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Skills-based hiring is not just a passing trend; it’s a significant shift in the recruiting landscape. Many employers are eager to unlock its advantages in terms of flexibility, diversity, economic efficiency, and dealing with talent shortages. But is there a gap between theory and practice regarding understanding and implementation?
Over the last few months, experienced TA leader Adrian Thomas and myself have partnered with Neil Kelly at Vector on some research to uncover the realities and practicalities of skills-based hiring within large global employers.
Neil and Adrian join me on this episode to discuss the findings, some of which are quite surprising, and to look at what employers need to do to advance with skills-based hiring.
In the interview, we discuss:
• Why and how we did the research
• Motivations for being skills-based
• Some surprising findings
• The problems with skills taxonomies
• Talent Acquisition and Talent Management
• Training Hiring Managers
• The way forward for skills-based hiring
Download our report ” Skills-Based Hiring, The Gap Between Theory and Practice”
Follow this podcast on Apple Podcasts.
Matt: Hi, this is Matt. Just before we start the show, I want to tell you about a free whitepaper that I’ve just published on AI and talent acquisition. We all know that AI is going to dramatically change recruiting, but what will that really look like? For example, imagine a future where AI can predict your company’s future talent needs, build dynamic external and internal talent pools, craft personalized candidate experiences, and intelligently automate recruitment marketing. The new white paper 10 ways AI will transform talent acquisition doesn’t claim to have all the answers, but it does explore the most likely scenarios on how AI will impact recruiting. So, get a head start on planning and influencing the future of your talent acquisition strategy. You can download your copy of thewhite paper at mattalder.me/transform. That’s mattalder.me/transform.
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Matt: Hi, there. Welcome to Episode 617 of Recruiting Future with me, Matt Alder. Skills-based hiring is not just a passing trend, it’s a significant shift in the recruiting landscape. Many employers are eager to unlock its advantages in terms of flexibility, diversity, economic efficiency and dealing with talent shortages. But is there a gap between theory and practice when it comes to understanding and implementation? Over the last few months, experienced TA leader Adrian Thomas and myself have partnered with Neil Kelly at Vector on some research to uncover the realities and practicalities of skills-based hiring within large global employers. Neil and Adrian join me on this episode to discuss the findings, some of which are quite surprising, and to look at what employers need to do to advance with skills-based hiring.
Hi Neil. Hi Adrian, welcome to the podcast. Please could you introduce yourself and tell everyone what you do?
Adrian: Hi Matt, I’m Adrian Thomas. I’ve run recruitment teams for the public and private sectors for many years, but most recently I’ve been helping organizations optimize their recruitment practice and I was delighted to be asked to get involved with this little bit of work on skills-based hiring.
Neil: Hi Matt, thanks for having us. My name is Neil, I am the CEO of Vector. We’re a talent solutions business. I had 25 years of talent acquisition experience working for some global Fortune 100 brands along the way. So really excited to get into this discussion today about skills first.
Matt: Fantastic. And it’s been a really interesting few weeks working on the research for this report and there’s some things that I know I really want to talk about and I’m sure that you want to talk about as well. Before we sort of dive straight into that, I suppose it would be useful to give people a bit more of a background into basically why we did the research and how we did it?
Adrian: The noise, the noise level on skills first or skills-based approaches to running a company or to running roles and you want to hiring for those roles was just so loud. And we were talking about what’s loud in the industry at the moment. And to me, in all my networks, skills first, skills based were the terms that were being used by a lot of people, and I didn’t get it in terms of what were the elements that were building this up, and I wanted to know a bit more. So, in talking with Neil, we decided that we should perhaps ask the industry and we got a few organizations to contribute, well more than a few, to contribute.
And it was interesting to see that the research that was out there at the time, about that conversation a few weeks ago was mostly around quantitative research. People have been sending out questionnaires and gaining insight, but there was very limited qualitative research. So, we took the opportunity to have some in depth interviews with some heads of resourcing, some heads of other HR areas across the US and the UK and Europe to understand just a little bit more about why people are talking about skills first right now and what might be the way forward.
Neil: Yeah, absolutely, Adrian. I think as you just to reiterate, the reality is that there is this noise, as you quite rightly said, in the market right now. And we feel as a business that it’s our role as we’re training and educating people in the industry to understand some of these topics better, because I think there is this combination between fact and maybe fiction which is out there. So, yeah, looking forward to sharing some of those results with the listeners.
