The State of

Skills-Based
Hiring 2022
TestGorilla’s annual
thought-leadership report
Table of contents
01 Executive summary 03

02 A word from TestGorilla 09

03 A word from our premium partners 11

04 Skills-based hiring: A new way to hire 14

05 Extraordinary outcomes for companies 19

06 Building a more diverse workforce 26

07 Attracting and retaining world-class talent 35

08 Creating flexibility in the labor market 41

09 The future of skills-based hiring 50

10 Appendix: About the survey 60

11 Appendix: Our partners 63

12 Appendix: Bibliography 66
01
Executive
summary
01: Executive summary The State of Skills-Based Hiring 2022

Work is changing fast.

The Covid-19 pandemic accelerated a pre-existing trend towards
remote work and globally distributed teams. Today, 18% of
employees work remotely full-time, with many more mixing
working-from-home and the office in what we have come to call
“hybrid” work.1
And as work has changed, so too has recruitment. Outdated hiring methods are not fit for purpose in
today’s globalized world. Subjective practices such as resume screening have long failed to do an adequate
job of pinpointing candidates with potential and proven skills, but in this new world, they no longer serve
any useful purpose at all.

A global talent pool hindered by hiring bias

Companies have discovered that a global world of talent is open to them. Now, candidates in any country
can access jobs and roles that were previously unavailable, broadening their horizons beyond their wildest
expectations, but to make the most of this talent pool, businesses need to be able to understand and assess the
skills of candidates from around the world.
But how does a hiring manager effectively assess the skills of an applicant who works for a company they haven’t
yet heard of, or a candidate who attended a college or university with which they are unfamiliar?
Hiring bias is a real and serious problem. The tendency of recruiters and hiring managers to unconsciously favor
similar or familiar backgrounds, education, and work experience results in employers failing to properly assess the
suitability of an applicant’s skills.
The problem is compounded by our over-reliance on resumes. These one-page statements of a candidate’s
previous history may be outdated, inflated, or simply untrue.

So how are companies finding ways to

find the right talent when the current,
entrenched recruitment processes are
so clearly not fit for purpose?
That was the question we set out to answer when we
surveyed 2,736 employers and 2,666 candidates.

4
01: Executive summary The State of Skills-Based Hiring 2022

Skills-based hiring: A new way to hire

FOR MORE, SEE SECTION 4

76% of employers today use skills-based hiring to identify talent

Our survey identified that the majority of employers (76%) are using some type of skills-based hiring to find
new talent that may have remained undiscovered in the past, with almost 55% using role-specific skills tests.

Skills-based hiring is the practice of identifying and validating a candidate’s skills using methods such as
scientifically backed tests. It is a more rigorous approach to recruitment that enables employers to judge
candidates objectively on the core skills required for an open role, plus their personality, their culture-add and the
soft skills that are increasingly important in the new world of work.

Our survey discovered that those companies that have embraced skills-based hiring have a competitive
advantage. These companies are experiencing a wide range of positive benefits and performance
improvements resulting from a focus on skills during their hiring processes, as discussed below.

Extraordinary outcomes for companies

FOR MORE, SEE SECTION 5

Employees are happier and stay longer

When employees are placed in jobs that match their skills and abilities, they are happier – 72.1% of team
members who were recruited via skills-based hiring were happy or very happy in their current roles, versus 62.9%
of respondents who were not recruited via skills-based hiring.

And when team members are happier, they stay longer in their roles. As a result, 91.2% of companies
experienced increased employee retention.

76% 91% 80% 72.1%

of employers use of employers saw of businesses had a of people hired via
skills-based an increase in company goal of skills-based hiring
hiring practices workplace diversity increasing diversity are happy in their role

5
01: Executive summary The State of Skills-Based Hiring 2022

Building a more diverse workforce

FOR MORE, SEE SECTION 6

91% of employers saw an increase in diversity

Of the employers we surveyed, 80% had a company goal of increasing diversity.

Focusing on what candidates know – not who they know or where they studied – has real and tangible
benefits for diversity in the workplace.

Reduced time-to-hire, reduced cost-to-hire and lower rates

of mis-hires
Companies that have adopted skills-based hiring reported frankly staggering improvements in their
recruitment metrics.

Testing for skills enables companies to quickly filter out those who are not suitable for a role, helping
hiring managers to spend quality time with those who have what it takes to get the job done. Our
respondents told us that when you know a candidate has the required skills, you can spend more time in
the interview focusing on assessing the applicant’s passion for the company’s mission and giving them more
information about the role so that they can make an educated and informed decision about whether the
job is right for them.

92.7% reduced the number of mis-hires

91.4% reduced the total time-to-hire

89.8% reduced the overall cost-to-hire

6
01: Executive summary The State of Skills-Based Hiring 2022

Attracting and retaining

world-class talent
FOR MORE, SEE SECTION 7

Candidates prefer skills-based hiring too

And it’s not just companies that are reaping the benefit of a renewed focus on skills; candidates prefer this
method of recruitment too.

Our survey showed that skills-based hiring is the recruitment practice that candidates prefer, with
54.3% saying that they like this approach better than other, traditional methods.

And once placed in a role that plays to their strengths, candidates are less likely to leave if hired via
skills-based hiring. Of those we surveyed, only 3.2% of respondents recruited using skills-based hiring are
thinking to leave their roles in the next 12 months, versus 7.3% of those who were not recruited using this
method – so expected voluntary attrition is 50% lower, with 91.2% of the organizations we surveyed seeing an
increase in employee retention.

Creating flexibility in the labor market

FOR MORE, SEE SECTION 8

Candidates increasingly want career mobility

After Covid-19, the Great Resignation prompted workers to leave jobs that did not provide an inspirational
company culture, a good work-life balance, and chances of better pay and career growth.

Of the candidates we surveyed, 36.2% of those under 34 said they were looking to change their role in the
next two years, and 49.3% said they had switched careers within the past year.

These were workers employed full-time across a number of industries, showing that occupational mobility is not
limited to young, service-industry employees in low-income positions, but that it is becoming the new normal for
older, more established workers too.

And with 56.5% of candidates feeling that they had failed to pass screening processes due to a lack of
relevant experience on their resumes, skills-based hiring can only become more important in ensuring that
strong applicants can be recruited – and can then upskill or reskill – in order to realize their potential.

7
01: Executive summary The State of Skills-Based Hiring 2022

The future of skills-based hiring

FOR MORE, SEE SECTION 9

What’s the future for skills-based hiring?

Skills-based hiring has grown rapidly over the past two years and that growth is set to continue, with 38% of
respondents saying that they plan to increase their budget for skills-based hiring in the future.

And yet as a new industry, challenges remain for skills-based hiring. In the coming year, we predict that the
industry is likely to develop innovative ideas around the following:

Enabling employers to Helping candidates to understand Improving the quality

evaluate assessments the value of skills-based hiring and integrity of skills
from large numbers of (which is sometimes seen as assessments
candidates “just another step” in the
recruitment process)

Skills-based hiring will become the dominant method of recruitment

Our survey uncovered an increasing disillusionment – from both companies and candidates – with the
ineffective and unfair recruitment methods that have blighted hiring in the past. Basing recruitment
decisions on resumes has led to high rates of mis-hires, low employee retention and recruitment biases that
have prevented those who were potentially the most able from being placed in roles best suited to their strengths.

