87% of professionals see skill gaps in their company, highlighting the importance of competency-based hiring to reduce these gaps. With the insights from our webinar with Tony de Graaf, this blog covers what competency-based hiring is, its advantages, practical steps for implementation, and tools to use.
What is competency-based hiring?
Competency-based hiring is an approach to recruiting and selecting candidates based on their demonstrated skills, knowledge, and abilities relevant to the job role.
Rather than focusing solely on education or experience, competency-based hiring assesses candidates on specific competencies or behaviours required for success in a particular role.
Why are companies shifting to competency-based hiring?
Companies increasingly shift from experience-based hiring to competency-based hiring, as it boosts reliable screening, talent pool expansion, retention rates, and diversity.
A more reliable screening method
46% of job seekers use ChatGPT to generate resumes and cover letters. Recruiters and hiring managers are aware of this shift and increasingly question the authenticity of these application documents. As a result, they are looking for a more reliable screening method.
Talent pool expansion
With 75% of employers reporting to have challenges in filling vacancies, there is a growing need for talent pool expansion. Competency-based hiring has been proven to reduce overlooking talented individuals, increasing talent pools.
Higher retention rates
91% of companies that implement competency-based hiring experience an increase in employee retention. Traditional hiring practices often fail in recognising job fit, leading to misplacements of new hires. Competency-based hiring can more accurately predict job fit, which boosts retention rates.
Increased diversity
Competency-based hiring promotes diversity by prioritising qualities over traditional factors, such as education. In fact, education is largely influenced by a person’s socioeconomic background. By evaluating competencies rather than solely relying on CV’s and cover letters, companies offer equal opportunities for all. Diverse companies attract 73.2% more top talent compared to non-diverse companies.
Where to start with implementing competency-based hiring?
Shifting from experience-based hiring to competency-based hiring can be challenging. In this paragraph, we explain how to start with implementing competency-based hiring.
Define the goal for the implementation
First, it is important to define what the goal is for the implementation of competency-based hiring. When the goal is clearly defined, it is easier to convince HR and hiring managers why implementing competency-based hiring is advantageous.
Close collaboration with HR and hiring managers
Furthermore, involving HR and hiring managers as much as possible in selecting competencies required for the role fosters a more effective implementation. Effective collaboration begins with a successful job intake meeting and asking the right questions to the hiring manager, such as:
- ¨What are the crucial skills and competencies that need to be replaced?¨
- ¨What are the skills or competencies that you would like to add to your team now that you have the opportunity?¨
Phased approach
To facilitate competency-based hiring, a phased approach can be used to roll out the project. This method involves breaking down the project into smaller, more manageable segments. For example, companies could initially implement competency-based hiring within one department before expanding it company-wide.
Tools for competency-based hiring methods
Companies can use various methods to measure competencies. In this section, we will cover frameworks, competency-based interviews, and psychometric assessments for competency-based hiring.
Frameworks
Competency frameworks are essential tools for measuring competencies in the hiring process effectively. The key to creating a competency framework for a job role is to restrict the number of competencies, make them as measurable and narrow as possible, and arrange the competencies into clusters. Here you will learn more about the whole-person assessment framework and how to draft your own.
Whole person assessment
An example of a framework to use is the whole-person assessment framework. The whole-person assessment aspects are divided into three clusters: interest, ability, and internal need. These clusters serve as a guide for identifying what to look for in a job candidate. Learn more about whole-person assessments in recruitment here.
Crafting a competency-based framework yourself
Companies can also craft their own competency-based framework. Here are the steps to take in creating one:
- Define and communicate the purpose: Identify the organisational need for competency-based hiring and involve colleagues in understanding its importance.
- Think of your framework structure: Consider whether you prefer to develop a framework with core competencies suitable for all positions, or tailored to specific job roles, required technical expertise, or leadership qualities. Then, think of what competencies are required for these categories.
- Gather data about the team: create team benchmarks to gain insights into how a role can be successfully executed and what kind of competencies high performers possess.
- Create the competency framework out of the data: Rethink, rephrase, and validate the competencies you have listed in step 2. Make sure that the competencies you have listed are as measurable and narrow as possible.
Competency-based interviews
Competency-based interviews provide a strategic method for hiring that focuses on assessing competencies and helps to reduce biases. This section delves into what strategies you can take to interview based on competencies.
Structured interviews
Develop pre-set interview questions to structure your interview format. Aim for questions that are only focused on competencies and learning ability, rather than previous experiences. It is advised to use situational questions, as these are less prone to subjectivity and help more in measuring competencies.
To come up with situational questions, Equalture’s CEO and co-founder Charlotte Melkert provided the following tip in her book ¨Beyond Resumes: A Blueprint for Competency-Based Hiring¨:
You can use ChatGPT – ask ChatGPT: ¨Provide me with 5 situational questions to ask candidates to assess the skill [competency X] for a [job] role.¨ This will at least help you get started.
Interview scorecards
Interview scorecards are often used to give a clear picture of valuable information coming from an interview. In this way, candidates can be effectively compared in a way that reduces biases. Scorecards consist of the following four columns:
Disclaimer: it is important to note the score immediately while the details top of mind and avoid small talk.
Psychometric assessments
Psychometric assessments are among the most reliable tools for competency-based hiring. When choosing a scientifically validated psychometric assessment, it allows us to make judgments based on scientific outcomes instead of personal biases. There are different components that can be measured with psychometric assessments:
General cognitive ability (intelligence)
General cognitive ability (GCA), or what we call intelligence, is the most important determinant of job performance. Work performance and cognitive ability is proven to have a correlation of 0.65 to 0.74. Assessments can measure a candidate’s or employees’ cognitive abilities, which will tell you how likely a person is to perform well on reasoning, memory, and solving problems.
Behaviour
Psychometric tests are capable of objectively assessing personal behavioural tendencies. Behaviour is proven to have a 0.45 correlation with work performance, making it a significant predictor. Examples of behavioural tendencies include collaborativeness and problem-solving style.
Selecting a psychometric tests to use
Choosing a pre-employment test can be quite daunting. Therefore, we have created a blog with 7 factors to consider before choosing a pre-employment test.
Conclusion
As more and more companies see the benefits of competency-based hiring for talent acquisition, talent pooling, and retention, this recruitment method is gaining significant traction. Competency-based hiring helps organisations in pinpointing the competencies needed to excel in a role, and to select based on these criteria. Hiring job candidates with the right set of competencies for the role will lead to decreased skill gaps in the workforce.
At Equalture, we have created our own scientifically validated game-based assessment for competency-based hiring. Do you want to try out Equalture’s game-based assessment? Fill in the form below.