Matt: No, absolutely. And I think it’s probably worth also reiterating that the companies that we spoke to, we deliberately spoke to big global organizations because we felt that they had the most sort of complexity and the most complex challenge with this. And it was interesting to see where they got with it, essentially. So, there were lots and lots of interesting things that came out of this, and we’ve only got the length of the podcast to sort of go into the highlights. So, I can’t go into the massive details in this particular forum, but I’m just interested have everything that we found, what were the real standout findings? Adrian, what were you surprised by? What was a real standout for you?
Adrian: Well, the real surprise to me is almost without exception, was that every participant in the research claimed to be undertaking skills-based hiring or were moving to become a skills first organization. But when we started talking to them in depth, it was very clear they weren’t. And they readily admitted they weren’t. And it seems to me that the most surprising thing is that people almost claiming to be because they felt everybody else is claiming to be. And perhaps just one good thing coming out of perhaps this report will be to allow everybody to reset and rethink what they believe their aspirations are in this field and to think about the way going about it rather than just saying it out of almost fear for being the only one who’s not doing it, which is quite bizarre. But that for me, was the standout piece that came from the research.
Matt: Yeah, absolutely. And I’d really echo that. I think there was a couple of things that really stood out for me. First of all, the commitment to the cause, if you like, in terms of pretty much every company that we spoke to, and indeed everyone, a lot of companies I spoke to outside of this research very much agreed that this is the thing that they wanted to do. And I think everyone also really agreed around what the benefits of it were. What was interesting though, was everyone’s motivations were slightly different. So, some people were doing it from kind of a future skills perspective. Some people were doing it because they had current skill shortages and they needed to think differently about how they were hiring, obviously DE&I was a big driver for other organizations, so there was a real mix in terms of the driving forces behind it, even though they were very strong in terms of whatever they were. And also, yeah, I would really reiterate again what Adrian said in terms of it was surprising how far behind people were compared to where we thought they’d be. I think that was the thing.
And I think we picked organizations that we thought would be kind of far along with this journey. And I think it really illustrated just how difficult this is and the complexity of it. And I think it’s interesting to compare that to some of the narrative that you see at conferences and stuff that comes out from the many vendors in this space, where perhaps some of the really intricate, tricky steps in terms of doing this are kind of glossed over as a bullet point in a list of how do you do skills-based hiring. So, I think it was great from that perspective to really uncover where some of the sticking points are and where people are finding it difficult. Neil, what was the stand out for you?
Neil: Yeah. I think that’s a great point, Matt, about the vendors, vendors very much look through their lens right. So, whether that’s a piece of technology or whether that’s the product they’re trying to sell, which is fantastic. However, you hit the nail on the head. TA practitioner like as I am, the reality is of stitching and weaving some of these things together to make it into a skills first organization is extremely difficult and I think that really resonated from the research that we heard that the strong feedback was that this is difficult, it’s complex. It’s difficult to find an entry point to this discussion, which we’ll come back to in a few minutes. But yeah, I think we can’t underestimate the activity and the challenge we’re taking on here.
Matt: It’s obviously a really complex topic and as I said before, it was really good to get into the detail about what people are finding difficult about it. I suppose to back up a little bit, one of the other things is actually the definition of it, because I think sometimes people will talk about it and don’t actually go into what they mean by it. I think one of the interesting things that came out of this research is we came up with a definition at the start and basically asked everyone what they thought about that. And there was kind of broad agreement, wasn’t there, Adrian?
Adrian: There was. I was surprised by it. And that perhaps also indicates how immature people’s thinking is. The organizations we spoke to have just not spent enough time thinking about skills. They have spent more time diving into, perhaps removing qualifications from their assessment process or years of experience. So, we tested them with a definition and without exception, they all felt this definition really plays to where their thoughts are and interesting, they couldn’t add to it. So, I think we played a blinder in defining this and I’ll read it slowly. So we through the research, agreed the following definitions of a skills-based hiring, skills first organization. An organization that prioritizes the skills of its workforce over traditional credentials like academic qualifications or experience, and utilizes those skills as the main driver for organizational and individual performance, keeping those skills continually under review and in line with future organization direction and training needs.
Matt: Just listening to that throws up one of the biggest parts of all of this in terms of a sticking point, in terms of complexity, which was having that skills taxonomy in your business. So, understanding what skills you have in your business and what skills you need in your business. And I mean, this was a massive area, wasn’t it, Adrian?