But that is changing. Skills-based hiring is a fast-growing trend that has the potential to revolutionize the
recruitment process. Companies using skills-based hiring are gaining a competitive advantage and candidates
hired in this way are quite simply happier in their roles, staying longer and performing better. More than 53% of
our survey respondents felt that skills-based hiring would be the dominant hiring method in the future.

It’s clear that with 76% of companies already embracing some form of skills-based hiring, the world is moving
beyond resumes as the basis of hiring decisions. Resumes lock us into who we know and what we have done.
They struggle to portray the skills we have and fail miserably at conveying potential. They are an outdated,
inaccurate and unfit tool for recruiting. Is this finally the end for resumes?

8
01: Executive summary The State of Skills-Based Hiring 2022

The first
resume was
written in
the 1400s.
Perhaps the
last resume
will be written
in 2023?
9
02
A word from
TestGorilla
02: A word from TestGorilla The State of Skills-Based Hiring 2022

A word from TestGorilla

At TestGorilla, we practice what we preach2: we’ve been doing
skills-based hiring from the beginning, using our own tests to
hire 100 people across 31 countries in two years. For proof
of the power of skills-based hiring, we don’t need to look any
further than the fantastic people around us.

I have enough experience with resume-based hiring to know

that, as a company owner and an entrepreneur, you hire
better talent when you use skills-based hiring. Your applicant
pool is much bigger if you give everyone a fair chance, and the
best talent comes out on top regardless of its background and your
unconscious biases, so it’s logical that you’ll hire better candidates.

With skills-based hiring, it doesn’t matter how many applicants

you have, because it’s incredibly efficient. If everyone takes a skills
assessment, the process is the same and will take you more or less
the same amount of time, unless there are more people you want to
interview. The best will demonstrate their skills and the data will float
them to the top.

Hiring becomes faster and more exciting – you focus your time on
the top people, get to know them, and hear their stories. It’s more
fun. You get to spend your time in a very qualitative, meaningful way.

Skills-based hiring also helps you make unbiased hiring decisions

and build a diverse team. Since it changes the way you source and
select candidates, it makes diversity possible in the workplace. When
you give diverse candidates more of a chance – by hiring for proven
skills rather than looking at resumes and inadvertently being drawn
to people who are similar to you – you make diversity possible. It’s as
simple as that.

I’m convinced that a big shift is taking place from resume- and
network-based to skills-based hiring. Multiple trends – increased
social awareness of bias, remote work unlocking global talent pools –
point toward this shift. And it’s seriously here to stay.

WOUTER DURVILLE
CO-FOUNDER AND CHIEF EXECUTIVE, TESTGORILLA

11
03A word from
our premium
partners
02: A word from our premium partners The State of Skills-Based Hiring 2022

A word from CapitalT

Skills-based hiring is the future and the need for it is clear.
There is a big problem with the current state of hiring, where
bias results in many people being excluded from jobs in
which they could potentially perform well. Skills-based
hiring is a great way to reduce unconscious bias, and with
the current trend for remote hiring and remote work, this
approach is accelerating in value, because it’s also a way to
find talent that is not necessarily geographically close to you.
My experience bears this out. For one open role, we sourced
candidates from our own networks, then added external
candidates and used skills-based hiring to assess them. Surprisingly,
the candidates who were referred, whom I expected to be really
good, did not do very well. Someone outside our networks
performed much better, so we hired a candidate to whom I wasn’t
connected but who was still a great fit.

Implementing skills-based hiring is not a barrier for tech companies,

though it may seem more daunting for businesses that employ blue-
collar workers – but this approach soon becomes intuitive, especially
as it makes a huge difference to how quickly and effectively
recruiters and HR managers can assess candidates. It’s so important
to have a second pair of eyes – in the form of testing, which provides
objective data – to help you make a decision without losing time.

People often assume that careers are linear, so they think they need
to hire someone with a specific type of background, education or
experience. In reality, the most successful people don’t have a linear
background, so it makes much more sense to evaluate them on their
potential and skills, and not on what they’ve done in the past.

There’s no way to break down barriers if you use traditional hiring

practices. Opportunity is not provided equally and employers must
be brave, in adopting skills-based hiring, to try to ensure that it is.

EVA DE MOL
CO-FOUNDER, CAPITALT

13
02: A word from our premium partners The State of Skills-Based Hiring 2022

A word from Klaviyo

Skills-based hiring has undoubtedly improved our ability
to assess candidates’ skills. Using an assessment platform
enables us to deliver a consistent, repeatable, scalable
experience that puts all our candidates on a level
playing-field.

In 2022, we have filled a large number of roles across

the EMEA and APAC regions. We adopted skills-based
hiring earlier in the year for two reasons: to speed up
our recruitment process and to give our candidates equal
opportunities by reducing bias.

This method has certainly improved our time-to-hire; moving

from a rather clunky manual system to skills-based assessments
accelerated our hiring process significantly. Then we saw
that using objective tests meant we could replicate the same
experience for each candidate, so skills-based hiring is an
important part of the work we do to ensure an inclusive and
equitable process.

Companies are working hard to think about how they assess

candidates, not just through the use of tools but also in how they
write job specifications, advertise jobs and develop interview
formats. Skills-based hiring is becoming key because mis-hires
are becoming more costly, and we believe it’s essential for testing
core skills.

We are currently looking into ways of further developing skills-

based hiring across other parts of our company, because the
people we’ve hired using this method have all been competent
and quick to learn.

PAUL ABERCROMBIE
DIRECTOR OF TALENT (EMEA), KLAVIYO

14
04
Skills-based
hiring: A new
way to hire
04: A new way to hire The State of Skills-Based Hiring 2022

What is skills-based hiring?

Skills-based hiring is a recruitment methodology
whereby job candidates are hired for open roles based
on quantifiable skills, rather than using subjective
methods such as resumes.3

As such, skills-based hiring is a new, more rigorous approach to

recruitment that seeks to verify applicants’ skills at an early stage in the
hiring process by asking candidates to complete scientifically backed tests
that are relevant to their desired role or by completing assignments that Jacco Valkenburg
are designed to replicate on-the-job scenarios.
Trainer employer
Skills-based hiring helps to recruit top candidates by accurately identifying branding and recruitment
the applicants who are best suited to each open role. The results can Recruiter University,
include improved quality of hires and improved performance from Netherlands
employees in their roles, with the added benefits of better organizational
efficiency and a boost to the bottom line.

Skills-based hiring also promotes equality of opportunity by creating a

“Companies are increasingly
level playing-field for all candidates. By measuring applicants on their
relying on online assessments
skills, rather than factors such as their educational background or work
when selecting candidates.
experience, it widens the talent pool to encompass a more diverse
Online assignments test
group of people. This, in turn, can feed into greater diversity – with its
an applicant’s skills and
accompanying business benefits – in an organization’s team.4
capabilities, so a traditional
Finally, skills-based hiring embraces and harnesses the potential of resume and cover letter
modern technology. By rejecting the centuries-old resume in favor of the are no longer needed.
most up-to-date tech, organizations that adopt skills-based hiring can Companies make a first
reduce time-to-hire and cost-to-hire by streamlining their recruitment selection using an online
process, as well as improving their results by quickly identifying the most assessment or referrals, and
skilled candidates from a larger, more diverse talent pool – in whichever only then does a candidate
location or industry they happen to be based. get an interview. This may feel
scary to job applicants, but
it’s fair. It offers opportunities
to less experienced people

76% who are good at their jobs.

