How skills-based hiring helps employers beat skills shortages by hiring hidden workers

It’s no secret that there is a global crisis in recruitment: 77% of employers globally reported talent shortages last year, a 17-year high.[1]

Asking how this mass skills shortage is possible is easy to forgive. In 2019, although the US economy posted 7.3 million job openings, this number was outstripped by the number of working-age unemployed and underemployed Americans at the time: a whopping 12 million.[2]

Part of the answer lies in the limited overlap between employers’ desired skills and the skills offered by many applicants. 

Tech roles are particularly affected. IT skills were at the top of the missing skills list in the labor market in the study above, and a separate report named cybersecurity as the biggest skills gap of 2022.[3]

Initiatives like widespread upskilling and identifying the hidden gems in your organization can address this issue. However, the broader systemic problem driving this gap doesn’t lie with candidates but with recruiters. 

The candidates you need are in the workforce, but outdated recruitment practices hide them from you. 

Skills-based hiring can help you beat skills shortages, hire these hidden workers, increase diversity, and promote equality of opportunity across the board – here’s how.

Who are the hidden workers?

“Hidden workers” are applicants hiding in plain sight in the workforce. They show up in unemployment statistics but not in your shortlist of candidates or broader applicant pools. 

This absence usually happens because traditional hiring methods exclude hidden workers based on bias. 

Examples of hidden workers include:

• Caregivers whose caring responsibilities have required them to sidetrack their careers. These are usually women. Working mothers of children under 10 were 10% more likely to consider leaving work owing to the pressures of lockdown than their male counterparts.

• People with a criminal record. Almost a third of hiring managers say they would exclude a candidate who disclosed a criminal conviction, despite only 15% saying this was a formal policy at their company.

• Recovered substance abusers.

• Disabled people and neurodivergent workers. 

• Older workers, who could be seen as a more expensive option when it comes to health insurance outlays.

• Immigrants and refugees who could lack fluency in their target language, face prejudice from recruiters and hiring managers, or not have accepted qualifications.

Many of these people fall under the umbrella of STARs or candidates skilled through alternative routes. 

In other words, they have the skills required to complete the role, but they did not acquire them through a four-year college degree. Instead, they picked alternative routes like on-the-job training.

Hidden applicants also vary depending on your industry. For instance, roles in health, education, administration, and literacy (HEAL) are overwhelmingly staffed by women, leading hiring managers to overlook men for HEAL jobs. 

But what about traditional hiring hides these workers from your view?

How traditional hiring excludes hidden workers

Hiring, by its nature, is an exclusive practice. The goal is to narrow down a large field of candidates until you find the person who best fits the role. 

In the past, creating an ideal candidate profile (ICP) with all your specific requirements for the role and setting out to find the best match was the norm.

But which elements of this approach are guilty of excluding hidden workers?

Outdated four-year degree requirements 

The four-year degree requirement feels like it is baked into hiring as we know it, with many employers using it as a shorthand for professional skills like:

• Communication 

• Presentation 

• Competency with Microsoft Office 

• Basic data analysis 

Degree requirements have resulted in degree inflation, with a degree gap emerging in many middle-skill roles. 

For example, in 2015, 67% of production supervisor job ads asked for a college degree – but only 16% of working production supervisors had one.[4]

Degree inflation contributes to the phenomenon of hidden workers because degree requirements exclude large swaths of the population. 

Nearly 60% of American workers over 25 do not hold a four-year degree. The same applies to 81% of Americans in rural communities.[5][6]

Degree requirements especially penalize already under-served communities. More than 75% of Black and 83% of Hispanic workers don’t have a degree because many people of color are held back from attending college by educational bias.[7]

As well as allowing racial bias into your hiring, they bring in socioeconomic bias because only one-fifth of students from low-income families attend college.[8]

Outdated degree requirements aren’t the only way unconscious bias enters your hiring process.

