8 Reasons Why It’s Time to Invest in Skills-Based Technical Hiring

why invest skills based technical hiring

The global economy is in a state of flux. Our relationship with our jobs has forever changed due to the pandemic. And the rise of AI technology promises to disrupt how we live and work.  

With so much change and unpredictability, the job of talent acquisition has become exponentially more difficult — especially when it comes to hiring top technical talent. 

To respond to this collective uncertainty, leading companies are investing in skills-based hiring processes and technology. In this post, we’ll explain why now is the time to invest in skills-based hiring for technical talent.

What is skills-based technical hiring?

Skills-based hiring is an approach to recruitment that emphasizes a candidate's abilities, competencies, and experiences. It’s different from traditional hiring criteria such as educational background, job titles, or years of experience. 

In skills-based hiring, teams focus on the skills and knowledge that candidates possess that are relevant to the job requirements.They also assess their potential to learn and adapt to new challenges.

This approach often involves using assessments, such as work samples, simulations, or tests, to evaluate candidates' skills and abilities, rather than relying solely on resumes and interviews.

By emphasizing skills-based hiring, employers can broaden their pool of candidates and reduce bias in the hiring process.

Assessments are nothing new for hiring engineers, however, the move towards skills-based hiring offers something different when considering candidates.

For example, employers identify candidates who may have relevant skills and experience, but who may not have followed a traditional career path or have a computer science degree.  This group of candidates, who have been mostly overlooked in the past, now have the same opportunity as others to be considered for open technical roles because it’s based simply on their skills.

Ultimately, skills-based hiring can lead to a more diverse and inclusive workforce, as well as better hiring decisions that align with business needs.

But why now? Here are 8 reasons why companies are prioritizing a skills-based approach to hiring now.

1. Recruiting teams are being overwhelmed by resumes

HR and talent teams are being flooded with resumes largely because of recent cuts by some tech and industry giants. The recent macroeconomic woes only add to the reality that HR leaders are burnt out on process and paperwork, according to a recent study from Sage

As SHRM reported, “A majority of HR leaders and C-suite executives agreed that HR needs to take on more of a strategic focus and a greater consultancy role, but 73 percent of HR leaders and 76 percent of C-suite executives said the balance of HR work is often still more administrative and process focused.”

And when it comes to hiring tech talent, the old methods of qualifying candidates – extensive interviews, checking references, personal relationships — simply don’t scale. 

The combination of automation and skills-based technical assessments gives recruiting teams the best chance to identify the best candidates with the verified skills to do the job.

2. The labor market has shifted to remote work

Since the pandemic, our collective view of work has changed. 

Perhaps the most obvious change is the shift from traditional office space to remote work. Though there’s some renewed push to bring workers back to the office, top technical talent still wants the flexibility and lifestyle benefits that come with remote or hybrid work. 

According to the Wall Street Journal, remote jobs attracted 52.8% of all applications submitted on LinkedIn in April — even though only 13.2% of job listings were remote.  

Given the changing office dynamics, companies seeking the attract the best technical talent will look for specific skill sets — regardless of where a candidate lives or works. 

3. Technical talent wants to focus on the work, not office politics 

As our relationship with work has changed, company culture and relationships with our employers and colleagues have become less important. The majority of workers, especially engineers, want to do the work they were hired to do — and have the flexibility to spend more time with their friends and families outside of the workplace. 

We see this shift playing out in the technical hiring process, too. Job candidates are showing they appreciate jobs – and interview processes – that squarely focus on the work, and not the office space/company. 

In our recent survey of technical job candidates, 56% said “having clear insight into the tech stack and day-to-day work” was more important than getting a tour of headquarters, learning about company culture, and even meeting teammates. 

In parallel, studies have shown that in-person interviews — which some view as important in determining candidates’ cultural fits for a company — are poor predictors as to whether candidates have the skillset needed to succeed in the roles they are hired for. 

In fact, a recent study from Crosschq showed that only 9% of interviewers' scores correlated to a “Quality of Hire.” 

4. AI to fuel more demand for tech talent

In the era of all things digital, every company is a tech company. 

Digital transformation has taken place across a range of industries, requiring companies of all shapes, sizes, and legacies to grow their technical capabilities and teams in order to compete. 

While some tech giants have trimmed operational staff in the past few months, most are also heavily investing in research and development. 

Meanwhile, AI is just in the early stages of fueling new opportunities for digital services and products — and creating additional demand for developers. 

Analyst firm IDC projects that by 2025 there will be a shortage of 4 million developers compared to the number of available jobs, an increase from 1.4 million in 2021. 

5. DEI programs on the rise

Another reason top companies are investing in skills-based hiring is that it is more in line with diversity, equity, and inclusion (DEI) best practices. Global investment in DEI programs — sometimes stemming from employee grass-roots efforts — is expected to grow from $9.3 billion in 2022 to $15.4 billion in 2026.

To be consistent, talent acquisition teams are trying to reduce the inherent bias created by  traditional hiring processes. 

Hiring systems that emphasize engineers’ skills over pedigree — and deemphasize in-person interviews where human nature may lead managers to choose candidates that are more similar to them — are more likely to lead to successful and fair hires.

Skills-based hiring can help companies and candidates avoid interview nightmares, like this one experienced by one of our survey respondents: “I think I have been discriminated against because I'm a woman and I didn't graduate from a top university.”

6. Top tech talent is looking for stability during unstable times

Startup funding, at least in some sectors, has slowed in recent months. According to a recent Crunchbase report, there was a 63% decline in funding during Q4 of 2022 compared to the same timeframe in 2021. 

As our CEO Dan Finnigan mentioned in a recent interview, when VC funding slows and startups struggle, top technical talent is more likely to look for job stability with companies that have deeper pockets. Watch the video below for the full interview.  

In order to capitalize, these companies have to understand the skills they need — and have the process and technology in place to identify these skilled candidates amidst the crush of other resumes. 

7. Technical hiring teams need tools to verify skills and detect fraud

While AI is expected to create demand for developers, it’s creating a headache for some talent acquisition teams. 

It’s becoming easier for developers to pass basic code tests using generative AI tools like ChatGPT, which passed Google’s coding interview for a 183K salary job

The reality is, many of these simplistic tests are useless for verifying the skills of technical candidates — and, by the way, most developers hate code tests, too

HR and talent acquisition teams need better tools to properly screen talent — and weed out fraudulent candidates. That’s why we advocate for more sophisticated skill assessments that better simulate actual work — including problem-solving exercises and tools that mimic an actual day on the job.

8. Retention a top concern among HR teams

Finding top talent is one thing. Keeping it is another. We believe there’s more than just a casual link between the two. 

The best way to find and keep talented engineers is to align their skills with the job they are doing — i.e. finding a good fit.  

One recent report showed that atop the list of this year's HR priorities is employee retention. 

Investments in employee engagement can make a big difference. But long-term employment starts with correctly assessing skills — especially technical skills. Matching skills with job requirements is foundational to job success – and, ultimately, retention.