Skills-Based Hiring: The answer to the shortage of IT specialists?

Deep down, we all knew it: the time for skills-based hiring was upon us! Even when I graduated with a degree in computer science 16 years ago (oh no, I'm a dinosaur!), the following formula already applied: 50% of what I had learned was already outdated by the time I graduated. This applied to all STEM subjects. And you don't have to have a degree in computer science to understand that half-lives have gotten even worse since then.

In the IT industry, it is no longer only degrees that count. If you want to become a software developer, data scientist or IT security specialist today, you need more than a university degree. Or none at all. Skills and practical experience are the new currency in the labour market. However, many companies – especially in Germany – still cling to traditional qualifications – and miss out on promising talent.

HR experts speak here of ‘education scepticism’ – the growing scepticism towards formal educational pathways as the only quality criterion. Companies like Google or IBM (Ginni Rometty – ‘Skills First’) have long since recognised the trend: they do without degrees as a mandatory criterion and instead rely on skills-based hiring – a recruiting approach that evaluates talent based on actual skills.

Of course, it's the Americans who are showing us the way once again! We in Germany also need to move away from titles/degrees and towards skills. Our plea for skills-based hiring – enjoy!

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The advantages of skills-based recruiting

Let's be honest – why do companies still filter by degrees? That may have worked 20 years ago, but today – in the age of artificial intelligence? The old system is hopelessly outdated – time for an update.

More talent, less stress

The IT market is empty? There are plenty of developers, data scientists and IT security experts out there who have learned their trade through self-study or practical projects. Skills-based hiring opens the door to these people and ensures that positions are filled (faster). In particular, career changers and autodidacts often bring relevant practical skills with them.

More fairness & diversity

Classic application processes have an in-built bias. Requiring a specific university degree automatically favours a particular social group. Skills-based recruiting puts everyone on the same level: do you have the skills or not? This not only ensures more fairness, but also better teams with different perspectives, opening up new opportunities.

Higher loyalty, less fluctuation

Of course, anyone with a top degree can perhaps do the job. But do they really want it? Skills-based hiring leads to people being hired who are the right fit for the role in terms of their skills – and that's exactly what ensures more satisfied, motivated employees in the long term.

Hiring without an endless loop

Months of application processes, countless interviews – and in the end, the ideal candidate turns you down? Testing for skills saves time. Practical tests, coding challenges or project work immediately show whether someone can do the job. No more guesswork, no more embellishing CVs.

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Implementing skills-based recruiting in your company

The idea behind skills-based hiring sounds obvious – but how do you actually implement it? A few euphonious changes to the job description are not enough. Skills-based recruiting requires a rethink in several areas: from identifying the right skills to developing new assessment methods and training HR teams.

Here are the three most important steps to successfully implement skills-based hiring in your company.

Identify the core competencies required for IT roles

A common problem in recruiting: Many companies don't have a clear picture of which skills are really crucial for a particular position. Job profiles are often created based on outdated templates or wish lists that hardly match real requirements. This is because rapid technological change means that the requirements profile is constantly changing.

💡 Solution: A structured analysis of the core competencies for each position. A skills matrix that differentiates between three categories can help with this:

✔ Must-have skills: Without these skills, the job cannot be performed (e.g. ‘experience with React for a front-end developer’).

 ✔ Nice-to-have skills: skills that are useful but not absolutely necessary (e.g. ‘knowledge of UX design for a web developer is desirable’).

 ✔ Soft skills: ability to work in a team, strong communication skills, problem-solving skills – often underestimated, but crucial for long-term success.

Example of a simplified skills matrix for a DevOps engineer:

This method helps to define clear, measurable criteria.

Develop assessment methods to measure skills

A major shortcoming of traditional recruiting processes: CVs and job interviews often say little about what someone can actually do. If you want to align the application process with skills, you need to develop the right methods for assessing skills.

Three proven methods for evaluating IT skills:

✔ Technical assessments & coding challenges

Practical tasks help to measure expertise in real time. Developers can prove how well they solve a problem in a coding challenge – instead of just talking about previous projects.

