Today’s job market is dynamic and demanding, with shifting role requirements, talent shortages, and growing pressure to improve diversity and retention. Because of this, many employers are reevaluating their hiring processes. Skills-based hiring offers a practical path forward by focusing on what candidates can do, rather than where they’ve worked or what degrees they hold. In this article, we’ll explore what skills-based hiring is, why it’s on the rise, common concerns to consider, and how to successfully implement this approach with support from staffing partners like Dahl Consulting (DAHL).
What is skills-based hiring?
Skills-based hiring is defined by Indeed as taking a skills-based approach to attracting, growing, and retaining talent (as shared during Indeed Academy’s 2025 webinar, Skills-First Hiring). Whereas “traditional” hiring relies more on credentials such as education, courses, or other formal training, skills-based hiring leans into candidates’ skills, transferable experience, and potential to thrive in roles that align with their background.
Why has skills-based hiring taken off?
Given the turbulent hiring market for both job seekers and businesses in recent years, the skills-based hiring approach has become increasingly popular. A recent survey conducted by Indeed (Skills-First Hiring webinar) found that 45% of job seekers felt it was more difficult to get hired over the past three years, while 43% of employers during this same time frame reported that receiving unqualified candidates was their biggest hiring challenge. In the current labor market, traditional credentials may not cut it to fill workforce gaps.
In response to hiring hurdles, it is not surprising that there has been a rise in skills-based hiring, as it offers businesses access to a broader, more diverse talent pool of individuals who may not have traditional credentials but still possess the right capabilities. Adoption rates of skills-based hiring have increased to 73% compared to 56% in 2022, according to a survey conducted by TestGorilla, a skills assessment platform. As this trend continues to gain traction, it is likely that this percentage will only continue to climb.
Talent is also starting to look for roles based on skills, signaling a growing need for employers to adjust their hiring practices. In fact, Indeed (Skills-First Hiring webinar) found that the most common job search was actually a blank search, showing that candidates often explore opportunities based on skillsets rather than specific job titles. This change is supported by worker sentiment, with 70% of workers believing they will need to adapt their skills over the next five years, and 92% feeling confident in their ability to do so. In short, workers are already preparing for a skills-driven future, and employers who update their hiring processes will be ready to meet those expectations.
What are the benefits of skills-based hiring?
Skills-based hiring doesn’t just change how employers evaluate candidates; it has ripple effects across the entire talent lifecycle. From expanding access to qualified candidates to improving retention and internal mobility, this approach helps businesses build teams that are more adaptable, inclusive, and aligned with real-world needs.
Benefit #1: Expands the talent pool and supports DEI
One of the biggest advantages of skills-based hiring is that it opens the door to a broader and more diverse talent pool. By focusing on skills rather than degrees or job titles, employers can connect with individuals who may have gained experience through nontraditional paths, such as self-taught professionals, veterans, career changers, or those without a four-year degree. This not only helps fill critical workforce gaps but also supports diversity, equity, and inclusion (DE&I) efforts by reducing bias that may be tied to traditional credentials.
Benefit #2: Creates opportunities for internal mobility
Skills-based hiring also creates more opportunities for internal mobility. When employers clearly define the skills required for a role, it becomes easier to identify current employees who are ready to take on new responsibilities, move laterally, or be reskilled for different positions. This approach encourages career growth, improves employee engagement, and can reduce turnover by providing clearer paths for advancement.
Benefit #3: Improves retention and job fit
Retention is another key benefit. When people are hired based on what they can do, not just what’s on their resume, they’re more likely to be well-matched to the role. In fact, 94% of those surveyed in TestGorilla’s State of Skills-Based Hiring Report agreed that skills-based hiring is more predictive of success in a role than resumes. Basing hiring and promotion decisions on talent’s skills leads to better performance, higher satisfaction, and longer tenure. As a result, businesses can see improved productivity and reduced costs associated with frequent rehiring.
Benefit #4: Aligns talent strategy with evolving business needs
Lastly, skills-based hiring helps companies stay aligned with business needs in a rapidly changing market. By evaluating talent based on up-to-date skills, organizations can fill roles more strategically, adapt faster to new priorities, and build a workforce that’s better equipped for the future.
What are some common concerns or barriers to skills-based hiring?