Adrian: It was. And there was very limited discussion to help solve it because it’s difficult to get an agreement on what is a hard skill or a soft skill or whether those skills vary by industry or job function. So, there’s a huge array of potential skills, and I’ve seen some reports of organizations on the vendor side defining a taxonomy of over 50,000 skills. Well, how do you start putting those into a job profile? How do you start pulling those into an attraction suite of skills? So, I do think that there is a lot of work to be done educating, getting hiring managers or managers of organizations to start thinking skills first. Before we can say that we’ve got a solution to the skills-based hiring problems, that we can go to vendors and say, “Please provide.” So for me, we’ve got to find a way to see the wood for the trees, and that’s going to take a lot of work, I think.
Matt: Yeah. I think this was just such a big thing. And talking to TA leaders and in some cases talent management professionals as well, who were kind of working together on this highly complicated, very, very difficult to do. Some people were getting people to self-report their skills and just kind of working through something that’s a moving target. If the whole point of looking at skills-based hiring is because skills are changing so quickly, then how do you map that in your organization? And I suppose that one of the ways to do that was obviously through technology. What did strike me in the conversations were a lot of organizations don’t necessarily have the budget to invest in new technology, so they’re trying to use their existing technology to do this.
And I just, a bit of me felt that to do this at the scale at which we’re talking, whether we’re kind of one technological advancement away from that, maybe in the future the technology will evolve in a way that will make it easier. There were certainly lots of issues with it. And I think the other bit that I take away was, I think people perhaps need to think in a bit more focused way around this, because mapping the entire skills of the entire organization does seem like a very difficult, if not impossible thing to do. And are there other ways of thinking about skills taxonomy that might get people further along on that journey? What were your thoughts, Neil?
Neil: Yeah, it’s a good question. I think a narrative you’ve used a number of times before, Matt, around perishable skills. That is, I think something as we weaved into the discussions with the research group that really resonated with people, these perishable skills that are here for a two- or three-year period, then suddenly fall away, is something absolutely true that organizations are seeing. I think the analogy I use, it’s like sand between the fingers sometimes you can’t quite grab hold of it because it’s constantly changing. I mean, a big global organization with thousands of different job profiles, how can you possibly, with the current framework, keep up to date with that changing so regularly?
So, I think this concept of recognizing which are perishable and those which are not, so we talk about hard and soft skills. So soft skills are the things that are going to stay with employees for a long, long time. And actually, this is now becoming the foundation of our discussions with our customers because we firmly believe that there is a life cycle for those perishable skills. So, I think that resonated during the research and I think it still makes sense now.
Matt: No, absolutely. I think it’s such an interesting area, and it’s good. I think it’s an area that we need discussions on. We need people talking about what they’re doing in a more detailed way than just a bullet point on a to-do list of things to get you to be a skills-based organization? I think the next point, which is something that was really interesting for me, was we went into this very much from the talent acquisition angle, so very much talking about skills-based hiring. But I think this is something that we realized already. But the more you look into it, the more this is something that involves the whole organization and particularly the people function.
I felt that the company that was perhaps furthest along with this was the one where talent acquisition and talent management were working incredibly close together on this as a partnership to become a skills-based organization. Their motivation for doing that was so they could get to a point where they could predict much more clearly in advance the sort of skills that they would need. And obviously, you can reflect that back into workforce planning in terms of what you’re hiring and what you’re training. It really seems that even just taking skills-based hiring, you can’t take that in isolation. It has to be seen in the context of the whole organization. But also, it’s something that some of the different silos, for want of a better word, of the people function kind of really needed to sort of be partnering with in terms of how they move together. I mean, what were your reflections on that, Adrian?
Adrian: Well, I think that’s one of the major conclusions, is that this isn’t going to be a fix that the TA function can do by simply changing one of their processes. This has to be a whole organization approach to skills first. And you can’t have an organization being managed by managers who are defining roles in terms of the years of experience or the role definitions that they’ve used for a generation or more. And then TA recruit people to a completely different script. So there has to be an alignment across the whole organization. And of course, once you’ve defined the skills that roles need, you need to attract for those skills, and that’s probably a different way of attracting than you’ve done in the past. You need to assess for them and that’s probably where people are at the moment playing in this game, and they need to move to earlier in the process.
But finally, once you’ve acquired people that retention is absolutely paramount to keeping recruitment costs down. So, developing them and retaining them and growing them against the future skills of the organization is again another critical piece. So, when I count up then who’s responsible or who’s necessary for the process, basically it’s the whole organization needs to have this and needs to understand this, which is why I talk about one of the critical factors is education. It’s not TA talking skills-based hiring. It is the organization talking about skills-based hiring to enable it to become a skills first organization. And that means talking to all of HR and beyond into the management teams, into the specific functions like procurement, etc. Finance everybody needs to be on board if this is going to be the success that people want it to be.
