The Practicalities of Skills-Based Hiring

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[00:01:03] Hi there, welcome to episode 617 of Recruiting Future with me, Matt Alder.

[00:01:30] Skills-based hiring is not just a passing trend. It's a significant shift in the recruiting

[00:01:35] landscape. Many employers are eager to unlock its advantages in terms of flexibility, diversity,

[00:01:42] economic efficiency and dealing with talent shortages. But is there a gap between theory

[00:01:50] and practice when it comes to understanding and implementation?

[00:01:55] Over the last few months, experienced TA leader Adrian Thomas and myself have partnered with

[00:02:00] Neil Kelly at Vector on some research to uncover the realities and practicalities

[00:02:05] of skills-based hiring within large global employers.

[00:02:09] Neil and Adrian join me on this episode to discuss the findings, some of which are quite

[00:02:14] surprising, and to look at what employers need to do to advance with skills-based hiring.

[00:02:20] Hi Neil, hi Adrian. Welcome to the podcast. Please could you introduce yourself and tell

[00:02:26] everyone what you do?

[00:02:28] Hi Matt, I'm Adrian Thomas. I've run recruitment teams for the public and private sectors

[00:02:35] for many years. But most recently, I've been helping organisations optimise their

[00:02:41] recruitment practice and I was delighted to be asked to get involved with this little bit

[00:02:45] of work on skills-based hiring.

[00:02:46] Hi Matt, thanks for having us. My name is Neil. I am the CEO of Vector. We're a talent

[00:02:51] solutions business. I had 25 years of talent acquisition experience working for some global

[00:03:00] Fortune 100 brands along the way. So really excited to get into this discussion today

[00:03:06] about skills first.

[00:03:07] Fantastic. And it's been a really interesting few weeks working on the research for this

[00:03:12] report and there's some things that I know I really want to talk about and I'm sure

[00:03:16] that you want to talk about as well. Before we sort of dive straight into that, I suppose

[00:03:20] it would be useful to give people a bit more of a background into basically why we

[00:03:26] did the research and how we did it.

[00:03:29] The noise, the noise level on skills first or skills-based approaches to running a

[00:03:35] company or to running roles, hiring for those roles was just so loud. And we

[00:03:42] were talking about what's loud in the industry at the moment. And to me, in all my

[00:03:49] networks, skills first, skills based were the terms that were being used by a lot of people.

[00:03:56] And I just didn't get it in terms of what were the elements that were building this up.

[00:04:02] And I want to know a bit more. So in talking with Neil, we decided that we should perhaps

[00:04:10] ask the industry and we got a few organisations to contribute, well more than a few,

[00:04:16] to contribute. And it was interesting to see that the research that was out there at the time

[00:04:21] about that conversation a few weeks ago was mostly around quantitative research.

[00:04:27] People have been sending out questionnaires and gaining insight, but there was very limited

[00:04:34] quality research. So we took the opportunity to have some in-depth interviews with some heads of

[00:04:41] resourcing, some heads of other HR areas across the US and the UK and Europe to understand just

[00:04:51] a little bit more about why people are talking about skills first right now and what might be

[00:04:58] the way forward.

[00:04:59] Yeah, no, absolutely. I think now as you just to reiterate, the reality is that there is this

[00:05:05] noise, as you quite rightly said in the market right now. And we feel as a business that it's

[00:05:12] our role as we're training and educating people in the industry to understand some of

[00:05:17] these topics better because I think there is this combination between fact and maybe fiction,

[00:05:22] which is out there. So yeah, looking forward to sharing some of those results with the

[00:05:26] listeners.

[00:05:27] No, absolutely. And I think that it's probably worth also reiterating that the companies that

[00:05:31] we spoke to, we deliberately spoke to big global organisations because we felt that

[00:05:37] they had the most complexity and the most complex challenge with this. And it was

[00:05:41] interesting to see where they got with it essentially. So there were lots and lots of

[00:05:47] interesting things that came out of this. And we've only got the length of the podcast to

[00:05:51] go into the highlights. So I can't go into the massive details in this particular forum,

[00:05:56] but I'm just interested. I have everything that we found. What were the real standout findings?