Unconscious bias during screening 

Traditional hiring also enables unconscious bias to play a role in the screening stage because a resume does not have a standard structure and does not include sufficient information to make objective hiring decisions.

If you’re lucky, a candidate could tailor their resume to be relevant to your open role, but they often send the same resume to many different employers.

Without consistent data to compare applicants – and often under significant time pressure – hiring managers fall back on less quantitative decision-making, which enables unconscious bias. 

One recent study found that candidates with White-sounding names were 9% more likely than those with Black-sounding names to receive responses to the same applications.[9]

Many conscious biases also exist in traditional hiring, for instance, against those returning to work after a long absence. 

Of the groups of hidden workers listed above, this bias could exclude caregivers, disabled workers, and individuals with prior convictions. 

Bias excludes talented workers from your talent pool based on irrelevant criteria – before they even make it to interviews.

Interviewer bias 

The lack of data that traditional hiring provides means that biases affect every recruitment stage, especially in unstructured interviews.

In an unstructured interview, recruiters do not decide the questions they ask beforehand, leaving them free to ask different questions of each candidate. 

Asking different questions means applicants’ outcomes are affected by the interviewer’s mood, first impressions, and memory. 

Some candidates get a grilling on key skills and others could have a chat about peripheral issues.

Naturally, this approach enables unconscious bias to affect outcomes. 

Take the example of age discrimination. An employer may ask an older candidate difficult questions about technology because they assume they are not as skilled as a digital native.

There is ample evidence that interview bias contributes to the gender employment gap. 

Yale University researchers found that male and female scientists still preferred to hire men even after receiving training about objective hiring.[10]

Why employers should include hidden workers in their recruitment strategy

There are many benefits to breaking down the barriers above and “revealing” the hidden workers excluded by traditional recruitment.

1. Hiring hidden workers can address skills shortages 

The most obvious benefit to opening your recruitment process to workers hidden by traditional hiring methods is that it gives you access to a broader talent pool. 

This access is especially useful now when recruiters struggle to find candidates in areas affected by skills shortages since the Great Reshuffle.

A skills shortage is when a skills gap – the lack of a specific skill within an organization – is also present in the larger context of an industry or geographical region.

For example, the lack of a college degree could hide a competent candidate from your usual recruitment process – like STAR Lashana Lewis, who had to drop out of her computer science degree because of financial issues.

Despite her skills, Lashana repeatedly failed to secure a job because she hadn’t finished her degree until she gained an internship at MasterCard through LaunchCode, a tech training nonprofit.

Now, Lashana is the chief technology officer at a coworking company and the director of aerospace IT at a drone tech company. Her skills are now on display.

2. It promotes workforce diversity

As we’ve seen, inequality – for instance, in the education system – means that traditional hiring often unintentionally excludes applicants from certain backgrounds.

Eliminating unnecessary four-year degree requirements brings more diversity into your organization by reducing the impact of educational inequality on your hiring process.

Promoting equality of opportunity for hidden workers also aids other forms of diversity, such as generational diversity and gender diversity, by reducing the impact of biases against these groups. 

Bias reduction is good for business because research has shown that higher levels of gender diversity and HR policies focusing on it correlate to reduced turnover.[11]

As we’ll discuss below, skills-based hiring is one of the best ways to remove these barriers.

More than 90% of organizations that adopted a skills-based hiring approach saw an increase in diversity, according to our State of Skills Based Hiring 2022 report.

3. It increases innovation

Tools like degree requirements don’t work as well as you expect them to.

For example, a study of 26 million job postings found that college graduates made for less engaged hires with higher turnover.[12]

Moreover, actively pursuing a diverse workforce can improve your business.

Research by Deloitte shows that diversity of thinking increases innovation by about 20%. Meanwhile, for every 10% increase in intersectional gender equity, organizations receive a 1%-2% bump in revenue – a relationship that has strengthened over time.[13][14][15]

Some employers even believe that hidden workers perform better than their more traditional counterparts:

Source

Promoting diversity in your workforce can also benefit more than just your company, often helping push social change outside of the business world. 