Matt: Neil, what are your thoughts?
Neil: Yeah, I was just kind of reflecting that. If you recall, Adrian, there was a financial services organization who were really sponsored from the top. So, the executive team were sponsoring the initiative to drive this within their organization. So, I fully support and agree with your comments. I think the only add on to that is the role that digital and technology functions play with the talent management and talent organization overall, because what they find in this particular organization that the role is becoming more significant that they’re playing. But allowing and ensuring the managers have a voice in this conversation and understand the journey they’re on is actually probably the most fundamental piece of all of this, because where does the investment come from? It comes from the business very often. So, if you don’t have the managers and the organization aligned to your mandate, it’s going to fail. So that particular organization, I think, are many, many yards ahead because they’ve got the engagements of hiring managers, the leadership, and the talent function.
Matt: No, absolutely. I think that kind of became clear. The few organizations that were kind of working together with that top level buy in, it’s a very different picture from a TA team who’s trying to sort of fight against the tide to move towards more skills-based hiring. So, I think that’s a really good point. So, we’ve established that this is really complex and it’s really difficult, and organizations are not perhaps as far along as we thought they were. I’m not sure that any of that is going to surprise anyone who’s listening. So I guess the question is, “What is the solution to all of this? Or at least what is the next steps? What advice would we give to people who are listening, who want to go on this journey, or they’re on this journey in terms of how they can get there quicker?”
Adrian: Well, I’m happy to have a stab at answering that because I don’t think it’s an easy answer. It’s going to be different for every organization, and I think the first thing an organization needs to do is take a look at itself. If it’s tech based and as we know, that’s evolving at supersonic speeds, then it might be more urgent and relevant that the organization gets into this area quicker than perhaps another organization where skills won’t change so quickly. And there’s plenty of organizations that fall into both of the extreme camps of those skills changing very, very fast. And skills not changing, a bus driver’s skills don’t change very quickly, but the technology may at some point come along and we’ll have to learn something different in that bus driving job.
And the guess I’m getting to is that whilst you’ve got the extremes of skills changing at a rapid pace and skills changing very slowly, there’s every type of change in between the two, which is, for me, why it’s critical that people start thinking, what’s the business imperative behind the skills and becoming a skills first organization? And answering that so that they can prioritize. And within large, complex global organizations, there’s probably roles and parts of the business that need to move quicker than others, and maybe there’s areas that don’t need to move at all. So, there’s no one size fits all. One quick fix won’t work. It is about taking that very deep, close look at your own organization, the own roles that you’re undertaking, and then coming up with an action plan to deliver against it. That action plan itself is probably going to be very, very complex, but I think starting with taking a look at what the business imperatives are will set you in good state.
Matt: Neil, what are your thoughts?
Neil: I think having a plan, as Adrian said, is obviously the starting point. But understanding the role that, as we described the trifecta between HR, talent acquisition, and the manager can play because certain things are within your control and the certain things are outside of your control. And one of the things that you must do is you need to iterate in this world. So, we can’t have a fully finished project that you can then drop into the business, nor can you take such small steps that you don’t nudge the needle. So, I think one of the areas which I referenced a few minutes ago is the role of the hiring manager. So, as you go along your journey, ensuring that you take the biggest population you service along that journey with you is critical. Now that might be some fundamental steps and some nudges that you make along that journey, but actually it starts allowing you to have the dialogue, to have the conversations, to having everyone at the same level as you expect them to.
Matt: I think that’s very, very useful advice because one of the things that comes really clear from all of this is the large amount of organizations who are looking to make progress in this area. And there’s some great reasons behind that. So, final question, where can people find out more about the research?
Neil: Yes. So, in the show notes at the which Matt will post, there’ll be a link on there, that will take you through to a landing page where please register your details there and you’ll actually get a report. So, the report we’ve created is accessible through that link and that will be on our Vector website under the learning section.
Matt: Neil, Adrian, thank you very much for joining me.
Adrian: Thank you, Matt.
Neil: Thank you.
Matt: My thanks to Neil and Adrian. You can follow this podcast on Apple Podcasts, on Spotify or via your podcasting app of choice. Please also subscribe to our YouTube channel by going to mattalder.tv. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to our monthly newsletter, Recruiting Future Feast, and get the inside track about everything that’s coming up on the show. Thanks very much for listening. I’ll be back next time and I hope you’ll join me.
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