A spelling mistake on your
resume or a weak cover
of businesses surveyed
are using letter are of less importance.
skills-based hiring Juniors can beat seniors on
knowledge and skills and thus
move into a higher position.”

16
04: A new way to hire The State of Skills-Based Hiring 2022

Percentage of companies using

skills-based hiring by working model

Hung Lee
Curator
Recruiting Brainfood, UK

“The shift to remote has been

generally beneficial for many
workers and has opened
up a lot of opportunities for Skills-based hiring reigns supreme
employers, too. We need to
be conscious of the new
in hybrid and remote companies and
challenges around diversity the tech sector
that come from hiring remote
workers, but on balance, Skills-based hiring is widespread among the large pool of companies we
accessibility has greatly surveyed. Our data shows that 76% of the 2,736 businesses we surveyed
improved with the shift to are using some type of skills-based hiring, although it is difficult to assess
remote working.” the efficacy of its implementation.

Skills-based hiring is particularly favored by hybrid and remote

organizations. We see that 81% of hybrid companies and 75.5% of fully
remote businesses are using skills-based hiring. This percentage falls for
in-person organizations, but remains high at 70%.

Perhaps unsurprisingly, given that skills-based hiring can be implemented

most effectively using up-to-date technology, our data shows that skills-
based hiring is used most often in the tech industries. These include
telecommunications (85.2% of companies surveyed confirm that they are
using this approach), marketing (86%), and broadcasting and publishing
roles (88.1%).

For comparison, the lowest percentage is found in the hotel and food-
services sector, at 62.2% – but of the 22 industries we surveyed, there
were only four in which fewer than 70% of companies were using skills-
based hiring.

17
04: A new way to hire The State of Skills-Based Hiring 2022

The most popular types of

skills-based hiring
Skills-based hiring takes many forms, but the most popular type in use
among the companies we surveyed is testing for role-specific skills. These
tests often seek to quantify the candidate’s hard skills with assessments
focused on testing precise knowledge that the candidate will need to
perform well on the job – such as programming knowledge, foreign
language ability and/or specific skills such as accountancy knowledge or
scientific understanding. In addition, role-specific skills can also test for a
candidate’s soft skills by testing (for example) their communication or their
leadership and management skills.

Of the respondents to our survey who are using skills-based hiring, 54.6%
are currently testing for role-specific skills.

The next most popular type is work samples and take-home assignments,
which are being used by 43.9% of the respondents who are using skills-
based hiring. Work samples or take-home assignments are typically
mini case studies or projects that the candidate is expected to complete
to prove their ability to answer the sort of day-to-day questions and
problems that are likely to come up in their role.

Which hiring tools have you used in your hiring

process in the past 12 months?

18
04: A new way to hire The State of Skills-Based Hiring 2022

A fast-growing trend
Our data also shows that skills-based hiring is a growing trend. Of the
organizations we surveyed that are currently using skills-based hiring,
58% have adopted this approach in the past two years. This coincides with
the Covid-19 pandemic, so it is likely that the rise in skills-based hiring has
been prompted by the accelerated change to hybrid and remote working.5 58%
of organizations
adopted skills-based
hiring in the past 2 years

19
05
Extraordinary
outcomes for
companies
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Adopting skills-based hiring may

require some adjustments from a
recruiting team, but the benefits
are manifold.

Our data shows that companies using skills-based

hiring are experiencing dramatic improvements in
performance across four key metrics.

IMPROVEMENT METRICS

Reduction in mis-hires (92.5%)

Reduction in total time-to hire (91.4%)

Reduction in total cost-to-hire (89.8%)

Increase in employee retention (91.2%)

21
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Skills-based hiring reduces mis-hires

A mis-hire occurs when a business appoints an unsuitable candidate to
an open role. In the modern economy, it is vital that businesses keep
their mis-hire rate as low as possible, because the ramifications are
serious and extensive.

These include major costs (such as the employee’s compensation and

severance pay, plus total hiring costs), the impact on team morale, the
disruption created by the candidate’s unsuitability and the process of
finding a replacement, and issues caused by the employee’s mistakes.
The management psychologist Bradford D. Smart’s research suggests
that a mis-hire can cost a company up to 24 times the employee’s
annual compensation.6 Emma McFetridge
Talent acquisition partner
Skills-based hiring can be an effective method of reducing mis-hires,
Bazaarvoice, Northern Ireland
because it enables recruiters and hiring managers to use objective
methods such as testing to ensure that a candidate has the required skills
for the role.

Our data bears this out; of the companies we surveyed, 92.5% have seen a
reduction in their mis-hire rate, with 44% recording a fall of more than 25%. “Skills-based hiring has
reduced our number of
mis-hires. When we haven’t
completed something
like an assessment,
we’ve noticed that what
candidates have said is not
really the truth, or they’re
not as skilled as they say.”

92.5%
of organizations
saw an reduction
in mis-hires

Cost of a mis-hire:

24x
annual compensation

22
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Skills-based hiring reduces

time-to-hire

Time-to-hire is an important metric for recruiters.7 This refers to the

91.4%
time that elapses between a candidate entering a company’s talent pool
and the same candidate accepting a job offer. It is significant because
it indicates how quickly an organization moves applicants through its
recruitment process. of organizations
saw a reduction
Skills-based hiring contributes to a more efficient, more streamlined in time-to-hire
hiring process. By testing candidates before the interview stage – a simple
process that can be done in a single click online – recruiters and hiring
managers are able to quickly and objectively rank applicants based on
their relevant, quantifiable skills.

Of the companies we surveyed, 91.4% saw a reduction in their total time-

to-hire when using skills-based hiring, with 39.9% recording a fall of more
than 25%.

How much has implementing

skills-based hiring
reduced total time-to-hire?

23
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Skills-based hiring reduces

cost-to-hire

Cost-to-hire is another significant metric for recruiters – not least because,

according to the Society for Human Resource Management (SHRM), it
can cost more than $4,000 to fill each open role.8 The costs involved can
include job-board fees, careers pages, employer branding, internal and
external recruiters, and pre-employment testing software.
Various factors influence cost-to-hire, such as hiring volume (the more
people a company hires at one time, the lower its cost-to-hire will be,
because some fixed costs can be spread) and the industry an organization
is in (some jobs have a longer time-to-hire, which naturally increases
hiring costs). But keeping cost-to-hire as low as possible is important for
businesses’ bottom line, while bearing in mind that investing in good
candidates is always worthwhile.

24
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Skills-based hiring can help to reduce cost-to-hire by, for example,

removing the need to pay external recruiters to sift through numerous
candidates before presenting a shortlist. Instead, all applicants are tested
and ranked on their relevant skills at the click of a button, so the widest
possible pool of talent is assessed with the minimum input from the
recruiter or hiring manager at this stage.

The companies we surveyed found that skills-based hiring made a

difference in this metric; 89.8% noted a reduction in their total cost-to-hire,
with 36.6% seeing a fall of more than 25%.

Of course, cost-to-hire is only a relevant and useful metric if the candidate

turns out to be the right hire. If the applicant is classified as a mis-hire, this
metric can be a misleading one. Too often, modern recruitment practices
Achyut Menon revolve around “excluding” candidates and finding reasons to “filter them
Managing director out”, as opposed to finding good reasons to keep them in. With skills-
Options Executive Search, based hiring, it is easier for organizations to expand their talent pools and
India find the right hire.

