What does it mean to be skills-first?

In today’s workplace organizations are realizing the limitations of traditional qualifications like degrees or job titles. Adopting a skills-first approach is a transformational shift that benefits both employers and employees. The shift towards a skills-first mindset is gaining traction as companies focus on specific competencies rather than educational backgrounds or rigid career paths. This approach not only ensures a more adaptable and resilient workforce but also opens doors to a wider pool of talent, increasing diversity and innovation.

As industries worldwide embrace the skills-first movement, it’s essential to understand what being "skills-first" truly entails, how it reshapes talent management, and the steps organizations can take to implement this transformative approach.

Shifting from degrees to kills

The traditional hiring model has often placed heavy emphasis on academic qualifications and years of experience. However, research shows that this approach no longer aligns with the fast pace of modern business. 

A report by Deloitte found that 89% of executives believe that skills, not degrees, are becoming the most important factor in determining a candidate’s fit for a role. This shift reflects the growing need for organizations to remain agile and competitive in the face of technological disruptions.

We all have skills that we've learned from other jobs, which are valuable and needed. It's hard when you feel overlooked because you don't have a degree, but a skills-based approach can create more opportunities. - Jasmine, Executive Coordinator, Deloitte US.

A skills-first approach focuses on what an employee can do rather than where they studied or how long they've been in the industry. Companies like IBM have already adopted this model, removing degree requirements from 50% of their job listings in 2021, and they’re not alone. 

As of 2024, more than 75% of organizations worldwide report that they have either begun implementing skills-based hiring practices or are actively planning to do so, according to the World Economic Forum. By prioritizing competencies and experience over formal qualifications, businesses can tap into a much broader talent pool, including non-traditional candidates who possess the skills needed to succeed but lack formal education credentials.

Unlocking career growth through skills development

One of the greatest benefits of adopting a skills-first mindset is the opportunity for enhanced internal mobility and career progression. A World Economic Forum report emphasizes that companies that prioritize skills development improve employee satisfaction, drive innovation, and productivity. The key to making this shift successful is to establish clear pathways for employees to develop and demonstrate new skills.

This approach is particularly valuable in industries where skills gaps are prevalent. The demand for digital skills, for example, continues to outpace supply. According to the European Commission, nearly 58% of workers require additional skills training to remain competitive in the evolving digital landscape. 

In response, leading organizations are investing heavily in upskilling and reskilling initiatives. These efforts are not only closing skill gaps but also retaining top talent. A 2023 Deloitte study revealed that companies with robust skills development programs are 63% more likely to retain high performers.

Additionally, creating a culture of continuous learning encourages employees to seek out growth opportunities within their current roles. This can lead to increased job satisfaction and lower turnover rates. Employees who see that their organization is committed to helping them grow are more likely to stay engaged and loyal, ultimately benefiting the business as well.

Skills-first and workforce diversity

The shift towards a skills-first mindset also has the potential to enhance workforce diversity significantly. Traditional hiring practices that rely on degrees and years of experience often exclude capable candidates from underrepresented backgrounds who may not have had access to higher education. By focusing on skills, companies can break down these barriers and create more inclusive hiring processes.

OneTen, an initiative supported by some of the world’s largest corporations, aims to hire one million Black Americans into family-sustaining jobs over the next decade by focusing on skills rather than degrees. This skills-first approach recognizes that talent is often overlooked due to systemic barriers and aims to create a more equitable job market. Similarly, a World Economic Forum study highlights that organizations using skills-based hiring see a 19% increase in the diversity of their candidate pool.

By implementing skills-first policies, companies can open up leadership pathways for a more diverse range of employees. Skills-based assessments allow organizations to identify high-potential individuals who may not have traditional leadership experience but possess the competencies required for success in managerial roles. As a result, companies can create more inclusive leadership teams and foster innovation through diverse perspectives.

Recommended reading: How to build a skills-based organization effectively

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As several industry experts have predicted for 2024, the skills-based approach is driving to the forefront of workplaces. More organizations are moving beyond degrees and job titles to focus on the skills a job requires and that a candidate possesses.

With 73% of workers agreeing that skills-based practices would improve their experience at work, organizations should consider implementing the approach to achieve better business results.

Check out our white paper to learn more about the skills-based approach and the benefits of implementing it in your organization.

Written by: Alexandra Paasch