How skills-based hiring can unlock talent in 2025

Work is always changing, and so are hiring practices.  Skills-based hiring, where hiring managers base their decisions on how strong a candidate's skills are, is a popular recruitment strategy. Research from Korn Ferry suggests that organisations focused on skills are 57% more likely to anticipate and effectively respond to changes.

Why is skills-based hiring on the rise?

In 2025, new career paths will emerge. The changing nature of work, the gap between skills, and the rise of online learning, all contribute to a skills-based approach. Next year, diversity and inclusion will continue to be at the forefront of hiring. Skills-based hiring reduces bias, leading to more diverse and inclusive teams. It evaluates candidates on merit rather than traditional qualifications.

A recent trend

According to the State of Skills-Based Hiring 2024 report by Test Gorilla, globally, 81% of companies use skills-based hiring. This compares to 73% in 2023 and 56% in 2022.

Skills-based hiring has increased over the last two years. According to the Test Gorilla Report,  59% of employers started using skills-based hiring in the last two years.

More than a CV

Almost all employers (98%) in The State of Skills-Based Hiring 2024 report believe skills-based hiring is more effective at identifying talented candidates than CVS. Moreover,  94% of employers believe that skills-based hiring is more predictive of on-the-job success than CVs.

For HR teams, one main part of the new Employment Rights Bill is the expansion of employment protections. The removal of the current two-year qualifying period to claim is one of the most radical changes under the Employment Rights Bill.

Employees will be protected from being dismissed without due cause in the first weeks of their employment.  Hiring managers are now thinking more carefully about who they recruit. And HR teams are implementing more stringent assessment and interview procedures. 90% of employers using skills-based hiring reduced mis-hires.

Faster hiring

Skills-based hiring can streamline the recruitment process and decrease hiring costs by lowering expenses associated with lengthy recruitment stages. This is why 81% of employers use skills-based hiring to reduce their time-to-hire.

Skills-based hiring per sector

Employers across sectors benefit from judging transferrable skills rather than experience. Sectors including tech, fintech, and financial services are increasingly turning to this hiring model. The industries with the highest adoption rates of skills-based hiring, according to Test Gorilla, are marketing (95%). This is followed by scientific and technical services (89%).

Tech employers value transferable skills as the industry rapidly evolves. Here it’s beneficial to hire for mindset over skills, as finding candidates with many years of experience in something like AI or automation is impossible. In tech, skills become obsolete, making traditional qualifications less relevant. By focusing on candidates' abilities and experience, recruiters can ensure that new tech hires can handle current and future challenges.

Hiring for potential can diversify your talent pool. Since the cost of higher education may not be financially viable for some people, removing degree requirements from some job adverts, can increase social mobility. And this can be beneficial for industries such as financial services or law.

Skills-based hiring can help undiscovered talent groups, including ex-forces, returners to work, and more. Traditional attitudes historically resulted in strong talent being overlooked. As hiring managers become open to skills-based hiring in 2025, more organisations will discover the potential of undiscovered talent groups.

Approaching skills-based hiring

Skills-based hiring has the potential to future-proof your talent pipeline. To start with, talk with employees about the skills they need to do the job. Remove unnecessary requirements from your job adverts and highlight desired skills.

In the interview process, ask questions around core skills, rather than prior experience. Use competency-based questions to test soft skills including, communication, adaptability, and teamwork.

Building a skills-driven workforce

With skills-based hiring, the most suitable hiring approach can depend on the industry and role. Certain professions and roles will always ask for degrees or industry qualifications. Yet, for roles where there may be a need for more candidates with experience, skills-based hiring is effective.

Skill-based hiring ensures that candidates can meet the demands of the present and future. By focusing on skills and potential, roles will appeal to a wider and more diverse talent pool.

The most sought-after skills will inevitably evolve. As an employer, you’ll need to keep pace and adapt your hiring practices and priorities. Ultimately, skills-based hiring in 2025 will lead to a more competent and innovative workforce.