“The focus must be on

quality-to-hire, and often this
is where a radical change in
sourcing is needed, because
companies miss out on
good candidates who were
not shortlisted. The whole
point is not to hire the wrong
person, but there’s no metric
to find out which were the
good people who fell through
the cracks. I feel that the
concept of cost-to-hire is
probably ‘industrial-era’. In the
intellectual era, there is a lot
of difference between hires:
you can find ‘a person’ or ‘the
person’, and the right person
will probably give you
two or three times better
solutions.”

25
05: Extraordinary outcomes for companies The State of Skills-Based Hiring 2022

Skills-based hiring increases

employee retention
Employee retention is a metric used to measure how successful an

91.2%
organization is in keeping hold of its employees.9 It can be measured as the
number of staff with a specific length of service (often one year or more),
shown as a percentage of the company’s overall workforce.
of organizations
This metric matters because low employee retention can mean high saw an increase
employee turnover; in other words, organizations suffer from a significant in retention
churn in staff because people leave frequently, and after a relatively short
period of time. Low employee retention can therefore prove costly for a
business that frequently needs to replace its staff, particularly if they are
leaving for preventable reasons such as a poor company culture.

Skills-based hiring improves employee retention by ensuring that the

candidates appointed to open roles are the right fit for the job. If an
organization is confident that there is a good match between the required
skills and an applicant’s abilities, proven using objective, scientifically backed
tests, there is a far greater likelihood that the candidate will succeed – and
stay – in their new role.

Of the companies we surveyed, 91.2% have seen an increase in employee

retention through the use of skills-based hiring. And the benefits are not
insignificant, with 43.6% of these businesses noting an improvement of
more than 25%.

How much has implementing skills-based

hiring increased employee retention?

26
06 Building a
more diverse
workforce
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

The importance of diversity in creating

high-performing teams Gender-diverse teams are

Numerous studies have shown a causal link between diverse and 25%
high-performing teams. The UK Chartered Institute of Personnel and more likely to
Development’s 2021 research into managing multicultural teams, for financially outperform
example, found diverse teams to be more creative and innovative than
homogenous teams.10 Moreover, McKinsey’s 2020 report “Diversity wins:
How inclusion matters” shows that gender-diverse teams are 25% more Ethnically diverse teams are

36%
likely to financially outperform less diverse companies, while ethnically
diverse teams are 36% more likely to.11
Embracing diversity can be an important step towards creating workplaces more likely to
that are inclusive and equitable, as well as high-performing. This is financially outperform
something that matters to candidates and employees: One Deloitte study
found that 83% of millennial employees are actively engaged at work when
they believe their organization fosters an inclusive culture, but only 60%
are actively engaged when they believe their organization does not.12

The importance of diversity is a topic that resonated with our survey

audience. Of the 2736 employers we surveyed, 76.8% said that the
company they work for has a goal to increase diversity within its teams.

Is having a more diverse team an objective or

goal of the company you’re at today?

28
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

Skills-based hiring increases

workplace diversity

Resume-based recruitment practices are prone to bias and as such are a

hindrance to creating more diverse teams.

The most striking piece of evidence for this is perhaps Marianne

Bertrand and Sendhil Mullainathan’s landmark study “Are Emily and Greg
more employable than Lakisha and Jamal? A field experiment on labor
market discrimination.”13 The study found that, in a scenario where each
resume is exactly the same, white American-sounding names received
50% more callbacks for interviews than African American ones. In more
recent research, a study of more than 2,000 hires for senior roles found
that the number of females hired for high-level positions increased by
68% when skills-based, rather than resume-based, hiring was used.14

If companies want to improve diversity, they need to hire in ways that

are less prone to bias. Skills assessments, with their focus on data-
proven skill sets rather than written records of background, education,
and experience, are a promising alternative to resumes.

How much has implementing skills-based

hiring increased workplace diversity?
91.1%
of businesses saw
an improvement in
workplace diversity

42.9%
of businesses saw
an increase of
more than 25%

29
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

We asked 2,082 employers who have adopted skills-based hiring about

the impact it’s had on their workforce. The data we’ve collected shows
that, when implemented, skills-based hiring has a 91.1% success rate in
improving workplace diversity.

Although the improvements documented vary by both company and

industry, 75% of our respondents saw at least a moderate change in
diversity (where moderate is defined by an improvement of 10% to 25%).
A significant improvement in diversity (26% to 50%) was seen by 28.7% of
respondents, and 14.2% saw a huge improvement, with their workplace
diversity increasing by more than 50% due to skills-based hiring.

Out of the industries where we had reliable sample sizes, companies in

construction, retail, and finance and insurance experienced the most
significant improvements in workplace diversity, with 43.2%, 49.2%, and Segun Mustapha
43.3% of companies respectively seeing improvements of more than 25%. People and culture officer
These results make a strong case for diversifying more stubbornly Suntory Beverages and
homogenous workforces via skills-based hiring, particularly given that Food Nigeria, Nigeria
construction is an industry renowned for facing difficulties with diversity
(Chartered Institute of Building statistics indicate that in the UK, the sector
still comprises just 15% females and 6% BIPOC).15 The financial-services
workforce, too, remains overwhelmingly male-dominated.16

“We operate in the food and

beverages industry, and
we didn’t have any women
on our production lines.
After deciding to increase
the number of women, we
used skills-based hiring to
assess 45 candidates – 30
women and 15 men. Using
our previous process, the
women would have been
rejected immediately,
because they wouldn’t have
met certain criteria, but we
were able to eliminate those
criteria. Eventually, we hired
seven women and five men,
whereas previously, this
would have been 12 men. It
was a great development
and everyone was happy
about it.”

30
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

Companies that implement skills-based

hiring are much more likely to also
implement other practices that reduce
unconscious bias during recruitment
Of course, skills-based hiring is not a silver bullet for diversity. To effectively
and meaningfully create and nurture diversity, equity, and inclusion,
companies must take a broad strategy for impact, creating empathy, adhering
to good practices, and encouraging continued learning among employees.

Out of the companies we surveyed, 34.7% of those that were not using
skills-based hiring were also not implementing any other practices in order to
reduce the influence of unconscious bias during hiring. In contrast, only 19.2%
of those companies who are using skills-based hiring had not implemented
any other practices to reduce the influence of unconscious bias.

Do you have documented processes,

training, and/or data collection in place at
your company to prevent unconscious bias
impacting your hiring decisions?
91.1%
of businesses saw
an improvement in
workplace diversity

42.9%
of businesses saw
an increase of
more than 25%

31
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

We can see here that companies that use skills-based hiring are more likely
to address the influence of unconscious bias on recruitment in other ways,
too. This correlation demonstrates that those who are already moving away
from resume-based hiring practices tend to have a stronger commitment to
facilitating diversity through recruitment.

This is an important indicator of the ethos that surrounds the adoption of

skills-based hiring, and also indicates that the companies who are adopting
skills-based hiring understand that, if they want to see results, they must
implement a broad strategy. Companies working on a number of fronts to
improve diversity can affect real and impactful change.

Max Armbruster
Founder and chief executive
Talkpush, Hong Kong

“We have 50 nationalities

among our 50 employees. We
have expanded considerably
the cultures and the country
of origin of the talent we
consider, and to deal with
the increase in numbers
we’ve experienced by hiring
remotely, we’ve increased our
reliance on assessments. So
skills-based hiring enables us
– and employers who do the
same thing as us – to expand
the talent pool and consider
a broader, wider range of
talents, which improves
the quality of the output. If
you have more input coming
in, you have better quality
coming out.”

