Skills Based Hiring: The evolving role of L&D in Talent Acquisition

The World Economic Forum exhorted companies and economies to prioritise skills over qualifications or even experience in 2023¹. The benefits of skills based hiring are clear: research by Deloitte² found ‘organisations building a skills-first culture are 63% more likely to achieve results…including meeting or exceeding financial targets, than those who have not adopted skills-first practices’.  

The need for skills based hiring is also clear: structural talent scarcity is affecting many sectors, with 52% of CEOs saying they expect skills shortages to affect their industry’s profitability in the next 10 years³.  

Adopting skills based hiring has many benefits HR and businesses, and consequently has been a hot topic for the past couple of years. For HR leaders beginning to transform their workplace into a ‘skills first’ organisation, we’ve written about what skills based hiring actually is and how to promote it internally.  

With all this evidence, organisations may be looking to Talent Acquisition to own and implement a skills based recruitment strategy. However structural talent scarcity is evident now. There simply isn’t enough talent to meet many ‘must-have’ roles, especially in leadership and technology specialisms. That’s where L&D can help augment Talent Acquisition’s efforts in skills based hiring – this article explains why.  

L&D has a strategic role to play both across the entire employee lifecycle and across HR’s wider business agenda. With a strong L&D strategy and execution organisations can attract and retain top talent, manage payroll costs, foster a nimble, agile workforce and drive diversity, equity and inclusion efforts.  

But perhaps one of the biggest bets L&D can help support is the pivot to skills based hiring. Skills shortages are a brake on growth, whether that’s the growth of a department, organisation or entire economy: witness UK Prime Minister Sir Keir Starmer’s recent pledge to ‘fire up’ the nation’s skillset. Globally the war for talent shows no sign of abating. Organisations must get better at fostering the critical skills they need in 2025 and beyond. 

Talent Acquisition is eager to partner with L&D: last year 84% of recruitment professionals said they wanted to work closely with L&D to deliver on their skills based hiring strategies. At the broadest strategic level L&D can help their TA colleagues win critical talent with compelling career paths and robust learning and development opportunities. More granularly L&D can help TA identify the particular skills hiring managers need. They can help by evaluating job descriptions, then mapping specific skills against job deliverables; they can also advise whether certain competencies can be acquired on the job and signpost how L&D can support that. 

It's important to acknowledge that skills gaps affect every demographic in the workforce. There is a lot of attention on digital literacy, highlighting the differences between Gen Z and Boomers/Gen Xers and their relative fluencies in digital technology. But while Gen Z may be ahead in the digital skills stakes, they lag behind in critical soft skills, and this can delay their career progression. 

Making sure digital natives are equipped to step into leadership roles is just as important as ensuring all hands can collaborate using technology.  

In summary, structural talent scarcity is already impacting organisations, and skills gaps are affecting every part of the workforce. The case for L&D to partner with Talent Acquisition and drive a skills based hiring approach is clear.  

Fortunately, becoming a skills based organisation is already on the strategic ‘to-do’ list for many CEOs. But if leaders need any more reasons to why they should prioritise it, here are seven compelling business benefits.

1. Broadens and diversifies the talent pool 

Perhaps the most well-known benefit of skills based hiring is how it diversifies and widens the talent pool. Using degrees as a proxy for skills shrinks the pool of available talent unnecessarily (unless, of course, candidates must hold a specific vocational qualification). In the US alone, Boston Consulting Group identified 70 million people who can be categorised as STARs – talent without degrees who are ‘skilled through alternative routes’⁴. Research by LinkedIn posits that shifting to skills first hiring gives organisations in any industry an average of 10 times the talent pool even in sectors like professional and financial services⁵.    

Skills based hiring doesn’t just broaden the talent pool – it diversifies it. By prioritising skills organisations can attract top talent from all walks of life including historically underrepresented groups such as veterans, people of colour, people with disabilities and so on. Having a greater diversity of identities in your organisation fosters innovation, creative thinking and even, according to some studies, greater profitability⁶.

2. Gives a more accurate view of talents’ potential 

Paradoxically, while broadening your talent pool, skills based hiring actually makes it easier to pinpoint the right person for the job. Resumes and experience only tell organisations what a candidate has done, not what they’re capable of. Assessing for skills helps recruiters pinpoint the talent with the highest potential to start strong and grow further in the role.

3. Reduces time to hire 

Scrapping the need for cover letters and tailored resumes can reduce time to hire for both your candidates and your hiring managers. By devising or acquiring tests to assess for skills, talent can quickly showcase whether they have the right competencies to succeed in the role, and hiring managers get to see how candidates perform in realistic work scenarios. And 68% of employees say they prefer a skills based hiring process⁷.

4. Encourages a culture of continuous learning and polishes your employer brand 

A culture of continuous learning is already a key talent attractor for millennial and Gen Z workers, and therefore an important element in your employer brand. In 2023 83% of millennials – who now are the most represented group in middle to senior management – said they would be more likely to choose an employer that prioritised learning and development opportunities, with 79% of Gen Z echoing the sentiment. Hiring for skills, potential and growth mindset sets the expectation that talent will learn continuously on the job right from the start.  

5. Improves employee engagement and retention 

Related to your employer brand, adopting an approach of skills based hiring has been proven to help boost employee engagement and retention.  

Firstly, as already discussed, demonstrating you’re a skills first organisation is a talent attractor. Secondly, supporting continuous learning helps talent see a long term future and career path at your organisation rather than a competitor. In 2024 88% of employers said that skills based hires stayed longer in their roles⁸; the same study found employees hired through skills based recruitment processes reported higher job satisfaction compared to peers⁹.    