✔ Project-based evaluations & case studies

 Instead of asking candidates about their experience, ask them to solve a specific task:

• How would a person design a data analysis dashboard?
• What solution do they propose for a security vulnerability in an IT system?

✔ Behavioural interviews & soft skills analysis

That's right, don't forget soft skills! Technical skills are important – but soft skills often make the difference between a good employee and a great one. Structured, competency-based questions help to make these skills measurable:

• ‘Tell me about a situation in which you had to solve a technical problem in a team.’
• ‘How do you deal with unexpected challenges in IT projects?’

Training for hiring managers in how to use skills-based approaches

A new recruiting model only works if everyone involved understands how it works. Many hiring managers are still trained in the old system – CV scans, certificate evaluation, classic interviews.

💡 That's why targeted training is needed for hiring managers to successfully implement the switch to skills-based hiring.

What do HR teams need to learn?

✔ How do I objectively evaluate candidates based on their skills?

 → Training in skills-based interview techniques, objective evaluations and practical assessments.

✔ How do I recognise unconscious biases in recruiting?

 → Workshop series on avoiding biases in application processes – e.g. not equating technical expertise with certain educational paths, but rather evaluating it based on real skills.

✔ How do I integrate digital tools for skills-based hiring?

 → Introduction of AI-supported applicant analyses, digital assessments and standardised test procedures.

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Challenges and solutions

Yes, skills-based hiring sounds great – but in practice, you quickly encounter resistance. Why? Because change is always uncomfortable. Especially in HR teams that have been working with traditional methods for years. But if you don't adapt now, you'll lose the war for talent.

Here are the three biggest challenges – and how to overcome them.

Overcome internal resistance to new recruitment methods

Problem: Many recruiters are attached to traditional processes. ‘We've always hired this way’ or ‘Without a degree, we don't know if someone is qualified’ – you hear these kinds of statements more often than you think.

✅ Solution: Use data to prove that skills-based hiring works.

• Show that companies that use skills-based recruiting find good people faster.
• Set up an internal pilot project: base a position exclusively on skills tests and compare the quality of the hires.
• References to the big players IBM or Google (links in the introduction).
• And then there's this statistic: according to a recent report by TestGorilla, 88% of tech companies are now hiring new talent based on their skills. Furthermore, 89% of tech managers are happy with their skills-based new hires over the past year (Forbes).

Ensure the validity and reliability of ability assessments

Problem: Evaluating applicants based on their skills sounds good in theory, but how do you objectively measure whether someone is really good at something? A coding test alone is not enough, and a single interview does not always tell the whole truth.

✅ Solution: Combine different assessment methods for a reliable picture.

• Technical assessments + practical tasks → measure hard skills
• Behavioural interviews + situational tasks → insight into problem-solving abilities
• Peer feedback from future colleagues → reality check: can the person really deliver in practice?

💡 Tip: Tools like Codility, HackerRank or TalentScore enable objective, data-based assessments.

Success factor: Make sure that tests don't contain any hidden biases, such as culturally influenced questions or unnecessarily complicated tasks that have nothing to do with the job.

Integrate soft skills into the evaluation process

Problem: Technical knowledge alone is not enough. Even the best developer is of little use if they can't communicate appropriately. But measuring soft skills is more difficult than a coding test.

✅ Solution: Develop standardised methods for soft skill testing.

• Situational questions in interviews: ‘Tell me about a time when you solved a technical problem in a team.’
• Simulations: Solve a common coding problem in a group and observe how the person communicates.
• Feedback from previous projects: Use references to get an assessment.

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Conclusion: Recruiting needs an update

Jeanne Cordisco, Chief People Officer at O'Reilly, agrees: ‘In the face of rapid technological advances that are leading to radical changes in employment opportunities, companies are increasingly looking for people with specialised skills.’ 

Degrees are no longer a guarantee of success – skills are the new standard for IT recruitment. Companies need to define core competencies in a targeted way – no more vague requirements. This is because skill-based hiring delivers better results – provided that the competencies are selected and defined correctly. HR teams need to adapt to this now at the latest and use the right tools. Because if you don't switch to skills-based hiring, you'll miss out on great opportunities and hidden talents.