As more employers consider shifting to skills-based hiring, questions and concerns naturally arise, especially when it means rethinking long-standing practices. While the benefits are clear, understanding the common challenges can help organizations prepare for a smoother transition.
Concern #1: Will candidates be less qualified without traditional credentials?
A common fear is that moving away from degree requirements could result in hiring underqualified candidates. However, research shows that many traditional credentials aren’t strong predictors of job performance, especially in roles where hands-on skills and adaptability matter most. Employers generally agree that both candidates with and without degrees are capable of meeting the same performance metrics. Therefore, the key to successful hires comes from the right screening methods, such as structured interviews and skills assessments. With these tools in place, employers can effectively evaluate whether candidates have the capabilities to succeed in the role, regardless of their educational background.
Concern #2: How do we validate skills without relying on resumes or degrees?
One of the biggest hurdles is figuring out how to confidently assess skills. Employers may worry about the reliability of self-reported experience or informal training. Tools like skills assessments, job simulations, and structured interviews can help measure a candidate’s real abilities. Partnering with staffing agencies or platforms that specialize in competency-based evaluation can also help bridge the gap.
Concern #3: Will this require too much change internally?
Transitioning to a skills-based approach may seem overwhelming, especially for teams used to filtering applicants by titles or degrees. But organizations don’t need to overhaul everything overnight. Many start by updating job descriptions to include specific skills rather than credentials, training hiring managers on new evaluation methods, and piloting skills-based practices in one department before scaling. Small steps can lead to a big impact over time.
Concern #4: What if employees or hiring managers resist the change?
Change management is a valid concern, especially when shifting internal mindsets. Some employees may worry about being overlooked if they don’t have the “right” degrees, while some managers may feel uncertain about hiring in new ways. Communicating the benefits, such as more equitable opportunities, better role alignment, and clearer growth paths, can help build buy-in. Including managers in the process and offering training on evaluating skills fairly can ease the transition.
How can my business successfully implement skills-based hiring?
- Start by rethinking job descriptions: Remove unnecessary degree or credential requirements and replace them with specific skills and competencies needed to succeed in the role.
- Define what success looks like in each role: Collaborate with team leads to identify the core skills required—not just tasks or responsibilities, but what capabilities actually drive success.
- Use skills assessments or structured interviews: Incorporate objective tools like job simulations, scenario-based questions, or skill tests to evaluate candidates’ real-world abilities.
- Train your hiring managers: Provide training on how to assess skills fairly and consistently, especially if you’re shifting away from traditional resume reviews.
- Leverage internal talent data: Identify current employees with transferable skills who could move into open roles through reskilling or lateral moves.
- Partner with experts when needed: Staffing firms or technology platforms that specialize in skills-based hiring can help you screen, assess, and place talent more effectively.
- Start small and scale gradually: Pilot the approach in one department or job family before rolling it out companywide. Use early wins to gain buy-in and refine your process.
- Track your progress: Grads of Life developed an Impact Measurement Framework to monitor metrics like productivity, growth, diversification, and more, to measure impact and guide adjustments. You may use this framework or develop your own to track goals.
What is the role of staffing partners for skills-based hiring?
Staffing agencies can play a crucial role in helping businesses implement a skills-based hiring model, especially when internal teams are overextended or under-resourced. These partners offer specialized expertise, tools, and processes designed to evaluate candidates based on capabilities, not just credentials.
Staffing firms can help rewrite job descriptions with a skills-first focus, recommend relevant assessments or screening strategies, and align candidate recommendations with the actual requirements of the role. They can also assist with internal upskilling efforts, talent mapping, and measuring long-term outcomes, such as retention and performance.
In addition, staffing partners often have access to broader and more diverse talent pipelines, which can help employers connect with individuals who may not appear through traditional resume screening. By focusing on what candidates can do, rather than where they’ve worked or what degrees they hold, staffing partners support more equitable, efficient, and future-ready hiring strategies.
Ready to build a more agile, inclusive workforce?
If your organization is exploring skills-based hiring, DAHL is here to help. Our team specializes in aligning talent solutions with real business needs, helping you identify qualified candidates based on capabilities, not credentials. From refining job descriptions to implementing skills assessments and improving retention, we partner with you every step of the way. Connect with us today to learn how we can support your shift toward a skills-first hiring strategy!