Skills-Based Hiring: What It Is & How It Works for Companies

By 2026, 85% of employers will be using skills-based hiring, a dramatic shift driven by the fact that 53% have already ditched degree requirements, according to TestGorilla. The widespread abandonment of traditional credentialing, with 53% of employers ditching degree requirements, underscores a crisis-level urgency to find talent beyond outdated academic pathways. The rapid adoption rate, a 76% increase from 30% in 2025, means companies are quickly adapting their talent search.

Both employers and job seekers report that finding the right fit is harder than ever. TestGorilla reports that in 2025, 63% of employers find great talent harder to find, while 70% of job seekers report finding a job is harder. A growing majority of companies are finding success by abandoning traditional degree requirements in favor of skills-based assessments to bridge this gap.

Companies that fail to adapt to skills-based hiring risk being left behind in the race for talent, while those that embrace it will gain a significant competitive advantage in workforce diversity and capability.

The Rise of Skills-Based Hiring

Skills-based hiring prioritizes specific skills and capabilities needed for a role over traditional qualifications like degrees or job titles, according to Phenom. This approach gained traction as 85% of employers are using skills-based hiring, an increase from 81% in 2025, according to TestGorilla. The use of skills-based hiring by 85% of employers, an increase from 81% in 2025, signals a fundamental shift in talent acquisition.

The driving force behind this shift is the persistent difficulty in sourcing qualified candidates. TestGorilla reports that in 2025, 63% of employers find great talent harder to find than last year. This suggests that the problem was not a scarcity of talent, but rather an outdated method of identifying it, compelling companies to look beyond traditional filters.

Implementing a Skills-First Approach

Companies must first map job titles to specific skills and standardize their job architecture to implement a skills-first approach effectively. This process involves considering skills with comprehensive labor market data to strengthen job architecture, according to Lightcast. Such data-driven insights help define the critical skills truly necessary for each role.

To prevent skills-based hiring from perpetuating existing difficulties, companies must focus on equitable practices. The US Chamber Foundation suggests that Learning and Employment Records (LERs) could play a critical role in advancing skills-based hiring practices and ensuring equitable implementation. Employers are pursuing skills-based hiring and advancement strategies by re-aligning requirements to ask for only critical specific skills and reducing reliance on traditional college degrees and work experience. Without a deliberate focus on re-aligning requirements and ensuring equitable practices like LERs, skills-based hiring risks perpetuating existing hiring difficulties and failing to deliver its promised benefits for both employers and job seekers.