[00:06:03] I mean, Adrian, what did you, what were you surprised by? What was a real standout for you?

[00:06:08] Well, the real surprise to me is almost without exception was that every participant

[00:06:13] in the research claimed to be undertaking skills-based hiring or were moving to

[00:06:19] become a skills first organisation. But when we started talking to them in depth,

[00:06:24] it was very clear they weren't. And they readily admitted they weren't. And it's, it's,

[00:06:31] it seems to me that the most surprising thing is that people almost claiming to be,

[00:06:36] because they felt everybody else is claiming to be. And perhaps just one good thing

[00:06:42] coming out of perhaps this report will be to allow everybody to reset and rethink what they

[00:06:49] believe their aspirations are in this field. And to think about the way about going about it,

[00:06:57] rather than just saying it out of almost fear for being the only one who's not doing it,

[00:07:03] which is quite bizarre. But that was that for me was the standout piece that came from the

[00:07:07] research. Yeah, absolutely. And I'd really echo that. I think there was a couple of things

[00:07:12] that really stood out for me. First of all, the commitment to the cause, if you like,

[00:07:17] in terms of pretty much every company that we spoke to, and indeed everyone, a lot of companies

[00:07:22] I've spoken to outside of this research very much agreed that this is the thing that they

[00:07:28] wanted to do. And I think everyone also really agreed around what the benefits of it were.

[00:07:33] What was interesting though was everyone's motivations were slightly different. So some

[00:07:37] people were doing it from kind of a future skills perspective. Some people were doing

[00:07:41] it because they had current skill shortages and they needed to think differently about how

[00:07:44] they were hiring. Obviously, DE&I was a big driver for other organizations. So there was

[00:07:50] a real mix in terms of the driving forces behind it, even though they were very strong in terms

[00:07:55] of whatever they were. And also, yeah, I would really reiterate again what Adrian said in terms

[00:08:01] of it was surprising how far behind people were compared to where we thought they'd be.

[00:08:08] I think that was the thing. And I think we picked organizations that we thought would

[00:08:12] be kind of far along with this journey. And I think it really illustrated just how difficult

[00:08:17] this is and the complexity of it. And I think it's an interesting to compare that to some

[00:08:23] of the narrative that you see at conferences and stuff that comes out from the many vendors

[00:08:27] in this space where perhaps some of the really intricate, tricky steps in terms of doing this

[00:08:34] are kind of glossed over as a bullet point in a list of how do you do skills-based

[00:08:39] hiring. So I think it was great from that perspective to really uncover where some of the

[00:08:42] sticking points are and where people are finding it difficult. Neil, what would stand out for you?

[00:08:48] Yeah, I think that's a great point, Matt, about the vendors and not having...

[00:08:55] Vendors very much look through their lens, right? So whether that's a piece of technology

[00:09:00] or whether that's the product they're trying to sell, which is fantastic. However, you hit

[00:09:06] the nail on the head, TA practitioner like as I am, the reality is of stitching and weaving

[00:09:14] some of these things together to make it into a skills-first organization is extremely difficult.

[00:09:19] And I think that really resonated from the research that we heard that the strong

[00:09:28] feedback was that this is difficult, it's complex, it's difficult to find an entry point

[00:09:34] to this discussion, which we'll come back to in a few minutes. But yeah, I think we can't

[00:09:40] underestimate the activity and the challenge we're taking on here.

[00:09:44] It's obviously a really complex topic and it was, as I said before, it was really good

[00:09:47] to get into the detail about what people are finding difficult about it. I suppose to back

[00:09:52] up a little bit, one of the other things is actually the definition of it because I think

[00:09:56] sometimes people talk about it and don't actually go into what they mean by it. I think one of

[00:10:01] the interesting things that came out of this research is we came up with a definition at the

[00:10:06] start and basically asked everyone what they thought about that. And there was broad agreement,

[00:10:12] wasn't there, Adrian? There was. I was surprised by it and that perhaps also indicates how

[00:10:18] immature people's thinking is. The organizations we spoke to have just not spent enough time

[00:10:24] thinking about skills. They have spent more time diving into perhaps removing qualifications

[00:10:31] from their assessment process or years of experience. So we tested them with a definition

[00:10:38] and without exception, they all felt this definition really plays to where their thoughts

[00:10:46] are and interestingly, they couldn't add to it. So I think we played a blinder in defining

[00:10:54] this. I'll read it slowly. So we through the research agreed the following definitions of a

[00:11:02] skills-based hiring, skills first organization. An organization that prioritizes the skills of its

[00:11:09] workforce over traditional credentials like academic qualifications or experience and utilizes

[00:11:16] those skills as the main driver for organizational and individual performance, keeping those skills

[00:11:23] continually under review and in line with future organization direction and training needs.

