The skill-based hiring movement is here: Where are we?

Employers have increasingly moved away from rigid degree requirements in favor of a skills-first hiring approach, driven by tight labor market conditions and the recognition that demonstrated competencies are more predictive of job success than formal credentials.

Employers are now even questioning the value of even an Ivy League degree, as per Forbes, because they no longer trust that college graduates will be equipped with the skills needed to perform a job. 

However, are companies actually shortlisting, and hiring from this pool of talent? 

In 2025, 85% of employers are now using some form of skills-based hiring, up from 73% in 2023. Notably, 45% of companies are expected to eliminate degree requirements for key roles in 2025 alone, with skills-based hiring employers 55% more likely to remove educational barriers to entry.

This shows that while companies actively identify and respond to the new hiring model, they are still hiring the same talent as they did before.  

The rise of skills-based hiring

By 2024, 81% of companies have adopted skills-based hiring, with the majority increasing their investment in this approach significantly.

Those companies that shortlist and hire candidates without degree bias report remarkable outcomes:

• 90% reduction in mis-hires
• 90% boost in diversity
• 78% decrease in cost-to-hire
• 81% reduction in time-to-hire
• 91% improvement in employee retention

Unilever, for example, has transformed its hiring practices by focusing on skills rather than rigid job titles.

They identified 600 Unilever-endorsed skills and proficiency levels key to success, and implemented this through their internal talent marketplace and skills-based hiring. This approach has led to an estimation of 50% more capacity from its current workforce, a finding backed by the PwC and World Economic Forum’s “Putting Skills First” report.

Developing skill matrices and fluid roles  

To fully adopt a skills-first mindset, organizations need to rethink how they define roles. Instead of predefined roles with rigid duties, organizations must break down the competencies required for each task. This means creating skill matrices that outline the must-have skills. This shift also includes revising job descriptions to target diverse skill sets, such as hands-on experience, cross-functional expertise, and certifications.  

Fluid roles are where employees can contribute based on their skills rather than predefined responsibilities, allowing for innovation. This approach also calls for using AI tools or HR solutions to match candidate skills with organizational needs. This ensures that skills flow to the most appropriate roles.  

Building a skills-based hiring culture: A roadmap for HR 

Researchers argue that those labeled as “unskilled” are actually “skilled through alternative routes,” gaining expertise through: 

• On-the-job training 
• Military service  
• Certification programs 

Much like holding a degree doesn’t guarantee proficiency, certifications and training alone don’t always ensure competency. HR must focus on whether a candidate truly possesses the skills required for the role and prioritize those that are most critical to the business. 

First, HR should start by defining the skills needed both now and for the future. This allows for a more focused approach when comparing candidate skills to organizational requirements. 

Candidate profile scorecards: Finding the right fit for the job 

One best way is to streamline this process using a candidate profile scorecard. These tools rate candidate profiles based on parameters such as: 

1. Job profile 
2. Skills  
3. Experience  
4. Educational degree  
5. Previous performance and/or experience  

Here, you assign weightage for each parameter. For adopting a more skills-based hiring, the weightage assigned to skills must be more than educational degree, or on par with previous experience. This immensely helps HR assess the candidate’s skills as well as their educational background.  

There are a few ways through which HR can prioritize skills when hiring: 

1. Remove educational requirements entirely or replace them with a minimal requirement, like a high school diploma. 
2. Reduce experience requirements, as skilled candidates from alternative paths often face limited employment and growth opportunities due to lack of traditional experience. A high skill match may exist even if past experience does not. 
3. If previous experience is necessary, set minimal requirements to allow candidates with some employment background but limited advancement opportunities due to their background to still qualify. 

You can achieve all of the above with a modern ATS. This is how it would look in action: 

When hundreds of candidates apply for a role, the system will automatically assign an overall score along with each score for all the parameters. This helps avoid any degree bias, accurately assessing the candidate’s fit for the role.  

This is an approach where employers focus on the most important parameter, which is skill. It also substantially reduces hiring bias for gender, background, race, disability, and so on. 

For instance, if you see that the candidate’s score for the skills section is way higher than the educational background, it would be an instance where you can consider the candidate for the next step in the hiring process, rather than ignoring the profile because of their education background.  

If you’re looking for an ATS that performs all this seamlessly, consider Keka. Here’s our candidate profile scoring in action: 

How do candidate profile scorecards lead to meaningful outcomes? 

Achieving meaningful outcomes depends on some significant factors, like: 

• Are these candidates being hired after the shortlisting process? 

• Is there a genuine change in hiring behavior and the culture surrounding the hiring process? 

• Is this change sustained in the long run? 

Hiring managers must truly believe that skills are what truly matter. Major corporations that have adopted this model have noticed a 10% higher retention points than degree-holders, and this is only expected to grow. 

This skills-based recruitment must be followed by skills-based hiring practices as well, such as adopting a skills-based approach when giving out assessments, implementing practical tests, measuring skills, and interviewing the candidates. Meaning, the candidates must not be rejected in the later stages of the hiring process simply because they do not possess higher educational requirements, which are not co-related to skills and competency. 

Metrics-driven approach to prioritize candidate skills  

Most importantly, implementing a skills-based hiring model heavily matters through which skills employers are prioritizing for a role.

While most companies use a skill taxonomy to define skills, collect data, and maintain it – a simpler, effective way would be to have employees enter their own skills, which will then be approved and rated by their superiors. 

Here are the metrics employers must focus on: 

1. Job performance correlation (impact on KPIs)  

These are the skills that show a strong correlation with high-impact outcomes, and help the employee meet their KPIs. 

2. Skills gap  

Employee skill profiles serve as a way for managers to rate them during performance reviews or identify skill gaps. Such gaps serve as an important clue on the kind of skills the team currently needs to perform well. 

3. Future business impact  

Consider skills that will be critical as the business grows. Think beyond immediate needs and of competencies that will help the organization stay competitive in the next few years. These skills could be related to recent technologies, leadership capabilities, and expertise in areas that may expand. 

4. Internal mobility potential  

Focus on skills that enable candidates to transition into other roles smoothly. This helps reduce the time and cost associated with hiring an external candidate. 

5. Time to proficiency 

When considering skills gap, future business impact, and internal mobility, it’s important to consider the learning curve associated with it. The learning curve for each candidate differs depending on the time taken for them to learn their current skill. 

6. Strategic value  

Strategic value skills come from the already shortlisted skills from the job performance correlation metric. In this case, you further prioritize skills that provide immense value to business outcomes directly.  

7. Cost to develop 

Along with time to proficiency, the cost to develop is also an important metric to consider. This really helps when looking for candidates who can pick up skills and new responsibilities quicker than other candidates.  

For example, a hiring manager may subconsciously shortlist a candidate merely because of their educational background rather than considering the costs, time, and resources associated with bringing them to full working potential.  

Sustaining a skills-based culture beyond hiring  

As more organizations also move towards building a skills-based culture, it’s also important for other companies to first understand the importance of embedding such practices into their long-term talent strategy.  

This shouldn’t stop at hiring: how are those skills utilized once employees are onboard? 

Hiring candidates based on skills is meaningless if the company doesn’t continue to prioritize skills in decisions like project involvement, appraisals, internal mobility, or promotions.