But how can you achieve all of this? Skills-based hiring is the answer.

How skills-based hiring can help you hire hidden workers: 6 strategies

The demand for skills-based hiring has arisen largely because of its ability to “screen in” candidates based on their relevant skills rather than their lack of often arbitrary factors.

It also gives hiring managers the data to make informed decisions without bias. 

Here are six strategies to unlock these benefits and reveal hidden workers in your recruitment process.

6 skills-based strategies for hiring hidden workers: Summary table

In a hurry? No problem – here are the headlines.

1. Throw out resumes and use skills testing to screen candidates

It’s probably obvious by now that one of the first steps to including hidden workers in your recruitment efforts is throwing out four-year degree requirements. 

This trend, known as the degree reset, has driven numerous employers to drop the requirement.

For the best results, don’t stop there. Employers looking to supercharge diversity – and their hiring process – should throw out the resume altogether and use skills testing platforms like TestGorilla to screen applicants.

Skills testing offers a more efficient alternative to resume evaluation, ensuring that you test the core skills required for the role, select candidates automatically based on their skills, and are more inclusive.

Skills testing doesn’t discriminate based on how candidates came by their skills, nor does it penalize people with the dreaded “gap in their resume.” It simply delivers skilled applicants with objective data showing their skill level. 

Particularly in the case of TestGorilla, skills testing is more accessible to people with disabilities. TestGorilla offers intentionally inclusive adjustments for tests, including: 

1. The option to answer verbally to aid individuals with a motor disability

2. More time to answer, which is useful for those who have a language processing disorder

3. Extra breaks, which can help those with autism spectrum disorder (ASD) avoid overstimulation

4. Different formats to aid those with visual impairments, for example, offering larger print or text readable by a screen reader

Most importantly, skills testing is more accurate than resume evaluation. 

It’s easy for candidates to lie on resumes. 

Just less than 80% of job seekers admit to having done this or at least thought about it.[16] 

Information from resumes is not useful. 

According to a study by Google, the number of years of work experience a candidate has only predicts their job performance with 3% accuracy. In contrast, skills testing is ten times as effective.[17]

Skills testing gives you more useful information in a more accessible format.

It’s especially useful in the hunt for hidden workers when you combine it with marketing to diverse job boards like Fairygodboss, which caters to women at different career stages.

2. Remove blanket bans on hiring people with prior convictions 

As well as removing resumes as a screening tool, we recommend removing blanket bans on hiring people with prior convictions. This approach is part of implementing fair chance hiring practices, which aim to make it easier for people with prior convictions to reintegrate into the workplace.

These approaches are also known as “ban the box” practices, and 37 US states have adopted them so far.[18]

Removing bans gives you access to a larger talent pool. 

Indeed, research estimates that removing conviction history inquiries on job ads introduces 700,000 more people into the job market.[19]

You could have concerns about these candidates’ performance, but they are largely unfounded.

One study found that 85% of HR executives and 81% of business leaders believed that employees with criminal records performed to the same standard or better than employees without.[20]

An example of an organization walking the walk in this area is Hot Chicken Takeover, a fried chicken restaurant chain in Columbus, Ohio. As well as offering fair chance hiring, the chain offers cash advances to employees who need them to protect them from predatory lenders. 

The company provides training for how to live on a budget and save money, and it matches certain savings, for instance, for security deposits on apartments.[21]

3. Use structured interview techniques 

As mentioned briefly above, unstructured interviews roll out the red carpet for interviewer bias. The answer? Structured interviews.

Unlike unstructured interviews, in which you improvise conversations and ask each interviewee different questions, in a structured interview you ask applicants:

1. The same questions

2. In the same order

3. Chosen to target core competencies

4. Judged by the same criteria 

Interviewers can even choose to score candidates’ answers individually as they go. This way, in addition to applicants’ test scores, they have quantitative data for their decision-making.