32
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

The most successful companies

implement skills-based hiring
alongside other practices to reduce
unconscious bias and improve diversity
To dig into this a little bit deeper, let’s take a look at what happens when
skills-based hiring is used alongside other initiatives intended to improve
diversity and reduce unconscious bias in the hiring process.

If you want to increase diversity within your teams, introducing skills-

based hiring is a good place to start. Of the 399 companies in the survey
who implemented skills-based hiring but no other practices to reduce
unconscious bias, 80.2% of them saw an increase in workplace diversity.

Companies who implement skills-based hiring alongside other

practices see the greatest improvements in diversity

33
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

Combining skills-based hiring with other practices that are designed to

reduce unconscious bias is even more successful. Our data shows that
for every additional practice implemented to reduce unconscious bias,
significant gains in workplace diversity are made.

The other practices that were considered were unconscious-bias training

for hiring managers, data collection of applicant pools through to
hired colleagues, or any other documented process aimed at reducing
unconscious bias.

The total percentage of respondents experiencing positive improvements

in workplace diversity increases from 80.2% to 92.62% when one other
practice to reduce unconscious bias is introduced on top of skills-based
hiring. Of the respondents who added another, 96.2% saw improvements
in workplace diversity. Of those we surveyed who implemented skills-
based hiring and three additional practices to reduce unconscious bias,
97.59% saw some kind of improvement in workplace diversity, while for
50.6%, the improvements were greater than 25%.

Companies who practice skills-based hiring plus a number of other

initiatives specifically designed to reduce unconscious bias – such as
unconscious bias training, data collection, or any other documented bias-
reducing process – are the most successful when it comes to reducing
unconscious bias during hiring and improving workplace diversity.

Although most of those who only use skills-based hiring improved

their workplace diversity, more of those who implemented additional
practices saw improvements, with a greater percentage of these seeing
improvements of more than 25%.

97.5%
of businesses saw
an improvement in
workplace diversity

50.6%
of businesses saw
improvements of
more than 25%

34
06: Building a more diverse workforce The State of Skills-Based Hiring 2022

Skills-based hiring will be crucial to the

future success of DE&I initiatives

Skills-based hiring can strengthen and facilitate other practices that aim
to reduce unconscious bias in the workplace.

Empathy is at the heart of unconscious-bias training, so all of the

standard strategies used in such training understandably take empathy
as their lynchpin. “Perspective-taking,” for example, is an exercise where
people are encouraged to take on the perspective of someone who
experiences discrimination, so that they can be more thoughtful about
the groups they hold biases against.

“Counter-stereotype training,” or “stereotype replacement,” involves

showing people images and examples that directly oppose some of the
negative stereotypes that drive unconscious bias (hearing and writing
about stories of powerful females has been shown to reduce levels of
gender bias).17

By this logic, having a workplace that isn’t diverse severely reduces the
chances of successful unconscious-bias training: It’s harder to develop a
sense of empathy that can effectively break bias if you’re never spending
time with people from the groups you hold biases against. If you
encounter and work with people who contradict your unconscious biases
every day, it becomes easier for you to break down these biases.

Workplaces often lack diversity because resume-based hiring upholds

multiple barriers to employment for people with certain backgrounds
and identities. Without these barriers, the workforce naturally becomes
more diverse.

35
07 Attracting
and retaining
world-class
talent
07: Attracting and retaining world-class talent The State of Skills-Based Hiring 2022

Being talent-first is a must for

businesses and organizations

A talent-first mindset is crucial for success for businesses in the 21st

century. Human resources drive business value by attracting and
managing talent effectively. Finding top talent, putting the right people in
the right jobs, and making sure they are happy and supported once they’re
in them, has arguably never been more important. So, how can businesses
and organizations take a talent-first approach to recruitment in order to
attract, and retain, world-class talent?

Rashid Lansah
Candidate

“As an employee who

came from a biochemistry
background but developed
different skills in product
design, UI/UX and web design,
and IT customer support,
I’d prefer to apply and work
for employers that use
skills-based assessments.
There’s a great benefit for
them in terms of getting a
long-term employee, and for
me because I’d be in a place
where I’d be valued for
what I can do, with limitless
opportunities for growth.”

37
07: Attracting and retaining world-class talent The State of Skills-Based Hiring 2022

Most candidates prefer skills-based hiring

Out of the 2,666 employees we surveyed, 1,448 of them (54.3%) told us they prefer
a hiring process that includes skills-based assessments; 26.6% answered that they
preferred hiring processes without assessments; 10.2% said they weren’t sure; and
8.9% had no preference when it comes to hiring processes.

Candidates value speed, communication, and transparency. But it’s very hard for
recruiters and HR managers to provide all of these things with resume-based hiring.

With skills-based hiring, recruiters can quickly access qualifying data about their
candidates, speeding up the hiring process considerably. The inclusion of an
assessment, and transparency regarding the results, also makes the selection criteria
clear to job applicants. By completing an assessment that tests the skills needed
for the job, they can gain both insight into what the role will entail and a sense of
whether they’ll enjoy it or not.

In light of this, it’s perhaps unsurprising that most of the employees we surveyed
prefer hiring processes that include an assessment. Skills-based hiring appeals to
candidates who are not afraid to show their worth and prove their ability. Companies
who take heed of research showing how important high-quality recruitment
experiences are to candidates have a better shot at attracting diverse and talented
people. As we’ll explore next, they also have a better shot at keeping them happy and
retaining them.

54.3%
of candidates prefer a
hiring process that includes
skills-based assessments

38
07: Attracting and retaining world-class talent The State of Skills-Based Hiring 2022

People who are recruited via skills-

based hiring are happier in their roles
Our data shows that people who are recruited using skills-based hiring
are happier in their job roles than those who are not. Among the group
of employees we surveyed, 72.1% of those hired using skills-based hiring
were either happy or very happy in their current role, compared to 62.9%

72.1%
of those who were recruited via other methods. This means that almost
10% more skills-based hires are happy at work.

There are a few reasons why this might be the case.

of people hired via
• First, skills-based hiring gives candidates the opportunity to do
skills-based hiring
something similar to what they’d be doing in the role they’ve applied
report being happy
for. If they dislike the work involved in the assessment, it’s a reliable
in their role
indicator that they won’t be happy in the job.

• Second, skills-based hiring gives employers a chance to understand

factors such as motivation and culture-add in candidates. Using
tests that measure what a candidate values and is motivated by, and
assessing the results against what the company values and uses to
motivate its employees, can give both parties insight into how happy a
candidate might be in a certain role.

39
07: Attracting and retaining world-class talent The State of Skills-Based Hiring 2022

If we take a look at gender differences, we can see that, overall, females are
happier in their roles, regardless of how they were hired: 71.3% of them report
that they feel happy or very happy in their roles, compared to 63.5% of males.

Both genders see a significant uplift in employee happiness for those recruited
via skills-based hiring methods, but skills-based hiring has the most impact on
males, where there is an 11-point percentage difference in happiness in their
roles between those hired via skills-based hiring (69.3% of whom are happy)
and those who were not (58.3% of whom are happy).

