Having experience doesn’t always mean someone will be good at their job. It alienates potential candidates who can offer a fresh perspective and skillset. This is why more businesses are transitioning to skills-based hiring to build stronger, more adaptable teams. This is particularly important as the job market faces rapid changes.
As a leading HR outsourcing company, we have been providing businesses across Australia with expert HR advice for over two decades. If your organisation needs support on how to adapt your recruitment model to skills based hiring, get in touch with us today.
What is Skills-Based Hiring?
Skills based hiring is the process by which candidates are hired based on their capabilities and competencies rather than formal qualifications, previous job titles or years of experience. Also known as competency-based selection, it takes a directed approach in asking, “Can you do what this job requires?” rather than “How long were you in your previous role?”. In today’s rapidly changing market, it is becoming an adopted hiring approach across many industries.
Why is Skills-Based Hiring Gaining Momentum?
Skills-based hiring is gaining traction across industries. As the nature of work evolves, traditional recruitment models are struggling to keep up. Employers are recognising that qualifications don’t always reflect a person’s ability to succeed in a role, prompting a shift toward hiring based on what people can do. Here are the top reasons for the shift:
Evolving workforce demands:
Rapid technological advancements, including the rise of AI and automation, have significantly changed the types of skills businesses need. In many cases, formal education simply can’t keep pace with these changes. New tools, platforms, and methodologies are emerging faster than university degrees can adapt. As a result, employers are placing more value on practical, up-to-date skills — whether acquired on the job, through bootcamps, online learning, or hands-on experience.
Access to broader talent pools:
By removing rigid educational or industry-specific requirements, skills-based hiring opens the door to a much wider range of candidates. This approach welcomes people from non-traditional or underrepresented backgrounds, including career changers and self-taught professionals. These candidates may bring diverse perspectives, lived experience, and adaptability, all qualities that are increasingly important in today’s dynamic workplace.
Fairer, more inclusive hiring:
Skills-based models help level the playing field by focusing on a candidate’s ability to perform, rather than their college degree. This approach reduces barriers to entry and promotes a more equitable and transparent recruitment process.
Improved retention:
One of the strongest business cases for skills-based hiring is retention. When candidates are selected based on their actual strengths and interests, not just credentials, they’re more likely to succeed in the role and feel a sense of purpose. This alignment leads to better engagement, performance, and ultimately, longer tenure. It also reduces the cost and disruption of high turnover, helping businesses build more stable and capable teams.
As talent shortages persist and work continues to evolve, skills-based hiring offers a future-ready solution that supports both business performance and workforce equity.
Benefits of Skills-Based Hiring
✅ Improved role fit – Candidates better match the demands of the role as the hiring approach is based on what the talent can do.
✅ Faster time-to-hire – Removing unnecessary credential filters speeds up the process.
✅ Greater workforce diversity – Opens the door to more inclusive and diverse talent pools.
✅ Lower turnover – Better alignment between people and roles reduces high turnover rates.
✅ Upskilling and career mobility – Supports internal growth and succession planning.
✅ More equitable access – Ideal for early-career talent and non-traditional applicants.
Skills-Based Hiring vs Traditional Hiring
How to Implement Skills-Based Hiring
When shifting to skills-based hiring practices, there are several steps we recommend organisations follow when writing the job description and application process to ensure the right people are hired for the job:
1. Start with a Role Audit
Start by breaking down each role into the skills and behaviours required to succeed in it. Remove rigid requirements such as a college degree or minimum number of years in a previous role, unless it’s truly necessary.
2. Write Skills-Focused Job Ads
Keep your language focus on outcomes and competencies rather than timelines and educational background. For example, “Ability to lead cross-functional teams” instead of “10 years in project management.”
3. Introduce Skills Assessments
Use real-world tasks to evaluate capabilities. This can be writing samples to coding challenges, or customer service scenarios.
4. Train Hiring Managers
Help your team shift their mindset from “pedigree-first” to “capability-first.”
Workshops, interview guides and rubrics can support this change.
5. Adjust Your ATS (Applicant Tracking System) or Screening Process
Update your systems to flag skills, results and experience over keywords and job titles. This can also be in the form of encouraging candidates to showcase projects and practical examples.
6. Promote Internal Mobility
Apply the same principles internally to identify hidden talent and support career progression within the organisation.
Challenges of Skills-Based Hiring – and How to Overcome Them
While there are many benefits to skills-based hiring, it does take time to perfect and shift hiring processes. One of the biggest challenges is overcoming ingrained bias, many hiring teams are used to relying on traditional markers like college degrees or job titles. To shift this, businesses need to retrain their teams and embed more inclusive, evidence-based hiring practices.
Another common issue is inconsistency in assessment design. Without a standardised approach, it’s easy for evaluations to become subjective or misaligned with the role. This makes it difficult to formalise the hiring process. Establishing clear, competency-based frameworks helps maintain fairness and accuracy.
Some organisations may also find that the process feels slower at first, but this is typically offset by the quality of hires and long-term retention. This is due to those hired are more aligned with the job requirements, and they want to be there. Finally, many applicant tracking systems (ATS) are built to prioritise keywords and credentials. Customising these systems to identify and surface skill-based indicators is essential for a successful transition.
How E.L Blue Supports Skills-Based Recruitment
At E.L Blue, we specialise in recruitment consulting, helping businesses shift toward more strategic, inclusive recruitment by:
- Reframing job descriptions to focus on real capabilities.
- Designing assessments that reflect day-to-day role performance.
- Embedding fair and evidence-based hiring processes.
- Mapping skills across your workforce for better internal mobility.
- Training hiring teams to make better, bias-aware decisions.
Conclusion
Skills-based hiring isn’t just a recruitment trend, it’s a smarter, fairer way to build strong teams. It allows businesses to respond to change, embrace diversity, and make better hires faster.
With the right workforce planning consultant, like E.L Blue, making the shift is simpler than you think. Ready to future-proof your hiring strategy? Let’s talk.