the talent crunch: how to compete for in-demand skills.

In a job market defined by change, traditional recruitment strategies are no longer as effective as skills based hiring. Today’s talent shortages are often caused by a mismatch between the skills employers need and the skills available in the workforce, making it difficult to find the right candidates.

For candidates, keeping up with this rapid evolution is equally challenging. Last year, one in ten workers was hired to a role that didn’t exist 20 years ago – and AI is creating new roles at a faster pace than ever. Many of these emerging positions demand entirely new skill sets, leaving both employers and job seekers navigating uncharted territory.

To build a future-proof workforce, employers may need to rethink their approach to sourcing talent. Below, we’ll explore why traditional recruitment strategies are falling short and how skills-based hiring can help both businesses and job seekers stay competitive.

why traditional recruitment strategies fall short.

By 2030, automation and AI will drive an anticipated 12 million occupational shifts, particularly for workers in customer service, administration, and manufacturing. As a result, more workers than ever are making lateral job moves, taking on extra gig work, and learning new skills to stay competitive.

However, traditional recruitment strategies often fail to keep pace with these changes. Many employers still use credentials to screen candidates, but the rise in non-traditional career paths means candidates’ skill sets aren’t always reflected in their job titles or educational backgrounds. This disconnect makes it harder for employers to identify the right talent using conventional resume screening.

For instance, university degrees – once seen as a gold standard for hiring – are no longer reliable predictors of in-demand skills. According to a McKinsey study, skills such as digital ethics, coping with uncertainty, and decisiveness had a low correlation to traditional education, in spite of the fact that they’re crucial to many of today’s employers.

To stay adaptable, employers must shift their focus from credentials to competencies, prioritizing skills over traditional markers of qualification.

how skills-based hiring can target in-demand talent.

Skills-based hiring strategies can range from simple changes, like removing degree requirements for certain roles, to more comprehensive overhauls that involve restructuring the hiring process to prioritize skills over resumes.

At its core, skills-based hiring involves breaking down job titles into a list of technical and soft skills, and identifying and evaluating candidates with skill sets that match. One of the main benefits of this approach is that it gives employers more accurate, objective evidence of a candidate’s capabilities.

Other key benefits include:

• Reduces time to hire: 74% of employers say skills-based hiring takes less time since it gives hiring managers a better understanding of actual performance.
• Reduces bias: Objective, measurable skills assessments can help eliminate the “paper ceiling” that many candidates face without four-year degrees. It also helps hiring managers stay more objective when assessing soft skills.
• Expands talent pools: Employers who use skills-based approaches are better positioned to consider less traditional candidates who might excel at the role.

Despite these advantages, many employers feel unsure about where to begin with skills-based approaches. In the next section, we’ll explore what these strategies look like in practice.

from resumes to results: practical strategies for skills-based hiring.

For employers just starting with skills-based hiring, even small changes can make a big difference. Below are some practical, scalable strategies to shift the focus from credentials to skills:

consider replacing credential requirements with skills

Last year, 1 in 3 companies reported removing college degree requirements for roles that didn’t need them, such as client service specialists and data analysts. Re-evaluating requirements for years of experience with similar titles can also open the door for candidates who have built up skill sets in less traditional ways.

To start, consider: what would an ideal candidate need to do well in order to be successful at the role you’re hiring for? Then, reconsider what credentials you truly need, and rewrite job postings to emphasize skills instead. For example, instead of requiring a "Bachelor’s degree in Marketing," ask for "experience with SEO tools and data analysis."

leverage skills tests and request work portfolios

Instead of relying on resume keywords, consider using pre-employment tests or portfolio requests as the first step in the hiring process. This shifts the focus from on-paper descriptions of skills to more objective assessments of what candidates can do.

For creative or technical roles, ask candidates to submit portfolios, GitHub repositories, or case studies that showcase their work. Behavioural interview questions and psychometric tests can help assess soft skills like problem-solving, teamwork, and adaptability.

contract, contingent, and gig opportunities

The gig economy is expected to triple by 2032, creating opportunities for workers and employers alike. Hiring temporary, contract, and gig workers can help employers assess and compare different skill sets to evaluate what skills truly deliver value. These opportunities also allow workers to explore a wider variety of roles and environments in their field of interest.

This solution can prove useful for employers who need specific skills on a seasonal or temporary basis, creating a workforce that’s adaptable to market demands. For example, an accounting firm may take on temporary customer service representatives during busy seasons, and scale back during slower months.

balance skills-based hiring with upskilling

When employers offer education and training programs, they can hire for potential to learn rather than requiring niche skills up front – and widen their available talent pool. These opportunities also attract top talent, as 72% of workers say L&D opportunities are important for current and future employment.

This is becoming increasingly useful in industries where skills shortages are driven by rapid advancements. For example, the reshoring of the US semiconductor industry will require 67,000 new engineers and technicians by 2030, yet traditional education hasn’t kept pace with demand. Indium Corporation, a technology materials manufacturer in New York, is solving the problem with apprenticeship programs that allow entry-level workers to gain the skills they need to operate machinery.

exploring skills-based internal mobility.

Staying competitive in today’s talent market isn’t just about strategic recruitment. It’s also about ensuring your existing workforce has opportunities to grow. 31% of workers have quit a job due to lack of career progression opportunities, creating internal “brain drain” that can disrupt internal workflows over time and increase the cost of hiring.

Employers who create internal mobility can:

• Reduce turnover and recruitment costs
• Boost employee satisfaction and engagement
• Create equitable paths to higher-paying jobs

Fostering internal mobility may require additional upskilling paths for management roles and lateral career moves. Mentorships and stretch assignments can also help top talent decide what career moves they’re best suited for, leaving room for skills-based hires in entry-level roles.

building tomorrow’s skills for a future-proof workforce.

The skills employers need today will likely be different from the skills they need five years from now. As the workforce adapts to new demands, hiring and retention strategies will also need to evolve. By shifting the focus from credentials to competencies, employers can adopt a more flexible, scalable approach to supporting adaptable talent.

There’s no single best approach to skills-based hiring, but each strategy can help create new building blocks for a future-proof workforce. Employers who reduce reliance on education might find new ways to upskill new hires; contract workers can help employers evaluate what skills tests are necessary for permanent roles.

The one underlying strategic imperative for employers will be adaptability. Skills-based hiring can help employers gain a competitive edge in a talent market poised to change. Talk to our talent consultants to learn more about recruitment innovation and actionable insights.