Of the people who were recruited using skills-based hiring, 72.1% report being
happy in their role versus 62.9% of those who were not – so, 15% more people
are satisfied with their job after being hired via this method.
Compared with those who were not recruited using skills-based hiring, around 8%
more females hired in this way are happy with their jobs. Almost 11% more males Nicole Roberts
express happiness with their roles when they are hired via skills-based hiring. Senior vice-president
of people
Forta
People who are recruited via skills-
based hiring stay longer in their roles
“People want to be authentic
Expected voluntary attrition is 50% lower for people recruited using skills-based
and find alignment with their
hiring – only 3.2% of employees hired using this method plan to leave their
skills and experience, but
roles in the next 12 months, compared with 7.3% of employees who were not
language and verbiage varies.
recruited via skills-based hiring.
A poorly crafted job posting
This means that those who are hired without skills-based hiring are more than may not yield the candidates
twice as likely to plan on leaving their roles in the next year than those who are the company is even looking
hired using skills-based hiring. In addition, only 15.1% of skills-based hires plan to for, causing applicants to
leave their current roles within one to two years, while 18.9% of those recruited try to fit the mold of what
without skills-based hiring plan on doing so. Moving away from resume-based they think the job is, based
hiring, and towards a skills-based approach to recruitment, has serious benefits on the posting. If you’re
for employee retention rates in the years immediately following recruitment. looking to actually match
that person’s work style,
Once again, the difference is more pronounced for males when skills-based
and bring them in as they
hiring is adopted: 25.4% of males who were not recruited using skills-based hiring
are, skills-based hiring can
plan to leave their roles in the next 24 months, versus only 16% of males who
definitely help. It leads to
were recruited using skills-based hiring. Again, considering how costly it is for
better job satisfaction.”
companies to hire the wrong person and quickly lose them, these 9.4 percentage
points represent a significant opportunity for companies to save money by
boosting their employee retention with skills-based hiring.

69.3% 76.2%
of males hired via of females hired via
skills-based hiring were skills-based hiring were
happy in their current role happy in their current role

40
07: Attracting and retaining world-class talent The State of Skills-Based Hiring 2022

N = 1,240 N = 1,214

3.2%
of people hired via
skills-based hiring
plan to leave their role
within 12 months

41
08 Creating
flexibility in the
labor market
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Automation is reshaping the world

of work
The Covid-19 pandemic sped up the timeline for the adoption of AI
and robotics18, bringing organizations face-to-face with an entirely new
world of work. In particular, the retail, financial services, healthcare, and
telecommunications sectors reported high levels of AI maturity19 in 2022.

To maintain their competitiveness, candidates must lean into the essential

human qualities that can’t be replicated by even the most sophisticated
technology – creativity, empathy, communication, and critical thinking.
At the same time, they must be aware of their skill set and how it can
be applied. If the opportunity to move from a limited career path to a
role with higher growth potential presents itself, they should obtain the Matt Alder
necessary expertise to make the switch possible. Producer and host of
From this vantage point, we can look at how executives, employees, and The Recruiting Future podcast
job seekers are reacting to the forces reshaping the world at work. From
engineering career transitions to leaning further into skills-based hiring,
most of our survey respondents are taking a proactive approach to
navigating the future.

“Back when the internet

first started transforming
recruiting, we thought CVs
would be the first thing to
go. The fact that more than 20
years later, we’re still relying
on something that someone’s
written in a Word document
about a job they had five
years ago as criteria for hiring
is insanity.”

43
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Candidates want career mobility

It began with the Great Resignation. In early 2021, with the pandemic at
its peak, workers frustrated with health risks, public mandates, confused
work-from-home policies, and reduced work hours started to quit their
jobs en masse.

However, most of these individuals weren’t leaving the workforce

altogether. Instead, they were looking to find roles that provided a more
inspirational company culture, better work-life balance, and a chance of
better pay and career growth.

Ellena Bartolini
Candidate

“In a world that’s constantly

Have you had a significant change
changing, it is key to be able
in job role / industry in your career? to move around between
companies and roles. I also
get bored quickly, so I like to
experiment with different
roles and don’t want to be
put in a box.”

36.2%
of candidates under 34 are
looking to change their role
within the next 2 years

44
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Our research provides a clearer picture of these trends. Of the employees

we surveyed, 49.3% said they had switched careers within the past year.

These respondents were all full-time workers employed across various

industries, including human resources, customer service, finance, and IT,
as seen in the chart below.

The results show that, contrary to popular belief20, it is not just young
service-industry employees in low-income positions who are seeking
better opportunities. Instead, it seems that occupational mobility is
becoming the new normal for older, more established employees
as well.

Industries that candidates moved

into from previous roles

45
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

As you can see from the charts above, many respondents who sought a
career change in the past year held management and leadership roles or
boasted years of experience in the job market.

Our data shows that most of these workers fall within the millennial
demographic (people born between 1981 and 1996). When it comes to
readiness to switch roles, employees in this age range are also strongly
represented. According to our survey, 36.2% of individuals under 34 said
they would be looking to change their role within the next two years.

These findings echo prior research, showing that millennials are far more
likely to change jobs21 than older generations and generally spend shorter
amounts of time in each role22.

46
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Of course, part of this shift is driven by post-pandemic talent shortages,

with increased demand for mid-level and senior candidates. Although
these market conditions enable millennials to exercise greater control
over their career progression, their choices are equally motivated by a
desire to learn new skills and explore new opportunities for
self-development.

Another key difference between the current shift towards greater

occupational mobility and past trends23 is that career transitions are
no longer dictated by increased educational attainment. For example,
the following graphic illustrates how a majority of the individuals who
switched careers over the past year already held a university degree.

47
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Females find it harder to switch roles

The data shows a clear split along gender lines, with 51.6% of males
changing roles or industries in the past 12 months versus 46.1% of females.

This disparity isn’t down to a lack of desire; 46.4% of the females we

surveyed expect to switch roles within the next two years. Further
research from LinkedIn24 confirms that females are just as open to new
career opportunities as males but feel less comfortable applying for jobs
where they do not match 100% of the requirements. Similarly, recruiters
are 13% less likely to click on females’ profiles and job applications when
seeking candidates for open positions.

Sara Sremcevic-Brown

46.1% 56.2% Candidate

“I believe resumes have

of female candidates of male candidates
changed roles in the past changed roles in the past always been the wrong
12 months 12 months way of ‘getting to know the
person.’ A piece of paper
can never show whether
a candidate is suitable for
a certain role. Education,
skills, and attitude cannot be
satisfactorily demonstrated
in writing. Once interviewed,
nine times out of ten, I’d get
a job. My personality comes
out in interviews, and my
passion and work ethic, as
well as all the examples of
my achievements and my
approach to certain work
situations, are things you can’t
put on your CV.”

48
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Fresh graduates cannot access the

best opportunities
If we zoom out and take a broader look at the data, we can confirm that
this reshaped job market isn’t working for everyone. Statistics show a clear
disconnect between the volume of open positions and reported figures
for unemployment. In the US, for example, the latest statistics show a near
record-breaking number of vacancies25, yet labor force participation26 is
decreasing, and the majority of job seekers say that it’s harder to get hired27
today than it was pre-pandemic.

Many of these issues can be blamed on a mismatch between candidate

expectations and the traditional hiring process. A large portion of job seekers
Kuba Garstka face difficulties finding opportunities that meet their expectations, and when
Candidate they do, they’re often met with unresponsive employers28.

