How skills-based hiring drives workplace diversity

The past few months have been an important time to promote diversity, equity and inclusion (DEI). 

June marked Pride month, celebrating the progress being made for LGBT+ equality. July was Disability Pride month, acknowledging the immense contributions of staff, service users and carers within the community. While at the end of September, it is National Inclusion Week, a week dedicated to celebrating inclusion and taking action to create inclusive workplaces.

But it is of course important to ensure that commitments to diversity, equity and inclusion continue all year round. 

Many communities still face prejudice based on their sexual orientation, gender identity, disability, race or religion. And this invariably means that their professional lives are also impacted - from encountering bias during the recruitment process to discrimination in the workplace.  

There is a growing commitment from the business world to create and sustain a diverse culture, where team members feel empowered to share different ideas, perspectives and experiences in a collaborative and creative work environment. But there is still much work to be done. 

• Only 19.7% of employees on company boards are women, according to Deloitte.
• Data from the Department for Work and Pensions suggests that in the UK, the employment rate is only 62.8% for ethnic minorities.
• The same study found that ethnic minority employees hold only 1 in 16 top management positions in the UK. 
• The unemployment rate of disabled working age adults is around twice that of able-bodied working adults, according to UK Government statistics. 
• Transgender adults are twice as likely to be unemployed in comparison to cisgender adults, according to data from McKinsey & Company.
• The Office for National Statistics (ONS) has published research that shows just 22% of autistic adults are in any kind of employment.

These statistics are damning and demonstrate that while there has been progress at a social and legislative level, the business world must still step up. The statistics also fly in the face of a growing body of evidence that demonstrates the valuable contribution that workforce diversity makes to areas such as productivity, innovation and problem-solving. 

A Boston Consulting Group (BCG) study, for instance, concluded that diverse teams are more innovative and more capable of developing products that are in tune with changing customer needs because of their varying backgrounds and perspectives. Elsewhere, other studies have indicated that diverse and inclusive workforces report improvements in individual discretionary effort, intent to stay and team collaboration and commitment.

Unsurprisingly, this ultimately influences the bottom line. McKinsey has reported that businesses with higher gender diversity on their executive teams are 25% more likely to experience above-average profitability, while companies rated in the top quartile of ethnic and cultural diversity are 36% more profitable than peer companies. 

The problem, according to Erica Price Burns, senior vice president and co-director of research at Whiteboard Advisors, is that while large employers know that a more diverse workforce is a more talented workforce, they often struggle to identify candidates from diverse social and educational backgrounds. This is a challenge that was flagged almost a decade ago in a McKinsey report exploring workplace diversity, but the issue persists - partly because of an insistence on degree-level education. A study of educational levels in the US has concluded that adding a four-year degree requirement automatically screens out 76% of African Americans and 83% of LatinX workers.

At the same time, even when minority candidates are part of the recruitment process, unconscious bias can negatively influence their opportunities for success. For instance, research in the Journal of Leadership Studies found that HR managers looking to fill a position in a male-dominated industry tend to be more skeptical of female candidates, and sometimes do not even consider them at all. Elsewhere, studies in The Journal of Social Issues have demonstrated how people of colour are more likely to be perceived as less skilled or more inefficient. 

As Price Burns notes: “Even with the best intentions, human nature makes hiring based on resumes and interviews over-reliant on educational background, employment background or personal characteristics.”

So what needs to be done? 

There are a variety of steps that can be taken to reduce the likelihood of unconscious bias in the hiring process, such as blind hiring and raising employee awareness of hiring bias. But these efforts do not also solve the issue of employers struggling to identify candidates from more diverse backgrounds. 

However, skills-based hiring can offer a solution. 

What is skills-based hiring? 

Skills-based hiring enables businesses to identify and prioritise the skills that candidates require to be successful in specific roles, rather than focusing on credentials, previous job titles, academic achievements and so on. HR teams can then align applicants that possess appropriate skills (or demonstrate the capability to quickly learn these skills) with roles. The result of this is happier, more productive employees. 

To learn more about skills-based hiring, read our introduction to the topic here. 

Crucially, skills-based hiring also means that any preconceived ideas of what the perfect candidate looks like are disregarded to focus on just the skills. Furthermore, by removing any job history or education requirements (such as degrees), businesses can access a much broader pool of talent, including talent that is traditionally underrepresented. Research from LinkedIn has found that 88% of recruiters admit they are filtering out skilled candidates purely because they do not possess specific job titles or qualifications. 

Skills-based hiring means that all candidates are considered equally as long as they have the skills or the capability to easily learn the skills. 

“Studies on job descriptions looking for biased wording have proven in tests to deter people of a certain age, ethnicity, educational attainment, social status, disability and gender,” says Perry Timms, Founder of People and Transformational HR (PTHR). “So we rule out potentially the best candidates because of this and that's something we'd never know or be able to track. Skills-based is a much more likely frame of reference for people to apply without feeling deterred by subtle biases in job specs.”