6. Maximises hiring budgets 

For some roles there simply aren’t enough people in the world with the skillsets organisations are clamouring for: think AI engineers. In 2024 The Financial Times reported AI graduates with three years’ lab experience were commanding seven figure salaries¹⁰. Clearly this is an extreme example, but structural skills shortages tend to push payroll costs up – data scientists, agile SCRUM-Masters and doctors are just three more jobs that can command a pay premium.  

7. Creates opportunities for internal mobility 

When HR understands the competencies candidates bring and can develop from the very start of their tenure, they have a better view on the skills mix they’re embedding into the organisation. By adopting skills based recruitment processes and, crucially, recording which skills have been hired and how they’re intended to impact the business, HR – whether L&D or Talent Acquisition – can measure the success of new recruits.  

Recording and mapping these skills, then evaluating how new talent uses them to drive the business’ agenda, achieves two things: 

1. Embeds a greater mix of skills across the organisation 

2. Fosters opportunities for (eventual) internal mobility. 

When new talent comes onboard with new skillsets, it’s much easier to upskill them to leadership roles than it is to find seasoned leaders with the same skillsets and bring them in externally. It also helps manage payroll expenses. Creating opportunities for internal mobility through skills based hiring and promotion further underpins the organisation’s commitment to continuous learning, meritocracy, and keeps the payroll bill down. 

However, if you can hire for aptitude rather than experience and then help people to ‘grow into’ the roles your business needs through training and development, you get a win-win-win scenario: engaged staff, likely to be loyal, and a lower payroll bill. 

While technical, ‘hard’ skills like AI prompts and coding competencies may seem like the obvious (and easiest) skills to test for, soft skills can – and should – be evaluated too. Another study by the World Economic Forum found that employers want more soft skills such as conflict resolution, creative thinking and empathetic leadership in the age of AI¹¹.  

Previously interviewers may have ‘got a feel for’ whether a candidate could deliver the necessary soft skills at interview, but there are more empirical opportunities to test and assess for them now. Legacy methodologies such as TalentQ’s Dimensions assessments helped identify core ‘soft’ competencies, and newer contenders such as TestGorilla now offer the same service. Working with Talent Acquisition, it’s worth seeing whether a candidate will be a good fit for the level they’re joining at, as well as if they have leadership potential.  

While no one wants to subject candidates to a barrage of tests (which would negate any reduction in time to hire), assessing soft skills as well as technical competencies results in better hires who have a better chance of longer, impactful careers at your organisation. And if a stellar candidate with the ideal technical skillset could develop into a leader eventually, help is at hand – soft skills are eminently teachable with the right support in place.

Review your job advertisement process

Today no job description stays static for three months, let alone three years. Fortunately, L&D can help future proof roles before the job advertisement has even gone live. By helping hiring managers and Talent Acquisition map skills against job descriptions, L&D can help them attract candidates with the crucial competencies required – rather than using experience or qualifications as a proxy for ability. 

Use skills testing for recruitment 

The next step is to verify that candidates have the skills you’ve mapped. Offer quick-fire tests or longer assessments to check whether candidates meet your requirements.  

As mentioned previously, it’s important to assess for both hard and soft skills. 

First, hard skills. Even though job descriptions continuously evolve, candidates must have the ability to deliver on day one. Work with Talent Acquisition and hiring managers to devise or buy tests that will show whether talent meets the right standards.  

Second, soft skills. These paradoxically are often harder to evaluate than technical knowledge, but if you want to future proof roles and keep top talent on board they’re non-negotiable. Connect with Talent Acquisition to help design tests and interview questions that will surface transferable skills and growth mindset, both key indicators that someone could have a long career in the business.   

Regularly assess and refine your processes 

All good partnerships are underpinned by good communication, and the collaboration between Talent Acquisition and L&D is no different. Talent Acquisition should make the time to regularly assess the skills based hiring process and fully utilise L&D’s support in refining it.  

To support a comprehensive talent acquisition process, complete with career development signposting, consider using specific talent acquisition software. 

Once people are onboard, assess their performance and how they’ve brought their specific skills to bear on the organisation’s trajectory. L&D can report back on whether skills have been transferred within the organisation and whether skills based hires are likely leadership candidates. If there are any gaps between hiring managers’ (and Talent Acquisition’s) expectations and reality, L&D can advise on training programs or stretch assignments to develop talent’s full potential.    

More broadly this is just one scenario where HR analytics can illuminate the true impact of HR’s wider strategic agenda. When L&D and Talent Acquisition measure the performance of talent they bring onboard and develop, they spot opportunities to: 

a) refine the skills based hiring process and  

b) refine the learning and development pathways talent take when joining the organisation.   

We’ve seen that skills based hiring works best when high potential candidates are recognised for what they are truly capable of, then given opportunities to grow and develop. This approach mitigates any gaps that otherwise top talent could present with; engages them; and fosters a longer tenure and rewarding career path. 

But Talent Acquisition must have L&D’s backing to offer all these benefits. And L&D must be able to deliver as soon as a candidate accepts an offer. Ensuring your organisation has comprehensive learning content, hosted on a platform with tracking capabilities, means Talent Acquisition and hiring managers can be confident the right candidates can grow into their roles. And skilled people, looking for opportunities to make their mark and meaningful work, can be confident they’re joining an organisation that’s as committed to their career growth as they are.