How Merit-Based Hiring Simplifies Talent Pipeline Management

For several years, the private sector has been moving toward merit-based hiring-placing more emphasis and value on skills and experience than on education and degrees. According to the Harvard Business Review, employers began transitioning to a skills-centric talent pipeline management strategy between 2017 and 2019 instead of focusing purely on degrees and work experience.

With the enactment of Executive Order 13932, the federal government is in the midst of its own transition to modernize and reform the way applicants are assessed and hired.

Federal agencies historically relied on resumes and education to evaluate candidates. However, hiring officers are now legally required to use validated skills assessments and scale back reliance on educational qualifications. This approach is designed to improve hiring outcomes by enabling agencies to evaluate candidates on whether they meet job requirements, regardless of whether the skills were acquired through a university degree program, on the job, or through self-study. 

This focus on skills-based hiring makes sense because it offers many advantages over traditional applicant-screening methods. Are you wondering what benefits merit-based hiring offers and how your organization can leverage them? Keep reading to find out.

What Is Merit-Based Hiring?

Merit-based hiring is often referred to as skills-based hiring because candidates must prove they have the abilities and knowledge to do a job by completing a skills assessment.

Merit-based hiring differs from traditional talent pipeline management because employers no longer evaluate candidates solely based on degrees and work experience. HR teams and hiring managers place less emphasis on both and rely on skills test results to measure applicants’ abilities and identify which ones are best qualified for the job.

Skills-based hiring extends far beyond the initial hiring process by leveraging assessments in staff development to prepare workers to step into leadership roles. HR leaders can use eSkill’s Leadership Skills Test to evaluate employees’ leadership potential. They can create custom assessments that meet their exact requirements by adding questions from Remote Working, Verbal Communication, and Emotional Intelligence skills assessments. Once they review the results, they can develop personalized training programs to help employees further their careers while increasing their value to the organization.

Benefits of Skills-Centric Talent Management

By implementing a merit-based talent pipeline management strategy, your organization gains the following benefits:

• Minimize Civil Liability: In 2020, the U.S. Equal Employment Opportunity Commission (EEOC) received over 67,000 workplace discrimination complaints. Many were from applicants who claimed that employers engaged in unfair hiring practices or otherwise treated them unfairly. Implementing merit-based hiring practices minimizes your organization’s potential liability by basing all hiring and promotional decisions on quantitative data.

• Mitigate Subjective Bias: Implementing skills-based talent pipeline management minimizes the chances of unconscious bias influencing hiring and promotion decisions. Taking steps to control bias is essential because fighting discrimination lawsuits is expensive and time-consuming, and paying damages can cost you millions.

• Avoid Hiring “Mistakes”: Hiring or promoting the wrong person costs your company thousands in lost productivity. According to the U.S. Department of Labor, the cost of a bad hire can be as high as $240,000, depending on the company and job role. This amount does not include the cost of repeating the screening and hiring process to replace the employee who did not work out.

• Decrease Hiring Costs: Implementing merit-based talent pipeline management leads to lower hiring costs and faster time-to-hire, which helps you expedite and complete the screening process more efficiently. Many eSkill clients have reduced hiring costs by 70% and time-to-hire by 60%.

• Improve Staff Morale: Skills-based hiring can improve staff morale. If you hire smarter, your staff benefits from working with well-qualified team members. Also, if employees see hiring and promotional decisions are based solely on candidates’ skills and abilities, they will trust and respect the process.

• Reduce Turnover: When you hire based on merit, you can implement a talent pipeline management strategy that helps you retain top talent. Your most productive employees will have an incentive to stay with your company if they see they will be rewarded for their hard work, have a fair shot at promotions, and can grow their careers.

• Tackle the Skills Gap: The shortage of skilled workers is making it challenging to find top talent and build a strong candidate pool. Transitioning to skills-based hiring from degree-centric hiring will help you close the skills gap. Applicants who would be a good fit for your organization may be discouraged from applying if they think they do not meet stringent degree or experience-based requirements. You can easily find great candidates and connect with a broader talent pool by rewriting your job descriptions to focus on skills.

How to Implement Skills-Based Talent Management

The first step in implementing merit-based hiring is to evaluate your job postings and position descriptions. Meet with your team and hiring managers to identify the skills and abilities necessary for each position. Then create job postings that highlight what attributes you seek and list degrees as “preferred” qualifications instead of “required.”

The next step is to define how you will measure applicants’ skills and abilities. The most pragmatic approach is to include skills tests in your hiring process. You can also use skills assessments to measure existing employees’ abilities to guide training and employee development.

The best way to implement a merit-based talent pipeline management strategy is to leverage skills tests for hiring, training, and employee development. Contact us to request a demo.