Consulting candidates’ test scores throughout the process reduces the pressure on candidates to be perfect interviewees. 

The best candidates aren’t always the best interviewees. Personal bias can affect how interviewers read applicants’ confidence during interviews. 

One study found that women’s self-confidence was only registered by others when they also appeared warm and welcoming, which was not a requirement for men.[22]

4. Prioritize culture add over culture fit 

Culture is important to candidates when choosing a new role: 86% say it’s somewhat or very important. 

Therefore, as you grow and diversify your workforce, it’s important to consider how each recruit influences your company culture. 

Traditional hiring instructs employers to do this by using the concept of “culture fit,” or how a candidate can replicate existing team members’ skills, mindsets, or personalities.

Companies often assess culture fit using subjective techniques like the “beer test,” checking whether the interviewer wants to go for a beer with an applicant. Naturally, these kinds of informal tests bring up all sorts of issues, including: 

1. Confirmation bias, because interviewers could have a narrow definition of what “culture fit” means and only look for applicants who conform to this view 

2. Clique formation owing to hiring many candidates of similar strengths and personality types at once 

3. Workplace conflict when hiring someone who does not conform to this narrow definition of the company culture

On the other hand, the concept of culture add looks at how applicants can add to the existing company culture by asking questions to ascertain what they can bring to the team.

We know this could seem counterintuitive – how can you create a cohesive culture by looking for what’s different in candidates? 

The key is to provide a diverse “toolkit” of values that employees agree are important and that they can draw from when faced with a challenge. 

One study found that employees who adhered to diverse values were better equipped for innovation than those with narrow cultural ideals.[23]

5. Hire for potential rather than experience 

You may think we already have this covered by throwing out the resume, but hiring for potential rather than experience should permeate the recruitment process.

As well as reducing reliance on experience at the screening stage, you should de-emphasize experience during interviews. 

For instance, you can focus on how candidates have applied relevant skills rather than the experience they have in similar roles.

Hiring for potential enables applicants without directly applicable experience – for instance, many veterans – to access your opportunities. 

It is also likely to yield better results. 

Prehire work experience is not a good indicator of how candidates perform in training or on the job, and it also doesn’t predict retention.

When hiring for potential over experience, you should also take a long-term view of employees’ careers, looking for attributes like a willingness to learn and skills related to areas in which their role could develop.

This approach lays the foundation to use skills-based learning to develop and retain candidates over a long time.

An example of this kind of equality policy comes from Sweden, which supports the integration of immigrants and refugees into the workforce by offering language classes and professional training programs to new arrivals.

Taking upskilling and reskilling for your workforce as a given from the outset of hiring can also aid with disability inclusion.

For example, CVS designed its “Abilities in Abundance” program to root out the barriers to entry and success for disabled workers and dismantle them. It provides preparatory training for jobs and job placement and support for disabled employees. 

The company has created career pathways that weren’t accessible before, and since the program has been in effect, it has seen less turnover and a reduction in training costs for new employees.

By anticipating candidates’ need for upskilling and reskilling at the point of hiring instead of simply looking at whether they meet a fixed set of criteria, employers can recognize multipotentialite employees and remain agile when dealing with uncertainty. 

This ability will be especially useful in the next few years as the workforce transitions to nonlinear career paths.

6. Retain diverse talent with strong development and wellbeing initiatives

Our final piece of advice when it comes to hiring hidden workers is not only to hire them but also to retain them. 

The truth is that diverse hiring is useless without inclusive workplace practices to ensure that hidden workers – many of whom belong to marginalized groups – can thrive once they work for you.

Take the example of caregivers. Without initiatives in place to support working parents in the workplace, you could have them drop out of the workforce again.