[00:11:35] Just listening to that, that throws up one of the biggest parts of all of this in terms of a

[00:11:40] sticking point in terms of complexity, which was having that skills taxonomy in your business.

[00:11:46] So understanding what skills you have in your business and what skills you need in

[00:11:51] your business. This was a massive area, wasn't it Adrian?

[00:11:54] Adrian It was and there was very limited discussion to help solve it because

[00:12:01] it's difficult to get an agreement on what is a hard skill or soft skill or whether those

[00:12:05] skills vary by industry or job function. So there's a huge array of potential skills

[00:12:12] and I've seen some reports of organizations on the vendor side defining a taxonomy of over

[00:12:20] 50,000 skills. Well how do you start pulling those into a job profile? How do you start

[00:12:27] pulling those into an attraction suite of skills? So I do think that there is a lot of work to

[00:12:35] be done educating, getting hiring managers or managers of organizations to start thinking

[00:12:41] skills first before we can say that we've got a solution to the skills based hiring problems

[00:12:50] that we can go to vendors and say please provide. So for me, we've got to find a way

[00:12:56] to see the wood for the trees and that's going to take a lot of work I think.

[00:13:03] Yeah, I think this was just such a big thing and talking to TA leaders and in some cases

[00:13:10] talent management professionals as well who were kind of working together on this.

[00:13:15] Highly complicated and very, very difficult to do. Some people were getting people to self

[00:13:18] report their skills and just kind of working through something that's a moving target. If the

[00:13:24] whole point of looking at skills based hiring is because skills are changing so quickly then

[00:13:29] how do you map that in your organization? I suppose that one of the ways to do that was

[00:13:34] obviously through technology. What did strike me in the conversations were a lot of organizations

[00:13:39] don't necessarily have the budget to invest in new technologies so they're trying to use their

[00:13:43] existing technology to do this. Just a bit of me felt that to do this at the scale at which

[00:13:51] we're talking, whether we're kind of one technological advancement away from that,

[00:13:58] maybe in the future the technology will evolve in a way that will make it easier. There were

[00:14:03] certainly lots of issues with it and I think the other bit that I take away was I think people

[00:14:07] perhaps need to think a bit more focus way around this because mapping the entire skills

[00:14:13] of the entire organization does seem like a very difficult if not impossible thing to do

[00:14:19] and are there other ways of thinking about skills taxonomy that might get people further

[00:14:23] along on that journey? What were your thoughts, Neil?

[00:14:26] Neil Milliken Yeah, it's a good question. I think a narrative you've used a number of times

[00:14:32] before Matt around perishable skills. That is I think something as we weaved into the discussions

[00:14:41] with the research group that really resonated with people. These perishable skills that are

[00:14:48] here for a two or three year period, then suddenly fall away is something absolutely true that

[00:14:55] organizations are seeing. I think the analogy I use is like sand between the fingers sometimes.

[00:14:59] You can't quite grab hold of it because it's constantly changing. I mean a big global

[00:15:05] organization with thousands of different job profiles, how can you possibly with the current

[00:15:11] framework keep up to date with that, changing so regularly? So I think this concept of

[00:15:18] recognizing which are perishable and those which are not. So we talk about hard and soft skills.

[00:15:24] So soft skills are the things that are going to stay with employees for a long, long time.

[00:15:29] Actually this is now becoming the foundation of our discussion with our customers because

[00:15:33] we firmly believe that there is a life cycle for those perishable skills. I think that

[00:15:42] resonated during the research and I think it still makes sense now.

