Hiring is broken. Here’s how to fix it

Hiring has not altered much since the early days of the 20th century. Despite all of the advances in technology, it costs over £30,000 to replace a staff member and takes nearly 30 days. In 2014, replacing staff cost British businesses £4 billion as new employees take up to eight months to reach optimum productivity levels.

This outdated model does not benefit those who don’t fare well in our test-based, rote-learning education system. The playing field is beyond uneven. It does not benefit learners in vocational education and training, it does not favour those increasing number of young people who have atypical careers, it does not help veterans, it does not help mothers. It doesn’t even help businesses – there are currently 2.8 vacancies for every 100 employees in the UK.

Hiring practices look to the past

We continue to rely on outdated methods of hiring, rooted in an earlier age. Like many business operations, we bolt on more processes rather than examining the larger system and rebuilding it to meet our current needs. We are still hiring as if work consisted of repetitive tasks when the core competency most jobs require, whatever the skill level, is critical thinking.

Degrees and years of experience provide very little insight into this. Indeed, research has shown that, together, degrees, training, and experience possess just a 2.1% predictive ability for job success. We treat these filtering tools as if they were oracles and then act surprised when our human capital fails to meet our business expectations. While businesses depend on human capital to function, hiring is treated as a necessary evil rather than a core business competency. Fundamentally, we are not very good at hiring people.

McKinsey partners Lowell Bryan and Claudia Joyce, in their book “Mobilizing Minds: Creating Wealth from Talent in the 21st-Century Organization" write: “In a modern, networked, and knowledge-based business environment, intangible assets (such as skills, reputations, and relationships) generate the highest value.”

It is clear that the business case for hiring should be focused on employees’ future capabilities – but that is not what hiring today looks at. Google’s former head of human resources Laszlo Bock, whose team receives 50,000 resumes a week, says: “Resumes are terrible. It doesn’t capture the whole person. At best, they tell you what someone has done in the past and not what they’re capable of doing in the future.”

Practical skills will matter more in the new economy

The pace of change in a digital economy demands that all workers bring an entrepreneurial mindset to their jobs. Being an entrepreneur means that you are skilled at adapting to change; that you are able to critically identify and assess problems and propose logical solutions; that you work flexibly within teams; and that you know how to communicate effectively with diverse groups of people. We need to change the way we hire in order to better assess prospective employees’ capabilities in these areas.

And we need to change the way we educate in order to strengthen students’ innate talents and human skills. Focusing on building these entrepreneurial skills will prepare learners exactly for these jobs of the future.

Employers are starting to demand skills-based education to enable skills-based hiring. Singapore has an entire programme called “second skilling”. Software development companies like Skillist allow hiring managers to easily make skills their focus. Skillist wants to do away with the 500-year-old idea of resumes by taking the focus away from credentials to transversal skills thus making hiring fairer – and more effective: 40% of its applicants passed through to the next round, double the normal rate.

The change towards skills-based education is taking place

In Europe, education, economic and employment policies are shifting to skills-based learning. Digital skills were already mapped in the 2013 European Commission Digital Competence Framework (DigComp), and in 2016 the Entrepreneurship Competence Framework (EntreComp) that maps transversal skills such as spotting opportunities, creativity, working with others, and mobilising resources, was added.

The EntreComp framework has laid the foundation for a common language addressing which skills are entrepreneurial and the value of entrepreneurial skills at all levels. Its user guide will give these skills more visibility, which in turn will be able to influence policy-making.

A new curriculum is being developed for schools in Wales focussing on skills building and raising lifelong learners, as life and the world changes around them. Scottish pupils are learning to 'make life better' as ethical entrepreneurs.

And companies as diverse as Greyston and IBM are turning to skills-based hiring as a better way to hire the talent they need to drive their business success.

Hiring is broken. Skills-based tools are how we fix it.