Merit-Based Hiring is Tomorrow’s Talent Management Solution

The private sector has been moving toward merit-based hiring for several years. This means recruiters and hiring managers are placing more emphasis and value on applicants’ skills and experience than on degrees, education, and information provided on their resumes. Per the Harvard Business Review, employers began transitioning to skills-centric talent management solutions between 2017 and 2019.

In 2020, the federal government enacted Executive Order 13932 to modernize and reform how agencies evaluate and hire applicants. Federal agencies are now required by law to implement merit-based hiring strategies.

Public and private sector organizations traditionally relied heavily on applicants’ education credentials to evaluate candidates. However, more and more are adopting merit- and skills-based recruiting practices because studies show degree requirements exclude qualified candidates. Research conducted with Harvard Business School, Accenture, and Grads of Life shows three out of five HR leaders and senior executives said they rejected qualified talent because applicants did not have a college degree.

What Is Merit-Based Hiring?

Merit-based hiring, also referred to as skills-based recruiting, is a talent management solution that requires applicants to prove they have the abilities, knowledge, and skills required for a job. This usually means candidates must complete skills assessments instead of merely submitting a resume or completing a job application.

Merit-based hiring differs from traditional hiring methods because HR teams and hiring managers use skills-test results to measure applicants’ abilities and no longer evaluate candidates solely based on degrees and work experience. They aim to identify candidates with the skills and knowledge to do the job, regardless of how they acquired the expertise.

The value of merit-based hiring extends beyond hiring and throughout an employee’s tenure with an organization because HR teams can use skills assessments to expedite new-hire onboarding as well as enhance employee development efforts.

By reviewing skills test results, HR leaders can determine which employees are ready to be promoted or would be if they had additional training. This enables them to develop personalized training programs that help employees enhance existing skills and learn new skills that will help them succeed as they assume other responsibilities and move into new roles.

For example, eSkill clients use the Leadership Skills and Emotional Intelligence assessments if employees will manage people in a new role. If an employee is being considered for a position that requires interaction with other managers and teams or managers, they can also require candidates to complete the Teamwork and Collaboration skills tests.

Benefits of Merit-Based Hiring

These are reasons why experts say merit-based hiring is the talent management solution of tomorrow.

• Improve Hiring Outcomes: HR leaders are tasked with making good hiring decisions. And they know it can cost their organizations hundreds or even thousands of dollars if they make the wrong choice. 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, industry sector, and job role. And this does not include the cost of repeating the screening and hiring process to hire someone to replace the employee. They want to hire the best person who can do the job and do not care how applicants obtained the skills.

• Decrease Hiring Costs: Implementing a talent management solution that focuses on merit-based hiring can lower hiring costs and expedite time-to-hire. This means HR managers and their teams can complete the screening process more quickly and efficiently with better overall outcomes. Several eSkill clients who have implemented skills-based recruiting have reduced time-to-hire by 60% and decreased hiring costs by 70%.

• Deal with the Talent Shortage: The shortage of skilled workers has made it challenging for organizations in all industry sectors to recruit top talent and create a strong talent pipeline. Transitioning from a degree-centric to a merit-based hiring strategy can help close the skills gap because it allows HR teams to consider candidates who otherwise might have been discouraged from applying because they lacked a college degree.

• Mitigate Potential Litigation: The U.S. Equal Employment Opportunity Commission (EEOC) receives thousands of discrimination complaints yearly from applicants claiming employers engaged in unfair hiring practices. Organizations minimize their liability by implementing merit-based hiring practices because hiring and promotion decisions are based on measurable data instead of “gut” feelings.

• Minimize Subjective Bias: Implementing skills-based recruiting minimizes the chances of subjective bias influencing hiring and promotion decisions. All candidates are asked the same validated questions, and tests are automatically scored. Any video questions are on-demand, which means applicants listen to the questions and record their answers. There is no direct contact with hiring team members. Some organizations disable the video, which means hiring teams evaluate responses without seeing the applicants.

• Reduce Turnover: Merit-based hiring helps organizations retain top employees. Top producers thrive when they work on a top-quality team. They are also motivated when they see that hiring and promotional decisions are based on candidates’ skills and abilities. When they see hiring is based on merit, it shows them hard work is rewarded, and it is possible to be promoted. So, they have no incentive to look elsewhere.

How Organizations Implement Skills-Based Hiring

Implementing a merit-based hiring process requires you to evaluate job postings and position descriptions to identify the necessary skills and abilities for each. Then you will need to revise job postings to ensure they highlight required capabilities and list a degree as “preferred” instead of “required.”

You and your team should then implement an industry-leading assessment solution such as the eSkill Talent Assessment Platform^TM.  This will enable you to evaluate applicants objectively, assess existing staff abilities, and proactively manage training and employee development.

Are you ready to implement merit-based hiring into your hiring process to create a talent management solution that will meet your current and future needs? Contact us to request a demo.