Practices to support working parents range from low-budget initiatives to bigger cultural overhauls, for example:

• Offering flexible working to accommodate school runs

• Generous paid family leave for all parents – not just mothers 

• Free childcare in the office 

Inclusive practices help to combat the Great Discontent by showing your workers that you value them as people and not just revenue generators. 

They also help promote internal mobility and access the benefits that an internally mobile workforce brings to your organization. 

Did you know that employees who move into new jobs internally are more than three times as likely to be engaged than those who don’t?[24]

Some of the most promising hidden workers could be the ones hiding in plain sight within your company. 

These employees have a first-hand understanding of how your business works but have previously been disqualified from promotion opportunities owing to a lack of formal training.

An example is Benny Paulino, a STAR who worked in a warehouse for years without the opportunity for advancement into management roles. 

When he got a job as a sales associate at Gap, he thought the cycle would repeat, but leaders recognized his transferable problem-solving and organization skills and enabled him to progress through the ranks. 

He is now senior district manager for Manhattan, a feat that wouldn’t have been possible without his tenacity or the willingness of his organization to recognize the value of his skills.

Bring hidden workers out of the shadows by replacing resumes with skills testing

In this blog, we’ve discussed how traditional hiring erects barriers between recruiters and under-served communities – and how skills-based hiring can break these down. 

By using skills-based methods in hiring and the workplace, you can:

• Provide greater access to opportunity across communities 

• Promote equality of opportunity within your organization 

• Spark change in the wider society by setting a standard of fairness 

To find out more about how to access diverse talent, read our blog about 9 ways to access talent in under-served communities.

To understand how to target your recruitment without unnecessarily excluding diverse individuals, read our blog on how to create an ideal candidate profile without excluding hidden workers.

Finally, to grow a diverse workforce and still maintain clarity of vision, use our Culture Add test to hire the best candidates.

Sources

1. “The Talent Shortage”. (2021). ManPowerGroup. Retrieved June 17, 2023. https://go.manpowergroup.com/talent-shortage

2. “Job Openings and Labor Turnover Survey Highlights”. (August 6, 2019). Bureau of Labor Statistics. Retrieved June 17, 2023. https://www.bls.gov/jlt/jlt_labstatgraphs_jun2019.pdf

3. “State of Upskilling Report 2022”. (2022). PluralSight. Retrieved June 17, 2023. https://www.pluralsight.com/resource-center/state-of-upskilling-2022

4. Fuller, Joseph; Raman, Manjari. (October 2017). “Dismissed by Degrees”. Harvard Business School. Retrieved June 17, 2023. https://www.hbs.edu/ris/Publication%20Files/dismissed-by-degrees_707b3f0e-a772-40b7-8f77-aed4a16016cc.pdf

5. “Labor Force Statistics from the Current Population Survey”. (January 25, 2023). Bureau of Labor Statistics. Retrieved June 17, 2023. https://www.bls.gov/cps/cpsaat07.htm

6. Marré, Alexander. (April 2017). “Rural Education at a Glance, 2017 Edition”. USDA Economic Research Service. Retrieved June 17, 2023. https://www.ers.usda.gov/publications/pub-details/?pubid=83077

7. “Highest Educational Levels Reached by Adults in the U.S. Since 1940”. (March 30, 2017). United States Census Bureau. Retrieved June 17, 2023. https://www.census.gov/newsroom/press-releases/2017/cb17-51.html

8. Fry, Richard; Cilluffo, Anthony. (May 22, 2019). “A Rising Share of Undergraduates Are From Poor Families, Especially at Less Selective Colleges”. Pew Research Center. Retrieved June 17, 2023. https://www.pewresearch.org/social-trends/2019/05/22/a-rising-share-of-undergraduates-are-from-poor-families-especially-at-less-selective-colleges/

9. Kline, Patrick M; Rose, Evan K; Walters, Christopher R. (July 2021). “Systemic Discrimination Among Large U.S. Employers”. National Bureau of Economic Research. Retrieved June 17, 2023. https://www.nber.org/papers/w29053

