4 Critical Steps for Deploying a Skills-Based Hiring Approach to Talent Acquisition and Retention

Why aren’t more organizations successfully transitioning to a skill-based hiring approach to talent acquisition? There are numerous benefits to doing so, from faster fill times and expanded talent pools to increased diversity and improved talent retention. And according to a recent McKinsey study, hiring for skills is five times more predictive of job performance than hiring for education.

Business leaders have taken notice, with 98% of executives planning on moving more toward becoming a skills-based organization, and 90% actively experimenting with skills-based hiring approaches now, according to Deloitte research. But despite the enthusiasm for the concept, fewer than one in five organizations are adopting skills-based approaches to a significant extent across the organization, in a clear and repeatable way.

Why the disconnect between aspirations and reality? Common challenges include:

• Difficulty keeping up with the changing skills needed
• Lack of skills data and taxonomy
• Compensation practices restricting skills-based awards
• Scarcity of resources to take on the huge manual effort
• Inability to assess skills competency and performance
• Absence of technology options to automate the process

Let’s look at four key steps your organization can take to successfully transition to a skill-based hiring approach and realize significant hiring talent acquisition and retention benefits.

1) Understand your current skill inventory.

The first step is to know where you’re starting from. What skills do you have in your organization across your entire catalog of job descriptions, business units, and locations around the globe?

It sounds straightforward enough. But historically this has been a Herculean manual effort, and the inability to establish this baseline has hampered efforts to effectively implement a skills-based approach.

Today, AI-powered technology is changing the game, enabling much more efficient analysis of tens of thousands of job descriptions and sophisticated matching techniques.

2) Analyze existing jobs for skills that are missing.

When competing for talent in a global market, having missing skill requirements can result in “mis-hires” that are costly to the company. This is why it’s important to examine the skill inventory findings and add skills to job descriptions where appropriate.

Here’s how it works. First, you need access to a “key” – a massive data set of tens of millions of job postings to associate the most common skills for each job description based on the taxonomy. Next, AI-driven technology is used to quickly evaluate a job description, parse out and rank a list of skills for that description, match it to the database, and identify missing skills that are most associated with this job.

3) Augment or enhance job descriptions and synergize any redundancies.

Including non-critical skills in a job description can drive longer fill times, unnecessarily inflate price points, and decrease diversity. This is why, as part of the analysis outlined in step two, it’s critical to also look for skills included in job descriptions that are NOT included in the typical “industry description.” You can then revisit these descriptions and remove the skills that aren’t truly necessary.

This optimization process should also include scanning the organization’s entire job catalog to identify redundant roles. It’s not uncommon for large companies to have two different job titles that have the same underlying skill requirement. Streamlining these roles reduces inefficiency and can also help decrease job parity and pay equity issues.

4) Turn your skills-based data into action.

Now that you’ve optimized your job catalog and taxonomy, you can use your skills-based hiring data to drive more effective talent acquisition, retention, and workforce decision-making. Opportunities include:

• Talent pool expansion: Look at where you’re sourcing skills versus where the data is suggesting you should be sourcing. Is there an opportunity to expand your talent pool and drive cost savings, improved talent quality and/or increased diversity?
• Pay rate optimization: Understanding how skills combine to impact pay rates has proven elusive for many organizations. But with skills-based data, you can triangulate pay rates more accurately based on the accumulation of multiple sought-after skills.
• Enhanced worker experience: Development opportunities are a key driver of improved employee satisfaction. Use skills data to set paths for the workforce to upskill/reskill so they qualify for new jobs.
• Increased worker redeployment: Look at situations where workers are rolling off assignments and cross-reference them to the skills you need, revealing cost-saving opportunities to redeploy top workers into open job postings that need those skills. This also ensures good talent isn’t walking out the door toward a competitor.
• Improved workforce planning: Plot skills over time to see how trends change. This will inform more strategic workforce decision-making, as well as ensuring there is organizational infrastructure in place to support emerging skills needed by the business.

Effectively implementing these four steps requires data, technology and know-how, but it’s worth the effort: Organizations that embed a skills-based approach are 107% more likely to place talent effectively, 98% more likely to retain high performers and 49% more likely to provide an inclusive environment according to Deloitte research.

How Magnit Can Help

Magnit is uniquely positioned to help organizations overcome common barriers to adoption and successfully deploy a skills-based approach by leveraging its:

• Massive Data Ocean: Magnit mines the world’s largest workforce data repository, including more than 100 million job postings and 80,000 skills, to drive accurate mapping of skills to job families/titles and inform smarter hiring.
• AI-Powered Technology: Magnit has created an advanced technology that ingests clients’ job catalogs and uses AI/machine learning and parsing techniques to identify skills within descriptions.
• Unmatched Taxonomy Expertise: Magnit’s Strategic Advisory team has years of experience optimizing job taxonomies across global organizations and helping drive program governance, market rate adherence, and pay equity and job parity compliance.

To learn more about Magnit’s skills-based advisory services, check out our solution brief and request a complimentary skills-based consultation.