And evidence has proven the impact that this can have on diversity. 

How does skills-based hiring improve workforce diversity?

Research from LinkedIn suggests that skills-based hiring increases the proportion of women in the talent pool by 24% more than it would for men in jobs where women are under-represented. For example, in Germany, the role of engineering team lead has 14% representation of women in the job title pool, but has 35% representation in the skills-first pool. If companies were to hire for this role using a skills-first approach, the overall talent pool of women increases by 10 times, compared to a 3 times increase for men.

Becky Schnauffer, Head of Global Clients at LinkedIn Talent Solutions, adds: “The labour market has historically been inequitable and opaque. Our data shows that a skills-first approach can help level the playing field for workers who may have been overlooked, including women, workers without bachelor’s degrees, and younger people.”

Bain has also reported how a focus on skills is leading to the recruitment of the best and most diverse talent. It highlights the skill-based work of IBM, which removed degree requirements for half of its US jobs and as a result has seen consistent increases in diverse and underrepresented talent. 

Bain concludes that by prioritising skills over academic credentials or pedigree, companies are better able to recruit people with different backgrounds, experiences and perspectives. It adds: “While skills-based hiring alone does not guarantee diversity, it is a necessary first step in breaking down potential barriers and creating a more inclusive organisation.”

Spotted Zebra is helping to democratise work opportunities for all and support greater diversity in the workplace, by helping businesses to place skills at the centre of every decision made about people, throughout the talent lifecycle - from hiring, to reskilling to succession planning. 

Our platform enables us to measure role-specific skills and/or alignment with future potential indicators, deploying trusted and validated psychometric content and the latest measurement science to maximise reliability and validity of the approach. The solution has been proven to be fair for use across ethnicity and gender.

We provide a suite of applications that work across every phase of the talent lifecycle. Whether you are hiring, thinking about development or promoting internal mobility, Spotted Zebra has created an application that puts skills first.

If you'd like to review your strategic workforce plan, our experts are available for a Skills Strategy Lunch and Learn. Click here to learn more and reserve a session for you and your team.

FAQs

1. What specific steps can companies take to implement skills-based hiring effectively and ensure it addresses unconscious bias in the recruitment process?

Companies can take the following steps to implement skills-based hiring effectively:

• Develop clear skills profiles: Create detailed profiles that outline the specific skills required for each role, both technical and behavioural.
• Use skills assessment tools: Implement robust skills assessment tools, like those provided by Spotted Zebra, to objectively evaluate candidates’ skills.
• Blind hiring practices: Remove personally identifiable information from resumes to prevent unconscious bias, focusing solely on skills and experience relevant to the role.
• Standardised interview questions: Use standardised, skills-focused interview questions for all candidates to ensure a fair evaluation process.
• Training for hiring managers: Provide training on unconscious bias and how to evaluate skills objectively, ensuring that all hiring managers are aligned with the skills-based approach.

2. How can businesses measure the success and impact of adopting a skills-based hiring approach on workforce diversity and overall performance?

Businesses can measure the success and impact of skills-based hiring by:

• Tracking diversity metrics: Monitor changes in the diversity of the workforce, including gender, ethnicity, age, disability status, and other relevant factors.
• Employee performance data: Compare performance metrics of employees hired through skills-based hiring against those hired through traditional methods. Metrics could include productivity, innovation, job satisfaction, and retention rates.
• Recruitment and retention rates: Analyse the rate at which diverse candidates are recruited and retained in the organisation.
• Feedback from employees: Gather feedback from employees on their experiences with the recruitment process and their perception of fairness and inclusivity.
• Comparative analysis: Conduct comparative studies of team performance before and after implementing skills-based hiring to assess improvements in innovation, problem-solving, and collaboration.
• Business outcomes: Measure business outcomes such as profitability, market share, and customer satisfaction to evaluate the broader impact of a diverse and inclusive workforce.

3. What are some examples of companies that have successfully implemented skills-based hiring, and what results have they seen in terms of diversity and employee performance?

• IBM: IBM removed degree requirements for half of its US jobs and saw consistent increases in diverse and underrepresented talent. This shift has helped IBM recruit people with different backgrounds, experiences, and perspectives, leading to a more diverse workforce.
• Google: Google has shifted its focus to hiring for skills and potential rather than just educational background, leading to a more diverse and innovative workforce. The company has reported improvements in team performance and innovation as a result of this approach.
• LinkedIn: LinkedIn's adoption of skills-based hiring has led to significant increases in the proportion of women and other underrepresented groups in its talent pool. For example, in roles where women were underrepresented, the proportion of women in the talent pool increased by 24%.
• Deloitte: Deloitte has embraced skills-based hiring to focus on the capabilities of candidates rather than their academic achievements. This approach has resulted in a more diverse workforce and has been linked to improvements in creativity and problem-solving within teams.

These examples illustrate how skills-based hiring can lead to a more diverse and high-performing workforce, ultimately benefiting the organisation’s overall success.

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