How skills-based practices can help employers in today’s labor market

At Skillful, we’ve often addressed the importance of skills-based practices in the strong pre-COVID labor market, when the unemployment rate was low and employers couldn’t find the talent they needed, but what can skills-based practices do for employers now, in the middle of a pandemic and an economic recession? Skills-based practices can help employers in today’s rapidly changing labor market with their sourcing, job posting, and interviewing. Once a candidate is hired these innovative practices can also help with onboarding, employee retention, and advancement.

A recent Forbes article predicts that 2021 will be a year of “massive job turnover”. A survey conducted by global staffing firm, Robert Half, found that companies are taking more time to hire job seekers in the current environment despite having access to a broader talent pool. This could spell trouble for employers and job seekers alike.

Here’s how skills-based practices can help employers in today’s labor market:

Increase diversity

“There are employers that want to diversify their workforce and be more thoughtful about how they hire, but they don’t have any tools to do that. If they are told ‘don’t do this' without giving them a better process to implement, there is a void that is created that is often filled by racial biases or other types of assumptions,” said Trevor Pruitt, Employer Initiative Manger at Skillful.

The goal of skills-based practices is to create a more equitable process, where the only factor hiring managers are using to judge somebody is their ability to do the job. Building a process that focuses on a candidate’s skills instead of their race, gender, or background can reduce bias and create a more diverse workforce. For example, when the Mercy Health Regional Talent Acquisition team, which fills over 3,100 positions per year started focusing on candidate’s skills they increased their hiring diversity (non-white new hires) from an 18 percent baseline to 38 percent.

Avoid costly turnover and protect your ROI

“When I look at Skillful’s tools and skills-based hiring practices, I link them back to return on investment and profit margins,” said Steve Busch. Steve operates a human resources consulting practice that focuses on talent management, leadership development, and vocational education and attended the Skillful Talent Series last year. He remembered a specific exercise he did during one Skillful Talent Series training, where the facilitator helped employers calculate their turnover cost. “You have the dollar amount of how much that turnover is going to cost and you can multiply that times the number of people that are turned over in that organization.  It could cost you ten thousand dollars every single time somebody leaves, quits or gets fired because of the bad fit because you didn’t hire them correctly. If you ask an employer what’s your gross margin? If it’s 10% you just had $10,000 in cost because you lost an employee, the company has to come up with $100,000 in new revenue to cover that cost,” Steve explained. “If you make that argument to the appropriate financial people in an organization, you’re going to have skill-based practices implemented very quickly.”

Steve utilizes skills-based practices and tools when working with businesses to help them throughout their talent management process. With over 25 years of experience as a human resources executive, Steve has been trained in various employee selection processes, but tells us he likes Skillful’s tools because “they’re quick and easy to implement.”

“Employers don’t budget for unplanned employee turnover, we don’t forecast for it, we don’t have insurance for it, it hits you and it hits you hard.”

Steve tells employers they need to take the time upfront to use the tools to design a job description that is relevant and tailored to that position because there’s no insurance for turnover. He says, “Employers don’t budget for unplanned employee turnover, we don’t forecast for it, we don’t have insurance for it, it hits you and it hits you hard.”

Become the employer of choice

According to the Washington Post, 76 percent of employees and job seekers said a diverse workforce was important when evaluating companies and job offers. Skills-based employee selection is great for improving your culture and becoming the employer of choice in very difficult markets. Skills-based employee selection relies on the skills a candidate has or the skills a candidate can learn, rather than proxies for skills like degrees, previous titles, and background. By focusing on skills, hiring managers also decrease their conscious and unconscious bias. 

Provide more equitable employment opportunities

Aside from the monetary benefits employers may get when making skills-based practices their choice for hiring, Steve thinks it’s the employer’s responsibility to the public to provide candidates with more equal employment opportunities. Traditional screening relies on credentials or degree requirements to screen out candidates. For organizations using applicant tracking systems, this step is automated. Often, applicants are reviewed quickly, allowing for biases to impact decisions.

Studies on quick resume screening reveal that people often focus on applicant names, titles, school names, education achieved, and other biases. These biases distract from fairly evaluating candidates' competencies. 

Skills-based screening, on the other hand, can help companies reduce bias and increase diversity and inclusion by focusing on required skills rather than relying on proxies for skills such as a degree or past job title.  

To learn more about the Skillful Talent Series and how skills-based practices can benefit your company visit:

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