For many of these individuals, the problems begin at the application stage,
“Standing out with my CV is
where they often struggle to differentiate themselves from other applicants
an ongoing problem for me.
due to the resume-based screening processes used by most organizations.
I never graduated before
starting my career. Higher Unsurprisingly, 56.5% of our respondents felt that their profiles didn’t pass
education is still one of the screening process due to a lack of relevant experience or qualifications
the requirements in many in their resumes.
recruitment processes, even
though it doesn’t necessarily
translate to skills needed or
to candidates’ capabilities
to succeed in the role. I I feel as though I have trouble “standing out
was lucky to find a place
that assessed my attitude
from the crowd” when submitting resumes
and knowledge, not my
background, which allowed
me to break the chain of
simple labor jobs and let me
into more business-oriented
positions. Many bright people
never get this chance.”

56.5%
feel they didn’t pass
screening due to lack of
relevant experience on
their resume

49
08: Creating flexibility in the labor market The State of Skills-Based Hiring 2022

Putting aside the fact that these factors have a negligible impact on job
performance29, they also create significant barriers to entry for fresh
graduates who can’t market themselves as proven quantities in their
chosen field.

Indeed, according to our findings, 31% of those under 25 who had

changed jobs in the past 12 months felt strongly that they had been
filtered out due to these issues.

These results correlate with post-pandemic data30 that shows that

underemployment rates are highest for older Gen Z (born 1997 to 2012)
workers. In general, employers prefer to hire teen workers for low-skilled
jobs and younger millennials for roles that require more experience,
leaving many fresh graduates stuck in the middle. As a result, many of
these individuals are forced to find employment in low-skilled roles31 that
often don’t align with their career objectives.

Those who are most affected are the young. They find it the most difficult
to prove their worth to a new employer.

Age breakdown: Agree / Strongly Agree with

trouble “standing out from the crowd”

50
09
The future of
skills-based
hiring
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Executives are bullish on skills-based

hiring
As this report has shown, skills-based hiring is a growing trend, and that
trend is set to continue: 87.5% of respondents to the survey say they will
make the same or more use of skills-based hiring in the future as they do
now, and 43.9% have stated that they will use more.

Of the employers who state that they will use skills-based hiring more
often in the future, the largest segment is focused on recruiting for IT-
specific roles.

With margins tightening in the tech sector32 and increasing difficulties in

acquiring and retaining talent33, it makes sense that HR teams are turning
towards data-driven processes to validate their hiring decisions and

Industry breakdown: Yes - Plan to use skills-based

hiring assessments more in the future

52
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

reduce the chance of mis-hires.

However, this approach isn’t just limited to organizations recruiting

for IT-related roles. Our data shows that employers focused on finding
candidates for customer service and HR functions are also planning
to ramp up the adoption of skills-based hiring. So we can see that this
method is seen as an effective way to validate a range of competencies,
even outside of highly technical fields.

Diving deeper into the results, we find that a clear majority of hiring
managers who believe that testing for soft skills will be critical to finding
successful candidates over the next five years are also increasing the use
of skills-based hiring.

53
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Expect greater investment in

skills-based hiring

Furthermore, respondents are willing to pay; 87.4% of respondents expect

that their budget for skills-based hiring will stay the same or increase in
the future, and 38.2% expect their budget to increase.

Our data also shows that companies of all sizes recognize the
importance of implementing fairer, more accurate recruitment practices.
Organizations with anywhere from 50 to more than 5,000 employees are
planning to increase investment in skills-based hiring.

Given these results, skills-based hiring appears to be a growing trend that

shows no signs of abating; 53.4% of respondents felt that skills-based
hiring was not only accelerating but that it would be the dominant method
of recruitment in the future.

53.4%
of respondents felt that
skills-based hiring would
be the dominant hiring
method in the future

54
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Challenges that skills-based hiring will need to

overcome

It’s clear, however, that skills-based hiring will need to overcome clear challenges. The companies we
surveyed were concerned about what they saw as the top four challenges:

Difficulty evaluating assessments from

a large number of candidates

Concerns about adding another stage

to the hiring process

Uncertainty about the quality

and integrity of assessments

Lack of budget

55
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Difficulty evaluating assessments from

a large number of candidates
For most HR teams, talent-acquisition strategies focus on attracting
a small number of high-quality candidates to apply for open roles in
their organization.

However, up to 78% of candidates apply for jobs where they don’t meet all
of the requirements34. For hiring managers, the main concern is screening
anywhere from 10 to more than 10035 profiles to find individuals whose
skill sets are a good fit for the role.

Although our data confirms that skills-based assessments are a strong

indicator of job performance at this stage, marking, documenting, and
processing non-automated tests can prove a significant burden for
hiring managers.

56
09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Concerns about adding another stage

to the hiring process
We’ve touched on the importance of time-to-hire as a key metric for
employers. Filling open positions as quickly as possible is critical to
maintaining productivity, revenue, and output across teams.

A drawn-out hiring process can also cause organizations to miss out on top-
tier talent. Recent data shows that most candidates who dropped out at the
evaluation stage did so because they felt their time was being disrespected36.

In our survey, 37.2% of employers stated they had concerns about adding
an extra step to the hiring process. However, the view from the other side
looks quite different. According to our data, most employees see skills-based
tests as a vital addition to traditional hiring processes that evaluate applicants
primarily on education and experience.

The chart below shows that 70.2% of respondents agree or strongly agree that
these assessments increase the likelihood that candidates can secure their
“dream jobs.” A further 55% said that skills-based hiring enabled them to access
career opportunities that would otherwise have been out of their reach.

The results indicate that candidates are more than willing to put up with extra
steps if they believe these extra measures make the hiring process fairer and
more objective.

70.2%
of respondents agree that
skills-based hiring would
increase the chances of
securing their “dream job”

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09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Uncertainty about the quality

and integrity of assessments
Of the employers we surveyed, 32.7% said they still doubted the accuracy,
validity, and fairness of skills-based assessments. In psychometrics,
34.7%
“criterion validity” refers to how well a test can predict an outcome of employers stated that
compared with a gold standard of measurement. In this case, a current skills test would help them
employee within a company performing at a high level would be able to to predict job success
pass a role-based assessment with flying colors.

More than a quarter of our survey respondents said pre-employment

testing was effective for verifying candidates’ soft skills, hard skills, and

28%
cognitive abilities. Meanwhile, 34.7% stated that skills tests helped them
predict how well job applicants would perform in their prospective roles,
so there was some level of consensus about the accuracy and validity of
this approach. of employers said
lack of budget would hinder
use of skills-based hiring
Difficulties budgeting for
skills-based hiring
Of the employers we surveyed, 28% said that they would have trouble
implementing skills-based hiring due to a lack of budget. These objections
can largely be attributed to the rising costs of recruitment, which we
touched on earlier.

According to some sources, 60% of the total expenditure37 for filling

an open position is incurred by placing departmental leads and senior
managers in supporting roles across the hiring process. The time these
individuals spend on writing job descriptions, screening applicants, and
interviewing prospects represents vital hours taken away from ROI-
generating activities in their respective functions. The concern is that
any time spent on preparing and marking role-specific tests and then
evaluating candidate skills based on their results would just add to these
opportunity costs.

