Employers are at an inflection point. The process of hiring has never been more costly, competitive, or complicated than it is today. In this environment, your company can ill afford to make hiring mistakes, sustain high turnover rates, or struggle to retain valuable long-term employees. That’s why many employers are shifting the way they think about hiring. Competency-based hiring is a reflection of that shift.
Competency-based hiring is a scientifically-backed strategy for evaluating prospective hires that focuses on specific skills, behaviors, and attributes that align with a given role, organization, and industry. Traditional hiring methods emphasize qualifications, experience, and credentials, which are of course important. This information is also easy to ascertain through a combination of vetting and interviewing.
In contrast, the personality traits that can actually help predict an individual’s potential for success in your organization are less easy to detect using traditional methods of employee evaluation. In the discussion that follows, we’ll explore the ways that competency-based hiring (sometimes also called skills-based hiring) can help employers transform their hiring process and we’ll highlight the role that individual personality assessments can play in reducing turnover, increasing diversity, and driving improvements in company culture.
How we reached a hiring inflection point
Before we dig a little deeper on the idea of competency-based hiring, let’s take a quick look back. How exactly did we get here?
In 2021, still in the shadow of the COVID-19 pandemic, American workers staged something of a national walkout. The Bureau of Labor Statistics (BLS) reports that some 47 million people left their jobs during a period now referred to as the Great Resignation, or the Big Quit. In the time since, employment levels in most industries have returned to or exceeded pre-pandemic levels. In retrospect, many economists suggest that the Great Reshuffle is perhaps a more apt name for what occurred.
So what’s the point of this little stroll through recent history?
The reshuffle revealed that tens of millions of Americans were unhappy in their current position. It wasn’t that they didn’t want to work. It was that they didn’t want to work for their current employer, or even in their current industry. Industries like education and hospitality were hit particularly hard as employers grappled to fill empty positions and manage understaffed shifts.
How did this happen?
There are a lot of overlapping answers to this question. Resigning workers cited a host of reasons including a search for better pay, greater work-life balance, and a change of career paths. But one explanation stands out, perhaps because it also seems to be at the root of so many other explanations–dissatisfaction.
Americans were dissatisfied with their current role, a sure indication that tens of millions of workers were simply a poor fit for the position, organization, or industry they occupied. The Great Reshuffle calls into question many things about our working economy–notable among them, traditional hiring practices.
Traditional hiring vs. competency-based hiring
The events of the last several years have stirred employers to reexamine long-standing hiring conventions. The mass exodus and relocation of American workers seems to undermine the effectiveness of academic degrees, resumes, cover letters and interviews as tools for prospective employee evaluation.
This is not to suggest that these tools are without value in the process. The experience, information, and credentials conveyed through these steps are relevant and useful. But in isolation, they fall well short of telling us the full story and upward potential of each prospective hire.
This is why many hiring and recruitment experts are observing a rip in the so-called “paper ceiling”. The “paper ceiling” refers to the exclusive use of credentialing to evaluate prospective employees. The implication is that those without the requisite academic degrees and certifications won’t even be considered for certain roles.
However, this approach may be excluding any number of worthy and even steller candidates from the hiring pool, including those that may not have financial, geographical, or technological access to a college education. Worse yet, it is an approach that may not be compatible with the changing makeup of the labor pool and the evolution of knowledge, experience, and learning in an information-connected society.
To say it more succinctly, a college degree isn’t the only way to educate and improve yourself. A group called Opportunity@work, which focuses on helping non-degree holders translate their unique talents and experiences into paying work, calls these individuals STARs. The acronym, meaning Skilled Through Alternative Routes, refers to the roughly 70 million Americans who have come by their unique blend of qualifications through military service, training programs, community college, or most commonly, on-the-job experience.
In short, these individuals may be an excellent fit for roles and opportunities that have traditionally been held out only to those with a college degree. Traditional hiring methods may prevent employers from making this connection. And that’s a loss, not just for qualified and overlooked candidates, but also for employers and their organizations.
How competency-based hiring can help
Why is this an issue for employers? Well, according to an article from BCG, many of the skills that companies are searching for today may not necessarily come with a college degree. Technological innovations like generative AI and machine learning are changing the labor landscape and driving a need for new skill sets.
However, says BCG, a study from Pearson Business School reveals that only 13% of college graduates today have the required skills to start in their field right away. The same study reveals that, today, 54% of college graduates are working in a field other than their original area of study.
These conditions call into speculation the presumptive usefulness of a college degree in determining job placement. And this speculation only grows stronger when you stack credential-based hires up against competency- or skills-based hires.
According to the BCG study, skills-based hires actually demonstrate better retention rates than traditional hires. According to BCG, those who are hired based on core competencies tend to stay on 9% longer than their counterparts who have been hired on the basis of their college degree.
But it’s not just employers who are reporting greater hiring success with these individualized assessment tools. An article from the Journal of Applied Psychology puts some scientific weight behind the idea. According to researchers, in an analysis of 39 individual assessment validation studies, “Assessor recommendations were found to be useful predictors of job performance, although the level of validity varied considerably across studies.”
The findings concluded that the validity of competency-based assessments “tended to be higher for managerial than nonmanagerial occupations and for assessments that included a cognitive ability test.”
The advantages of competency-based hiring
The caveats cited above are useful for understanding how best to leverage personality assessment tools in your hiring process, and for identifying the right assessment tools for your hiring needs. More generally though, the research backs the idea that we can overcome the increasingly obvious limitations of traditional hiring by incorporating competency-based hiring into the process.
Competency-based hiring processes give us a way of honing in on the skills, behaviors, and experiences that are most likely to contribute to success in a given role and organization. Advantages of this approach include:
- Reduced turnover, through the use of metrics that are more directly tied to job performance, long-term organizational potential, and cultural compatibility
- Fairer hiring practices, with empirical competency-based assessments helping to mitigate unconscious biases, subjective opinions, and “gut-feeling” hiring decisions
- Improved predictive capabilities, with evidence of past behavior helping to more accurately anticipate future performance
- Increased diversity, with an emphasis on job-specific attributes rather than credentials helping to bypass systemic and demographically-driven hiring inequalities
- Data-driven decision making, with competency-based metrics lending to deeper analytical insights, the identification of meaningful trends, and continuous improvement of hiring methods
Selecting the right competency-based assessment tool
As the research suggests, adding competency-based assessment to your hiring process can improve the likely fit and longevity of your hires. And as the research also suggests, it can be a particularly powerful way to evaluate cognitive abilities and leadership potential. That’s why it’s important to choose an assessment tool that provides clear metrics in these areas.
For instance, The Success Portraits Personality Test (SPPT) evaluates prospective employees on 19 distinct personality traits including relevant managerial traits like Meta-Leadership, Achievement Striving, and Assertiveness; as well as cognitive traits like Socal Intelligence, Self Regulation, and Vision.
Take a closer look at the SPPT and find out what makes these traits such powerful predictors of employee potential. Or take the test yourself to see how you score!