In modern recruitment, one phrase you’ll hear a lot is “skills-based hiring.” This approach flips the traditional script by focusing on what candidates can do – their skills – rather than only on their degrees or previous job titles. Companies are embracing skills-based hiring because it widens the talent pool and often leads to better hires. In fact, a 2024 survey found 81% of employers now use some form of skills-based hiring (up from 56% in 2022), and nearly all believe it will remain the dominant recruiting approach moving forward. In short, hiring for skills is quickly becoming the new normal, helping organizations find talent that truly fits the role in today’s fast-changing job market.
The Rise and Importance of Skills-Based Hiring
Why the shift toward skills-based hiring? Simply put, businesses need to adapt. The labor market has been unpredictable lately, and the skills needed for success are evolving rapidly (for example, demand for new tech skills like AI is surging). Traditional hiring criteria – like requiring certain degrees or a minimum number of years’ experience – can miss great candidates who have the right abilities but not the “right” pedigree. Skills-based hiring refocuses recruitment on practical competencies and potential. This not only helps employers fill roles amid skill shortages but also supports workplace diversity by giving fair chances to those from non-traditional backgrounds.
The data backs up the importance of this trend. Many employers have started dropping or de-emphasizing old filters (for instance, fewer companies screen candidates by GPA or alma mater now. Skills-first hiring is on the rise across industries – by one count, close to two-thirds of employers use skills-based practices even for entry-level hires. And it’s paying off: organizations report that evaluating candidates for their skills leads to better hiring outcomes and fewer mismatches. In a nutshell, focusing on skills helps companies find people who can do the job well, not just those who look good on paper. It’s a practical, human-centered change that is reshaping how employers think about talent.
How HCM Tools Help Identify, Track, and Match Skills
Adopting a skills-based approach is easier with the right technology. Modern HCM (Human Capital Management) tools – basically today’s advanced HR systems – are built to help companies identify, track, and match people’s skills to jobs. For example, many HCM platforms include a skills inventory feature where employees can list their abilities or earn skill badges, giving you a searchable catalog of talent within your organization. They also often integrate assessments or learning modules, so you can track who has mastered what skills over time.
A huge advantage of HCM technology is its matching capability. Using AI and big data, these systems can analyze both job requirements and employee/candidate profiles to suggest good fits. In fact, leading HCM and talent platforms now automatically match people with roles or projects that best fit their skills. They can even infer related or “adjacent” skills a person might have and highlight potential career paths that weren’t obvious from a job title. For recruiting, this means your applicant tracking system can quickly surface candidates whose abilities align with the role, even if their resumes use different wording. And for internal talent management, your HCM suite can alert you that, say, a marketing employee with project management skills might be a great fit for that open project coordinator position in operations. In short, HCM tools act as a smart talent matchmaker, crunching the data so you can make more informed hiring and internal promotion decisions.
Internal Mobility and Smarter Talent Matching
Skills-based hiring isn’t just about bringing in new people – it’s also about mobilizing the talent you already have. Internal mobility means giving your employees opportunities to move into new roles or projects within your company, based on their skills and interests. This is where smarter talent matching truly shines: a modern HCM system can reveal “hidden” skills in your workforce and connect employees with internal openings or gigs that suit them. By focusing on skills, you might discover that the perfect candidate for that tough-to-fill role is already on your payroll, just in a different department.
Encouraging internal mobility has big benefits for both the company and its people. Here are a few key advantages of a skills-driven internal talent strategy:
- Better retention and engagement: When employees know they can grow their career at your organization, they’re more likely to stay. LinkedIn found that workers stick around 41% longer at companies with high internal mobility. People feel valued when they see paths to advance or diversify their skills, which keeps them motivated and engaged.
- Lower hiring costs and faster fill times: Filling a role with an internal candidate often saves time and money. You cut down on expensive external recruiting efforts, and an internal hire can ramp up faster since they already understand the company’s culture and processes.
- Maximizing your talent potential: Internal mobility helps you make full use of your team’s capabilities. Employees may have talents or training that their current job doesn’t utilize – an internal move lets them apply those skills where they’re needed. Plus, by rotating and upskilling staff, you build a more agile workforce that can adapt as skill needs change.
In practice, many organizations are launching internal talent marketplaces – basically internal job boards powered by AI – to facilitate this kind of skill-based matching. These platforms let employees create profiles listing their skills, interests, and career goals, then match them to internal opportunities (permanent roles, stretch assignments, projects, you name it). The system might, for example, recommend a sales associate for a data analytics project because she listed SQL knowledge and a passion for analytics. By leveraging HCM tools in this way, companies create a win-win: employees get growth opportunities, and employers get to fill talent gaps more effectively from within. The end result is a more flexible, loyal team that can meet new challenges without always relying on outside hires.
Providence’s Role in Supporting This Shift
Shifting to a skills-based, data-driven talent strategy can feel like a big change – but you don’t have to do it alone. Providence Technology Solutions is a trusted partner for companies looking to modernize their hiring and talent management. We bring hands-on HCM expertise to help you leverage these tools and approaches in a way that makes sense for your business. In fact, our team has experience across many leading HCM platforms (Dayforce, SAP SuccessFactors, Workday, and others), so we can work with your existing systems or guide you in selecting a new one without bias. We’ve seen firsthand what works and what doesn’t when it comes to implementing skills tracking, assessments, and internal talent marketplaces in both enterprise and mid-market environments.
As a consulting partner, Providence’s goal is to make this skills-based approach practical and effective for you. That means we don’t just configure software – we collaborate with your HR leaders to update processes, train your team, and ensure the technology truly supports your strategy. Whether you’re trying to identify skill gaps, roll out a new HCM module, or create better matches between your people and open roles, we provide real-world guidance every step of the way. In today’s talent landscape, being able to adapt and align on skills is key to staying competitive. Providence is here to help you update your hiring strategy for today’s world – in a straightforward, down-to-earth way that drives results. Together, we’ll build a more skill-focused, agile approach to talent that positions your organization – and your people – for success.
