our data driven approach to executive search, we see better decisions being made as we enable clients to be more fact based in decisioning, by having better hiring processes that focus on the real requirements and the use state of the art tools and assessments to help filter the decisioning process with a bias towards hiring the best candidate.”

Of course, the global pandemic has impacted the types of skills search firms are looking for in candidates. “The crisis actually broadened the talent pool in terms of location flexibility and that has expanded the options for many of our clients,” said Mr. Hartmann. “We are also seeing a high value put on candidates that demonstrate adaptability, resilience and agility.”

Some search firms, however, are finding that knowledge of an industry or company still remains vital when seeking top candidates. “Since we are focused on recruitment for leadership positions, expertise of the industry is often required by our clients,” said Jonathan Plourde managing partner of Alexander Hughes International. “But considering the talent shortage we are facing now, organizations need to be creative and find talent from outside their typical pool,” he said.

“The pandemic created pressure on organizations to revise how they hire,” Mr. Plourde said. “All industries need to reinvent themselves, and the way to achieve that is with diversity of thought which comes from diversity in hiring. Diversity of all kinds, including industries, expertise, culture, functions – that is the only true way to transform an organization.”

Related: Skills Gap Points to Why We Need to Invest in People

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

Share This Article


Notify of
Inline Feedbacks
View all comments