Sevenstep Blog

Know the Promise and the Fine Print in Skills-Based Hiring

By Gary Norris, Client Services Leader, Sevenstep

What does it take to thrive amid a persistent skills shortage? If you struggle with this question, you're not alone. Many employers are challenged to identify, attract and retain workers to meet evolving demands.

The issue of securing critical skills is especially pressing in emerging fields like AI and technology, joining historically challenging sectors like nursing and skilled trades. Industry findings from recent reports highlight the struggle: 

• 48% of organizations are adding staff to meet AI demands. 
• 60% of tech workers are hired in non-tech industries. 

• Roughly 200,000 new nursing positions are projected annually in the U.S. through 2031.

• Wages in skilled trades rose 20% in the U.S. from 2020-2024.  

Enter the much-discussed strategy of skills-based hiring. All hiring is skills-based to some extent, but traditional practices don't always prioritize skills. They overlook capable candidates who lack a college degree or the required years of industry experience. Skills-based hiring aims to select candidates based on relevant skills and reduce the emphasis on education or experience.  

By reducing degree- or industry-specific experience requirements, the approach expands the potential talent pool to a wider base of more capable candidates. Likewise, a skills-based strategy can minimize mismatches in hiring (and the consequences of poor employee performance). Simply put, by testing for specific current skills, companies are more likely to hire the right talent for the job, particularly as skills rapidly evolve in many fields.  

The Fine Print: Assessments Alone Don't Guarantee Results

Inserting a skills assessment into the application process should not be a one-size-fits-all approach. Every role we recruit requires different approaches to how and when you apply an assessment. Our experience shows that recognizing and addressing subtle issues can yield significant improvement for the client.  

Adjust for Quality Versus Quantity of Candidates in the Process
For example, we work with a client that employs high-touch support for its customers through a “white glove” virtual service call center. That means we need to reach the most capable service representatives possible amid a large field of applicants who meet baseline requirements.  

Their prior recruitment process focused on building the largest pool of candidates and sending an assessment to as many people as possible, sometimes in the thousands. This proved to be time-consuming, inefficient and a poor candidate experience since more than 75% of the applicants took the assessment only to be rejected immediately after.  

We optimized the process by looking at the assessment to verify that it was the right fit for the purpose. We also refined the job description, leveraged prescreen and knock-out questions at the point of application, and strengthened our resume review to send the assessment to fewer but more qualified candidates. The assessment pass rate increased from 25% to 75%. More importantly, the interview-to-offer ratio improved from 12:1 to 2:1. Hiring managers now need to spend much less time interviewing to get an even better quality of hire. 

Don't Let Assessments Drive Candidates Away
Another challenge is candidates may shy away from an assessment and drop out of the application process. We addressed this issue for a client hiring Medicare agents who assist seniors through open enrollment. The client had proven that their assessment accurately indicated strong candidates who would succeed in their roles. We found that many candidates dropped out before the assessment.

To start, we took stock of the assessment itself and their skills-based hiring approach and process. Over three years, we worked with the client to steadily improve the number and portion of applicants who took the assessment. Improvements centered around the frequency and quality of our assessment follow-ups, prepping candidates for what to expect, and educating hiring managers on the relationships among assessment performance, interview performance, “do not offer” rate and quality of hire.  

We also customized candidate strategies to meet local demands across seven geographic markets. We staffed over 800 Medicare agents in two years with a 99.5% fill rate. Taking the time to refine and clarify requirements and support the right assessment strategy speeds up hiring and improves satisfaction on all sides. 

Putting Skills First Is Becoming the Norm

As talent shortages persist and new technologies reshape the workforce, companies that focus on securing the right skills will position themselves to thrive. By prioritizing capabilities over credentials and working with the right strategic permanent hiring partner, organizations can build stronger, more adaptable teams to meet the demands of the future.