Understanding skills-based hiring

Skills-based hiring focuses on a candidate’s abilities, including soft and hard skills, not their educational history. It evaluates whether a person can perform the required tasks using tools such as structured interviews, task-based assessments and practical scenarios.

Why it matters:

• Helps expand your talent pool
• Aligns hiring with job performance
• Removes unnecessary barriers
• Supports long-term workforce planning

Employers facing talent shortages or shifting workforce expectations often adopt this model. You can find support through resources like Indeed’s Skills-First Hiring Starter Kit.

Skills-based vs. degree-based hiring

In 2024, 52% of U.S. job postings on Indeed didn’t include formal education requirements. That’s a clear sign that hiring is shifting toward skills-based evaluation.

Here’s what that change involves:

Degree-based hiring:

• Screens for degrees or years of experience
• Limits the applicant pool
• May miss out on nontraditional candidates
• Emphasizes credentials

Skills-based hiring:

• Screens for experience while balancing relevant skills
• Expands applicant reach
• Recognizes alternative experience
• Prioritizes real-world outcomes

When you remove rigid degree filters, you can reach candidates with the potential to succeed based on how they think and work—not where they studied.

The role of soft skills in hiring

Soft skills are often needed for professional success, helping candidates interact, adapt, solve problems and stay engaged. This can be especially important for leadership, customer-facing or collaborative roles. For example, a candidate may have refined time management skills through a server position, yet that valuable skill could apply to many roles. These include:

• Communication
• Time management
• Critical thinking
• Adaptability

To assess soft skills:

• Use situational interview questions
• Ask candidates to walk through past work scenarios
• Include short team-based, role-play or behavioral exercises, such as a customer scenario for a hospitality role or a team-building challenge for a project manager
• Use consistent rating tools

Including these skills in your evaluation helps you build a workforce that collaborates effectively, not just on paper.

Implementing skills-based hiring practices

To start, assess how your current hiring model works. Then consider these steps to make a shift:

1. Audit your job descriptions

Remove unnecessary degree requirements or rigid experience minimums from your job descriptions. Focus instead on job-specific tasks, outcomes and skills.

2. Use structured screening

Develop consistent screening questions that match the core responsibilities, tools and working conditions of the role.

3. Integrate assessments

Add practical exercises during the interview or application stage. Keep them short, relevant, task-based and tied to key outcomes. Consider how you can make them inclusive for all candidates by offering several formats, such as verbal or written, or time extensions.

4. Train hiring managers

Help your team get comfortable evaluating skills. Provide scorecards, interview rubrics and guidelines that support consistency.

5. Measure results

Track time to hire, candidate quality, team feedback, retention and a skills-growth metric relevant to your industry. These insights can show what’s working and where to adjust.

Overcoming challenges in skills-based hiring

Shifting to skills-based hiring often means adjusting how your team writes job postings, screens applications and makes decisions. While these changes may feel new at first, starting with a clear plan can make the process smoother and more efficient.

Here are common concerns and how to address them:

1. New steps may slow the hiring process: Hiring teams may worry that adding assessments or structured interviews will delay decisions.

Solution: Begin with one role and use templates to simplify the setup. Start small, then expand as you learn what works. You can aim to balance speed with long-term fit.

2. Limited tools to assess skills: Without a clear way to measure ability, some hiring managers may rely on resumes or job titles, potentially missing out on quality candidates.

Solution: Use simple, repeatable tools like structured scoring guides or practical exercises tied to core job outcomes. These provide everyone with a shared method for evaluating candidates.

3. Uncertainty around dropping degree filters: Some teams feel unsure about removing degree requirements.

Solution: Share real examples of high-performing employees who were hired without traditional qualifications. Let results show why skills-based hiring works.

4. Budget and capacity limits: Tools, training or automation may seem out of reach if resources are limited.

Solution: Start with what you have. For example, write clear interview questions based on job tasks. As your team observes results, it becomes easier to build support for new tools or processes.

Crafting effective job descriptions

Well-written job descriptions are central to skills-based hiring. They show candidates exactly what’s expected and reduce confusion about qualifications.

Instead of listing formal education or years of experience, highlight actions and outcomes that are required for the position. This might include certain abilities, such as familiarity with programming languages, rather than requiring several years of experience using Python.

For example:

• Able to lead daily production meetings
• Able to adjust schedules to meet delivery targets
• Experience tracking digital ad performance
• Experience recommending budget changes based on results

This kind of language helps candidates assess their own skills more accurately.

For consistency across roles, consider creating a template with sections for:

• Core responsibilities
• Key skills and tools
• Success metrics
• Preferred experience (if any)

Generative AI tools can help tailor job descriptions while keeping them focused and relevant. They can also remove biased or unclear language to improve accessibility.

