Hiring for skills is a popular trend among employers who want to broaden the talent pool to include more diverse and fully qualified candidates. Instead of relying on credentials, such as degrees, certificates, or years of experience, skills-based hiring focuses on the abilities and competencies that are relevant for the job. This approach can have many benefits, such as expanding the talent pool, reducing bias, and improving retention. However, it also comes with some challenges that need to be addressed in order to make it effective and fair.

One of the main challenges of skills-based hiring is defining what skills are needed for the job and how to measure them. Many employers use job descriptions and interviews to identify the skills they are looking for, but this can be vague and subjective. For example, what does it mean to have good communication skills or problem-solving skills? How much of these skills are required and how do they apply to the specific tasks and goals of the role? These questions are often left to the discretion of the hiring managers or recruiters, who may have different opinions or expectations.

Moreover, how do employers test for skills in a valid and reliable way? Many employers use assessments, such as tests, simulations, or portfolios, to evaluate the candidates’ skills. However, not all assessments are created equal. Some may be too easy or too hard, some may be irrelevant or outdated, and some may be biased or discriminatory. For example, a test that measures mathematical skills may not reflect how the skill is used in the context of the job, or a portfolio that showcases creative work may favor candidates who have more resources or opportunities. Therefore, employers need to ensure that their assessments are aligned with the job requirements and that they are fair and consistent for all candidates.

One way to overcome this challenge is to use a method called Performance-based Hiring. This is a process that helps managers convert skills into performance objectives when opening a new job requisition. It starts by asking the hiring manager to describe how the skill is actually used and applied on the job, rather than using generic terms or labels.

For example, instead of saying that a salesperson needs to have negotiation skills, the hiring manager would explain what kind of deals they need to close, with whom, and under what conditions. Then, they would create a complete SMART objective (specific, measurable, achievable, relevant, and time-bound) to ensure that how the skill is used is clear to every interviewer. For instance, a SMART objective for negotiation skills could be: “Achieve a 20% increase in revenue by closing at least five contracts with new clients in the next quarter, while maintaining a positive relationship and a high level of satisfaction.”

By using Performance-based Hiring, managers can level-set the skills they are looking for and make them more objective and realistic. They can also use these SMART objectives as a basis for assessing candidates’ competency and fit. Instead of asking hypothetical or behavioral questions, such as “How do you negotiate with difficult customers?” or “Tell me about a time when you successfully negotiated a deal,” they can ask candidates to describe accomplishments that are most comparable to the SMART objectives. For example, they can ask: “Tell me about a recent contract that you closed with a new client. How did you approach the negotiation? What were the challenges and how did you overcome them? What was the outcome and how did you measure it?” By doing this, they can evaluate the candidate’s skills based on their actual performance and results, rather than their self-reported abilities or potential.

Performance-based Hiring is a powerful way to implement skills-based hiring in a more effective and fair way. It helps managers define and measure the skills they need for the job, and it helps candidates demonstrate their skills in a concrete and relevant way. By using this method, employers can find the best talent for their roles, regardless of their background, education, or experience. You’ll be able to use this Performance-based Hiring ChatGPT app to create a sample performance-based job description. Just put in the job title, a short description and a few critical skills and see some magic happen. Then ask it to create a compelling job posting and some interview questions. This step alone will change who you see for this job and how you assess their competency and fit for the role.

While skills-based hiring is a good first step in opening the talent pool to more qualified people, it’s only a first step, and a small one at that. Converting these skills into key performance objectives and using these as the means to assess a candidates competency and fit for the role is how hiring for skills can be a difference maker for attracting more diverse and qualified candidates, reducing hiring costs and turnover, and improving employee satisfaction and performance.