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Image: Vadim Pastuh/Adobe Stock

Today’s labor market “is full of missed opportunities” where solid candidates are not getting matched to positions that could positively impact companies, LinkedIn’s newly released Skills-First report maintains. This requires rethinking how to prepare the workforce of the future and equitably match talent with jobs.

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What is skills-first hiring?

Skills-first hiring refers to putting skills at the forefront of hiring strategies by recognizing an individual for their skills and capabilities and breaking down roles into the capabilities required to do them well, according to Sue Duke, head of global public policy and the economic graph team at LinkedIn.

“This doesn’t mean we should ignore traditional hiring systems, but there’s a massive opportunity to enhance hiring to widen opportunities throughout the workforce,’’ Duke said. “The good news is this shift is already underway, and employers are showing signs of embracing this new way of thinking about talent.”

What are the benefits of skills-first hiring?

According to the LinkedIn report, benefits of skills-first hiring include:

  • Increasing talent pools in the U.S. by 19x.
  • Adding up to 20x more eligible workers to the employer talent pools.
  • Increasing the global talent pool of workers without bachelor’s degrees by 9% more on average than for workers with degrees.
  • Increasing the proportion of women in the talent pool by 24% more than it would for men in jobs where women are underrepresented.
  • Increasing the talent pool for Gen X workers by 8.5x, for Millennial workers by 9x and for Gen Z workers by 10.3x.
  • Democratizing access to opportunity.

Duke stated there is a major opportunity to level the playing field for women, especially in occupations where women are underrepresented, including technology, engineering and construction. For example, in the U.S., only 20% of workers with the title “test engineer” are women, but women make up 47% of the talent pool based on relevant skills. When companies look beyond job titles and hire a test engineer based on skills, the overall talent pool for women increases by 9x, Duke said.

One of the more revealing findings in the LinkedIn report is that about one in five job postings (19%) in the U.S. no longer requires degrees, up from 15% in 2021. When employers look at more than education when hiring for a role, they are creating a more equitable talent pool, Duke said. For example, nearly 70% of the jobs in the U.S. require a bachelor’s degree, but only 37% of the U.S. workforce actually has one. “This effectively eliminates over 50% of the candidates for roles, yet, these people may have the skills to succeed despite their lack of a college degree,” Duke said.

Additional benefits of a skills-first approach

The benefits of a skills-first approach go beyond the hiring phase and have notable impacts throughout the employment cycle, according to the report. For example, LinkedIn data finds that investing in employees’ learning and growth is key to retention.

Workers who have made an internal move at their organization at the two-year mark have a 75% chance of remaining there, compared to 56% for those who haven’t.

Likewise, companies that excel at internal mobility are able to retain employees for an average of 5.4 years, the report said.

Are more recruiters using skills data to fill jobs?

In the past year, more than 45% of recruiters on LinkedIn explicitly used skills data to fill their roles, up 12% year over year, the report said.

LinkedIn site users added 380 million skills, including certification, to their profiles in the past year — up over 40% year over year.

How skills-first hiring helps counter labor shortages

The report addresses the current economic uncertainty and finds that even with this at play, “the ratio of jobs to applicants remains nearly double the pre-pandemic average in several countries.” Even as economies slow, LinkedIn anticipates labor shortages will continue to exist for the foreseeable future.

One reason is that labor force participation still hasn’t returned to pre-pandemic levels, according to the report. To counter this, one approach is to expand the talent pool to include all workers with the necessary skills to fill open roles in industries where there are shortages.

“This may mean hiring people who have never held that job title before or even worked in that industry before,” the report noted. “During times of rapid change, we need to help workers transition to jobs that are in demand and that match their capabilities.”

If employers could easily find and hire workers based on what they can do without excluding qualified candidates based on criteria like prior job title, workers could transition more efficiently and economies could adapt more quickly, the report stated.

How employers can use a skills-first approach to hiring

Generally, employers are looking for candidates with transferable in-demand skills such as leadership and specific technological abilities, Duke said. “In nearly all cases, employers will find that candidates always have skills that can be applied to a position, even if the candidate is coming from a vastly different industry. This increases the talent pool and makes it easier for employers to find good candidates,” she said.

As an example of how the skills-first approach works, Duke said that when employers looking to hire digital marketing managers use this method, the available talent pool increases by almost 22x. “That’s because many of the skills associated with this job are common across other jobs and industries,” she explained. “In this case, about 30 separate job titles across the U.S. have relevant skills for this job, but most companies would overlook those candidates.”

Every role at an organization can be broken down into a set of skills needed to do the job well. Every person has a set of skills, whether they’re an existing employee or part of an external talent pool, Duke said. Employers need a better understanding of what skills are required to do the jobs at their company so they can take a more equitable approach to finding talent with those skills.

For a skills-based hiring process to work, skills should be placed at the center of recruitment as well as internal hiring.

“Employers have the chance to reimagine the labor market and break down barriers, and to build a world where everyone has access to opportunity — not because of where they were born, who they know or where they went to school, but because of their skills and abilities,” Duke said.