10. Agarwal, Pragya. (December 3, 2018). “Unconscious Bias: How It Affects Us More Than We Know”. Forbes. Retrieved June 17, 2023. https://www.forbes.com/sites/pragyaagarwaleurope/2018/12/03/unconscious-bias-how-it-affects-us-more-than-we-know/

11. “Why Diversity and Inclusion Matter (Quick Take)”. (June 24, 2020). Catalyst. Retrieved June 17, 2023. https://www.catalyst.org/research/why-diversity-and-inclusion-matter/

12. Fuller, J., Raman, M., et al. (October 2017). “Dismissed By Degrees”. Harvard Business School. Retrieved June 17, 2023. https://www.hbs.edu/managing-the-future-of-work/Documents/dismissed-by-degrees.pdf

13. Bourke, Juliet. (January 22, 2018). “22 January 2018”. Deloitte. Retrieved June 17, 2023. https://www2.deloitte.com/us/en/insights/deloitte-review/issue-22/diversity-and-inclusion-at-work-eight-powerful-truths.html

14. “Accenture Makes Strategic Investment in Pipeline to Accelerate Gender Parity in the Workplace”. (August 6, 2021). Accenture. Retrieved June 17, 2023. https://newsroom.accenture.com/news/accenture-makes-strategic-investment-in-pipeline-to-accelerate-gender-parity-in-the-workplace.htm

15. “Diversity wins: How inclusion matters”. (May 19, 2020). McKinsey. Retrieved June 17, 2023. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters

16. “Hiring Charlatans?”. Checkster. Retrieved June 17, 2023. https://www.checkster.com/are_you_hiring_charlatans

17. Bock, Laszlo. (April 2015). “Here’s Google’s Secret to Hiring the Best People”. WIRED. Retrieved June 17, 2023. https://www.wired.com/2015/04/hire-like-google/

18. Avery, Beth; Lu, Han. (October 1, 2021). “Ban the Box: U.S. Cities, Counties, and States Adopt Fair Hiring Policies”. National Employment Law Project. Retrieved June 17, 2023. https://www.nelp.org/publication/ban-the-box-fair-chance-hiring-state-and-local-guide/

19. “Congress Passes Landmark ‘Ban the Box’ Legislation”. (December 17, 2019). National Employment Law Project. Retrieved June 17, 2023. https://www.nelp.org/news-releases/congress-passes-landmark-ban-box-legislation/

20. Shaffer, Linda. (2021). “Fair Chance Hiring How-To”. HR Today. Retrieved June 17, 2023. https://www.hrotoday.com/news/talent-acquisition/fair-chance-hiring-how-to/

21. Grammer, Scott. (June 5, 2019). “Ohio Restaurateur Founds Hot Chicken Takeover, Hires Ex-Cons”. Prison Legal News. Retrieved June 17, 2023. https://www.prisonlegalnews.org/news/2019/jun/5/ohio-restaurateur-founds-hot-chicken-takeover-hires-ex-cons/

22. Guillen, Laura. (March 26, 2018). “Is the Confidence Gap Between Men and Women a Myth?”. Harvard Business Review. Retrieved June 17, 2023. https://hbr.org/2018/03/is-the-confidence-gap-between-men-and-women-a-myth

23. Corritore, Matthew. (July 5, 2018). “Does Focusing on Cultural Fit Harm Innovation?”. Medium. Retrieved June 17, 2023. https://medium.com/@mattcorritore/does-focusing-on-cultural-fit-harm-innovation-37e5113aaaef

24. “Workplace Learning Report”. (2021). LinkedIn Learning. Retrieved June 17, 2023. https://learning.linkedin.com/content/dam/me/business/en-us/amp/learning-solutions/images/wlr21/pdf/LinkedIn-Learning_Workplace-Learning-Report-2021-EN-1.pdf