Can skills-first hiring be the solution to the global talent shortage?

Where has all the talent gone?
        Long-time passing!
Where has all the talent gone?
        Long time ago.
Where has all the talent gone?
        Rivals took them, everyone.
        Oh, when will you ever learn?
        When will you ever learn?

 Recruiters worldwide would nod in rueful agreement with this version of the Pete Seeger song! The global shortage of skilled employees is indeed worrying. Ironically, there also exists a large cohort of unemployed workers. For example, here are some figures from the U. S.:

Number of job openings: 9.9 million+ Number of unemployed Americans: 5.8 million

The  World Economic Forum (WEF)  says that a prime cause for this anomaly lies in how employers assess workers’ skills. For instance, many U. S. industries struggling to fill vacancies require that the candidate compulsorily hold a degree to qualify for these openings. That translates into filtering out 64% of employable, skilled but non-degree holding Americans.

 

87% of companies [worldwide] say they have skill gaps, or expect to within a few years.                                                                                                                  (McKinsey & Company in a report from January 2021)

Is there a workaround for this situation? The WEF study emphatically says “yes”, substantiating that employers must now shift focus from an often-needless  insistence on degrees  to assessing the actual skills and attributes required for a position. As many business leaders who have successfully adopted a skills-first approach would have you know,  talent shortage is a chokehold that companies impose upon themselves. Also, that analysing and reimagining hiring parameters is the way forward.  Organisations have begun to realise the truth in this.  To quote  a Forbes (March 2023)  report, “hiring for skills versus pedigree is now a business imperative.” Let us see why.

Flexibility in hiring opens access to a new talent pool

When companies drop the conventional thought that a pedigree is a prerequisite for recruitment, they open up better career opportunities to deserving candidates who would otherwise be left out. In a time of fierce competition for high-quality talent, this strategy sensibly widens the pool of workers available for hiring.

“...a skills-first approach …is key to embracing agility and achieving success in the future of work as well as opening up talent pools. Research shows that Indian companies that hire for skills can increase their talent pipeline by 12.1X.”                                                                                                                                                                                                                            (People Matters)

However,  while dropping the requirement of a degree is a step in the right direction, to truly leverage the benefits of this new approach, organisations must embrace the change holistically and commit  themselves to support skill-building for employees throughout their careers.

Continuous skill development nurtures upward mobility and loyalty among employees

In a tricky business environment, the big question that engages HR managers is: “What do employees want?” Getting the right answers to this puzzle is key to a healthy retention rate. LinkedIn’s Workplace Learning Report (2022) says,

“... having opportunities to learn and grow is now the number one factor that people say defines an exceptional work environment.” Among millennials, a top workplace expectation is the opportunity for continuous learning and development. Formal learning and development (L&D) programmes, in-house skill training, internships and apprenticeships are some ways in which organisations can enthuse a young workforce to remain engaged and loyal as their career trajectories move upwards.

Diversity gets a boost when employers adopt a skills-first mindset

It is now accepted wisdom  that a diverse workforce, be it in terms of gender, age, colour, race, disability or other social constructs, is good for business, paying off handsomely through higher productivity, strong employer brand value and a healthier work culture. A company committed to a skills-first hiring policy eliminates ingrained social biases from the get-go, benefiting not just its bottom line but society as a whole.

   

Implementing a skills-first approach:

Recruitment managers tend to believe that a college degree can stand in for analytical thinking skills, a can-do attitude or cooperative spirit.  However, as a recent Harvard Business School study of “middle-skill” jobs (positions needing post-high school training/education but not a college degree) shows, productivity is not measurably higher when those positions are manned by degree holders. If your business is staring at a talent shortage, here are some tips to a skills-first approach:

• Recast job postings based on skills needed for each position
• Start an employee referral programme
• Team up with a professional, data-driven recruiter
• Invest in reskilling/upskilling programmes for your current workers. It is easier than searching for fresh talent.

 

Sources:

• https://www.weforum.org/agenda/2023/01/5-ways-skills-first-approach-unlocks-access-to-jobs-davos-2023/
• https://thunderbird.asu.edu/thought-leadership/insights/why-there-global-talent-shortage-and-what-can-you-do
• https://www.forbes.com/sites/forbesbusinesscouncil/2023/03/30/skills-first-is-more-than-a-hiring-strategy-its-a-mindset/?sh=118a583326cd
• https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/chart-of-the-day/mind-the-skills-gap
• https://hbr.org/2023/03/the-new-collar-workforce
• https://www.peoplematters.in/article/training-development/building-a-skills-first-people-strategy-37326
• https://opensourcedworkplace.com/news/25-things-millennials-want-from-an-employer-company-workplace-and-job-expectations