[00:15:48] No, absolutely. I think it's such an interesting area and it's good. I think it's an area that

[00:15:53] we need discussions on. We need people talking about what they're doing in a more detailed way

[00:15:57] than just a bullet point on a do list of things to get you to be a skills based

[00:16:03] organization. I think the next point which is something that was really interesting for me

[00:16:10] was we went into this very much from the talent acquisition angle. So very much talking about

[00:16:16] skills based hiring, but I think this is something that we realized already. But

[00:16:22] the more you look into it, the more this is something that involves the whole organization

[00:16:27] and particularly the people function. And I felt that the company that was perhaps

[00:16:32] furthest along with this was the one where talent acquisition and talent management were working

[00:16:40] incredibly close together on this as a partnership to become a skills based organization.

[00:16:47] Their motivation for doing that was so they could get to a point where they could predict

[00:16:52] much more clearly in advance the sort of skills that they would need.

[00:16:56] And obviously you can reflect that back into workforce planning in terms of what you're

[00:17:00] hiring and what you're training. So it really seems that even just taking skills based hiring,

[00:17:06] you can't take that in isolation. It has to be seen in the context of the whole

[00:17:10] organization. But also it's something that some of the different silos for whatever

[00:17:16] better word of the people function really needed to sort of be partnering with in terms

[00:17:21] of how they move together. I mean, what were your reflections on that, Adrian?

[00:17:27] Well, I think that's one of the major conclusions is that this isn't going to be a fix that

[00:17:34] the TA function can do by simply changing one of their processes. This has to be a whole

[00:17:41] organization approach to skills first. And you can't have an organization being managed by

[00:17:48] managers who are defining roles in terms of the years of experience or the role definitions

[00:17:59] that they've used for a generation or more. And then TA recruit people to a different complete,

[00:18:06] the different script. So there has to be an alignment across the whole organization.

[00:18:13] Of course, once you've defined the skills that roles need, you need to attract for those skills.

[00:18:19] You need to, and that's probably a different way of attracting than you've done in the past.

[00:18:23] You need to assess for them. And that's probably where people are at the moment playing

[00:18:29] in this game. And they need to move to earlier in the process. But finally, once you've

[00:18:34] acquired people, the retention is absolutely paramount to keeping recruitment costs down.

[00:18:42] So developing them and retaining them and growing them against the future skills of

[00:18:47] the organization is again, another critical piece. So when I count up then who's responsible or

[00:18:54] who's necessarily part of the process base is the whole organization needs to have this and

[00:19:00] needs to understand this, which is why I talk about one of the critical factors is education.

[00:19:07] It's not TA talking skills based hiring. It is the organization talking about skills based

[00:19:14] hiring to enable it to become a skills first organization. And that means talking to all of

[00:19:19] HR and beyond into the management teams, into the specific functions like procurement, et cetera,

[00:19:26] finance, everybody needs to be on board if this is going to be the success that people

[00:19:30] want it to be. Neil, what are your thoughts? Yeah, I was just kind of reflecting that.

[00:19:36] If you recall, Adrian, there was a financial services organization who were really sponsored

[00:19:41] from the top. Right? So the executive team were sponsoring the initiative to drive this within

[00:19:47] their organization. So I fully support and agree with your comments. I think the only

[00:19:54] add on to that is the role that digital and technology functions play with the talent

[00:20:01] management and talent organization overall, because what they're finding this particular

[00:20:06] organization that the role is becoming more significant that they're playing.

[00:20:11] But allowing and ensuring the managers have a voice in this conversation and understand the

[00:20:18] journey they're on is actually probably the most fundamental piece of all of this, because

[00:20:24] the word does the investment come from? It comes to the business very often. So if you

[00:20:28] don't have the managers and the organization aligned to your mandate, it's going to fail.

[00:20:35] So that particular organization, I think, are many, many yards ahead because they've got

[00:20:40] the engagements of hiring managers, the leadership and the talent function.

[00:20:45] No, absolutely. I think that kind of became clear. The few organizations that were kind of

[00:20:49] working together with that top level buy-in, you know, it was a very different picture from

[00:20:55] a TA team who's trying to sort of fight against the tide to move towards more skills based

[00:21:00] hiring. So I think that's a really good point. So we've established that this is really complex

[00:21:06] and it's really difficult and organizations are not perhaps as far along as we thought they

[00:21:11] were. I'm not sure that any of that is going to surprise anyone who's listening. So I guess

[00:21:16] the question is, what is the solution to all of this? Or at least what is the next steps?