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09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Scaling skills-based hiring to large

number of candidates
Of the companies we surveyed, 38.5% mentioned that they found it
difficult to evaluate assessments from a large number of candidates.
This challenge relates primarily to work samples and/or take-home
assignments, as online talent assessments are automated to provide
immediate results no matter how large the talent pool.

Moving forward, we predict that the industry will move towards more
standardization in work samples and/or take-home assignments to make
it easier to provide these assessments to a larger number of candidates.
Over the past few years, we have seen the industry grow and provide
Paul Musters
improved methods for testing role-specific skills at scale, and given that
Founder
such a large number of respondents found this to be a challenge, it is
Emaho, Netherlands
logical to expect the industry to react with online solutions for work
samples in the future.

“One of the reasons

skills-based hiring helps is
because you don’t have to
overthink how to make a
hiring decision because you
have a framework in place.
It saves you time and, even
more importantly, it saves
you headspace. A gut feeling
can play a role, but your gut
feeling is trained better with
these tools.”

38.5%
of employers said they found it
difficult to evaluate assessments
from a large candidate pool

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09: The future of skills-based hiring The State of Skills-Based Hiring 2022

Reframing hiring processes to

incorporate skills-based hiring
assessments
Of the employers we surveyed, 63.6% indicated that they had reviewed
CVs and resumes as part of their hiring process over the previous year.
However, almost 80% noted difficulties in screening applicants using
these tools.

Key issues highlighted included problems identifying whether candidates

have the required skills (34%) and concerns over the accuracy of the
information contained within the documents (33%). By comparison, 58% of
respondents said that skills-based assessments were more effective than
CVs or resumes in identifying talented candidates. A further 55% agreed
that these were more accurate predictors of on-job performance.

Historically, CVs and resumes have been used as a first-line screening

tool to ensure candidates meet the minimum requirements for a role.
Meanwhile, take-home assignments, cognitive tests, and role-specific tests
are usually administered once applicants have passed these initial filters.
Yet our results show that these methods are far better for validating the
soft and hard skills that candidates bring to the table.

Based on these findings, it becomes apparent that skills-based

assessments should not be used as an additional step in the traditional
recruitment funnel, but as a replacement for time-consuming and
inaccurate resume-based screening.

By streamlining their processes in this way, employers can increase the

breadth and depth of talent of their applicant pools and make effective
hiring decisions far more quickly.

80%
of employers noted difficulties
in screening applicants using
CVs and resumes

60
10
Appendix:
About the
survey
10: Appendix: About the survey The State of Skills-Based Hiring 2022

Appendix: About the survey

For this report, we surveyed 2,736 employers and 2,666 employees

in October 2022. Data was collected through independent channels.

Of the employers surveyed, the majority were based in the US

(33.6%) and Great Britain (29.1%). However, we also had a substantial
number of responses from Australia, Canada, and New Zealand.
The majority of employees we surveyed were also based in the US
(48.7%) and Great Britain (25%); 19.2% were based in Canada, and
the remaining respondents came from Australia and New Zealand.

Their respective organizations ranged in size from single-person

operations (6.4%) to small and medium-sized enterprises employing
anywhere from 10 to 250 people (39%) to large enterprises
employing more than 250 people (41.6%).

In terms of the industries represented, the largest percentage of

respondents came from healthcare and social assistance (9.4%).
However, hiring managers from the finance and insurance (8.5%),
retail (8.2%), and education (7.7%) sectors also made up a significant
portion of survey participants.
In terms of their sectors, our largest employee sample sizes came
from education (12.1%), arts, entertainment or recreation (9.8%),
and agricultural trades (7.8%).

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10: Appendix: About the survey The State of Skills-Based Hiring 2022

Of our respondents, 53.3% of employers identified as male while

46.6% identified as female. The vast majority of hiring managers
and executives surveyed identified as white (70.8%), while 8.1%
identified as black and 7.3% as Asian.
We surveyed a balanced range of high, middle, and low-income
employees, of whom 57.4% identified as male, 42.3% as female,
and 0.3% as other. Of these respondents, 68.8% identify as white,
9% as black, 8.8% as Asian, 4.5% as Arab, 1.9% as Latinx and 1.4%
as multicultural.

Take part in next year’s survey

The data collected from employers and employees was analyzed and
presented by TestGorilla, in the first edition of what will be an annual
report tracking the growth in, and success of, skills-based hiring.
We’re grateful to all of our partners for permitting us to include their
stories – and if you’d like to join forces with us as a partner on the
2023 report, please get in touch via [email protected].

63
10: Appendix: About the survey The State of Skills-Based Hiring 2022

About TestGorilla
TestGorilla is an online pre-employment testing platform with a wide-ranging library of
more than 260 scientifically validated tests. These can be used to assess candidates’
skills in specific job-related skills, language proficiency, cognitive abilities, soft skills,
motivation, personality and culture add. The company’s global remote team of more than
100 people serves recruiters, HR professionals, hiring managers, and hiring teams in more
than 100 countries. TestGorilla, which counts Sony, PepsiCo, Bain & Company, Revolut,
H&M and the UK’s National Health Service among its customers, secured Series A funding of
$70m in summer 2022.

Improving hiring processes

A key part of TestGorilla’s mission is helping organizations to optimize recruitment
and widen their applicant pools. The platform is built to ensure that employers can
quickly onboard a large number of candidates into their funnel, and the user-optimized
assessment flow encourages high completion rates across all assessments.

These are particularly critical features for HR teams and recruiters who
struggle to attract a suitable breadth and range of talent to their
job postings using traditional CV and interview-based screening
processes.

One example is the global B2B payment provider TreviPay38. Due

to a lack of standardized hiring procedures and limited hiring
criteria, the company was unable to engage the best candidates
within its applicant pool.

Using TestGorilla, the TreviPay team could create a custom

assessment for any open position and post a link to it on their
chosen channels, with reasonable confidence that motivated
candidates would complete all stages of the evaluation. By
implementing this system, Trevipay was able to assess a far
wider range of candidates with greater accuracy and efficiency.

Indeed, according to our data, over this past

12-month period, more than 650,000 jobseekers
have engaged with TestGorilla assessments posted
through public links on social media and career
websites. Moreover, 88.4% of candidates finished all
required tests after beginning the application process.

64
11 Appendix:
Our partners
11: Appendix: Our partners The State of Skills-Based Hiring 2022

Our partners

Klaviyo The Recruiting Future Talkpush

Ellena Bartolini
Paul Abercrombie Podcast Max Armbruster Candidate
Director of talent (EMEA) Matt Alder Founder and chief
Producer and host executive

CapitalT Recruiting Brainfood

Kuba Garstka Rashid Lansah
Eva De Mol Candidate Candidate
Hung Lee
Co-founder Curator

Bazaarvoice Options Executive Search Suntory Beverages Emaho

Emma McFetridge Achyut Menon and Food Nigeria Paul Musters
Talent acquisition partner Managing director Segun Mustapha Founder
People and culture officer

66
11: Appendix: Our partners The State of Skills-Based Hiring 2022

TalentMapper Forta Sara Marketing Sumo

Marcel Rietveld Nicole Roberts Sremcevic-Brown Adrian Tan
Chief executive Senior vice-president Candidate Chief marketing
and co-founder of people strategist

Recruiter University
Jacco Valkenburg
Trainer employer branding
and recruitment

67
12 Appendix:
Bibliography
12: Appendix: Bibliography The State of Skills-Based Hiring 2022

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