Assessing candidates’ skills

A skills-first model generally works best if the evaluation process is consistent and tied to job needs.

Here’s how you can structure skill-based evaluation:

• Structured interviews: Ask all candidates the same questions aligned with the required tasks.
• Behavioral examples: Request descriptions of past work outcomes or role-specific challenges.
• Mini-assessments: Assign timed or untimed tasks that reflect day-to-day responsibilities.

For example, if you’re hiring for a logistics coordinator, you might ask the candidate to plan a short delivery schedule using mock inputs. Or, if hiring a customer service manager, you might review how they’ve handled process changes or trained team members.

Leveraging internal talent

Hiring externally is often necessary, but internal candidates can be a valuable source of talent when using skills-based methods.

Many employees have untapped skills they aren’t using in their current roles. Others are ready for advancement and can grow into new responsibilities without needing a degree or official title.

To strengthen internal mobility:

• Build a company-wide skills inventory
• Invite employees to express interest in open roles
• Create learning pathways based on required competencies
• Encourage transparent communication within the program
• Offer small project opportunities to help employees prove their abilities

For example, someone in an operations support role may already manage vendor issues or update processes but lack formal project ownership. A structured mobility program could help that employee grow into a coordinator or manager role.

Retention tends to improve when people have real opportunities to grow without changing companies. AI can help track skill growth over time and suggest role matches as people develop.

Defining necessary skills

A strong skills-first strategy starts with clarity. Define which skills support success in each role, and then translate those into hiring, onboarding and development.

Start by working with hiring managers to identify:

• Core duties the role performs daily
• Systems or tools used frequently
• Soft skills that support collaboration or decision-making
• Key results someone in the role should produce

You can gather this by reviewing performance data, interviewing high performers and analyzing similar job families.

Once identified, organize these into a structured list—this becomes your hiring blueprint.

Ensuring equitable pay

Pay decisions should reflect:

• The skills required to succeed in the role
• The complexity and impact of those skills
• The consistency of performance, not just past job titles

To help stay equitable:

• Review how pay bands are set and updated
• Compare employee outcomes across roles with similar skills
• Remove reliance on prior compensation during the offer stages

For example, two project managers may have different degrees or years of experience but perform the same job with the same results. A skills-first pay framework would compensate them equally. Equitable pay practices may also include a review of pay gaps related to gender, race or other biases that can surface in skills-based systems.

The future of skills-based hiring

The shift to skills-first hiring is here to stay. It reflects lasting changes in how work is defined, how technology supports it and how teams are built.

Many employers are moving toward:

• Flexible, task-focused job descriptions
• Faster, data-supported screening tools
• Less reliance on credentials
• Continuous learning paths for growth

Reskilling and internal development will be critical to keeping up with change. Employers who build hiring models that track and value skills will be better prepared.

AI and skills-based hiring

AI tools are becoming central to how employers evaluate, place and support talent. In a skills-first model, AI can support:

• Job ad creation with skill-specific language
• Resume scanning based on verified competencies
• Role matching for internal candidates
• Predictive performance scoring for applicants

Used well, these tools reduce bias and surface strong candidates faster. However, consider incorporating regular audits to prevent AI from introducing bias to ensure responsible AI use. For example, a resume with nontraditional experience, like freelance work or bootcamp training, might be missed by keyword filters but highlighted by a skills-first system.

Adapting to labor market changes

Skills-based hiring helps you respond to a changing workforce. For many roles, degree-focused filters no longer align with how many people gain experience.

This model gives you a framework to:

• Hire faster in tight labor markets
• Improve diversity by removing unnecessary barriers
• Focus on what drives performance
• Develop teams with long-term growth in mind

As the labor market evolves, skills-first hiring helps you find the right people faster and build teams that grow with your goals.

FAQs about skills-first hiring

How can I build leadership pipelines using skills-first hiring?

Skills-first hiring helps identify leadership potential based on traits like initiative, problem-solving and team impact, regardless of formal titles or degrees. To build a leadership pipeline, consider candidates and employees who consistently show these skills in their current roles.

Then, offer stretch assignments, mentoring and targeted development tied to observable capabilities. This approach helps surface high-potential talent earlier and more equitably than traditional methods. You might also recognize leadership potential by evaluating prior instances where the candidate influenced outcomes without formal authority.

What’s the role of certifications in a skills-first hiring model?

Certifications can serve as third-party validation of specific skills, especially in technical or regulated industries. In a skills-first model, they’re most useful when paired with proven ability.

For example, a coding certificate may confirm baseline knowledge, but practical assessments or project portfolios can show how that knowledge is applied. Use certifications as supporting evidence, not as mandatory filters.