[00:21:22] What advice would we give to people who are listening, who want to go on this journey or

[00:21:26] they're on this journey in terms of how they can get there quicker?

[00:21:30] Well, I'm happy to have a stab at answering that because I don't think it's an easy answer.

[00:21:36] It's going to be different for every organization. And I think the first thing

[00:21:40] an organization needs to do is take a look at itself. If it's tech based and

[00:21:47] that as we know, that's evolving at supersonic speeds, then it might be more urgent and relevant

[00:21:54] that the organization gets into this area quicker than perhaps another organization

[00:22:02] where skills won't change so quickly. And there's plenty of organizations

[00:22:09] that fall into both of the extreme camps of those skills changing very, very fast and skills

[00:22:16] not changing. A bus driver's skills doesn't change very, very quickly. But the technology

[00:22:23] may at some point come along and we'll have to learn something different in that bus driving

[00:22:28] job. And I guess what I'm getting to is that whilst you've got the extremes of skills

[00:22:32] changing at a rapid pace and skills changing very slowly, there's every type of change

[00:22:38] in between the two, which is for me why it's critical that people start thinking

[00:22:45] is what's the business imperative behind the skills and becoming a skills first organization

[00:22:53] and answering that so that they can prioritize. And within large complex global organizations,

[00:22:59] there's probably roles and parts of the business that need to move quicker than others.

[00:23:04] Maybe there's areas that don't need to move at all. So there's no one size fits all,

[00:23:09] one quick fix won't work. It is about taking that very deep close look at your own organization,

[00:23:17] the own roles that you're undertaking and then coming up with an action plan

[00:23:21] to deliver against it. That action plan itself is probably going to be very, very complex,

[00:23:27] but I think starting with taking a look at what the business imperatives are

[00:23:31] will set you in good stead. What are your thoughts?

[00:23:35] I think having a plan, as Adrian said, is obviously the starting point, but understanding

[00:23:42] the role that we know, as we described the trifecta between HR, talent acquisition and

[00:23:48] the manager can play because there's the same things are within your control and the same

[00:23:53] things are out outside of your control. And one of the things that you must do is you

[00:23:59] need to iterate in this world. So we can't have a fully finished project that you can then drop

[00:24:06] into the business, nor can you take such small steps that you don't nudge the needle.

[00:24:12] I think one of the areas which I referenced a few minutes ago is the role of the hiring manager.

[00:24:19] As you go along your journey, ensuring that you take the biggest population you service

[00:24:25] along that journey with you is critical. Now, that might be some fundamental steps and some

[00:24:30] nudges that you make along that journey, but actually it starts allowing you to have the

[00:24:36] dialogue, to have the conversations to having everyone at the same level as you expect them to.

[00:24:43] I think that's very, very useful advice because one of the things that comes really clear from

[00:24:48] all of this is the large amount of organisations who are looking to make progress in this area,

[00:24:54] and there's some great reasons behind that. So final question, where can people find out

[00:24:59] more about the research? Yes, so in the show notes at the

[00:25:04] Wichmattle post, there'll be a link on there that will take you through to a landing page

[00:25:10] where please register your details there and you'll actually get a report. So the report

[00:25:14] we've created is accessible through that link and that will be on our Vector website under

[00:25:20] the learning section. Neil, Adrian, thank you very much for joining me.

[00:25:25] Thank you, Matt. Thank you.

[00:25:27] My thanks to Neil and Adrian. You can follow this podcast on Apple Podcasts,

[00:25:33] on Spotify or via your podcasting app of choice. Please also subscribe to our YouTube

[00:25:40] channel by going to mattalder.tv. You can search all the past episodes at recruitingfuture.com.

[00:25:48] On that site, you can also subscribe to our newsletter, Recruiting Future Feast,

[00:25:54] and get the inside track about everything that's coming up on the show.

[00:25:58] Thanks very much for listening, I'll be back next time and I hope you'll join me.

[00:26:17] Bye.