Skills-Based Economy: What is it and How Does it Benefit You?

Posted on Tuesday July 05, 2022

Maybe lately you’ve been feeling dissatisfied and unfulfilled in your current job. Wanting to make a career transition, you’ve eagerly looked through job postings online. You have the skills, you have the confidence, and you have the knowledge. So why is obtaining a job in another industry still so hard? It’s not, at least not anymore.

Now, hiring managers are increasingly pivoting away from an emphasis on degree requirements and direct industry experience, and moving towards an approach that relies on proven competencies and transferable skills. (Hiring In A Skills-Based Economy) Transferable skills can include anything from project management to something more abstract like critical thinking. This emerging trend is a win-win for both employees and employers. In fact, hiring managers who used skills data on LinkedIn were 60% more likely to find a successful hire than those using a more outdated approach not relying on skills.  

Called skills-based hiring, this method considers a candidate’s potential beyond their educational and career background, which can not only help to diversify the hiring pool but can also open the door to previously disregarded candidates. (Skills-Based Hiring Is on the RiseUnconscious bias plays a role in the hiring process whether we want it to or not; but, through a skills-based approach we can limit unfair barriers in hiring and work towards becoming more inclusive. By assuming that somebody is qualified for a job just because they have a degree, or similarly assuming someone without a degree will not be a good fit, an organization is closing itself off to talented people.  

This is especially relevant for millennials and Gen Z, who don’t always follow one traditional career path. (What Kind Of Jobs Are Generation Z Looking For?) Millennials and Gen Z gain skills through various experiences including freelance work, part-time jobs, volunteering, military service, study abroad, certificate programs, and online lectures. It’s important for hirers to see the value in these less traditional experiences if they want to find the best match for their company.  

It's not only hiring managers who are going through a shift in thinking either; by the end of 2020, opportunities to learn and grow new skills was shown as the number one driver of a great work culture by employees. (Employee Well-Being Report) While salary remains a decisive factor, having a comfortable work culture is growing in importance for employees. It means that employees are seeking more than just financial rewards from their company. They want to feel inspired, improve themselves, and build on their knowledge. Not surprisingly, 62% of employees want more time to learn in their current role. (How employees are feeling right now) Knowing this, organizations would do well to provide time and encourage employees to pursue continued learning and upskilling if they want to keep their employees happy.  

The Good News for Employees: 

The rise of a skills-based economy brings a chance for employees and jobseekers to repurpose, upgrade, and emphasize previously developed skills. This means a once out of reach opportunity can now become a possibility through a bit of learning and self-reflection. By widening the scope of considerable experiences, employees can find that they have more skills than they originally realized.  

Take for example a cashier, which is a job that typically has no degree requirements. To just name a few, cashiers use customer service, sales, teamwork, and time management skills daily in their work. This accounts for 70% skills overlap with customer service representatives. (A Skills-First Blueprint to Better Job Outcomes) Through skills-based hiring, a cashier could more easily move into a customer service representative role, even without a college degree. This means employees are no longer limited to one area of work or expertise and can branch out further into the areas they truly desire. With more opportunities on the table, employees can find work that better suits their unique skills and life experiences.  

Want to add a skill? 

Trends come and go fast but that doesn’t mean you can’t catch up. Committing to a mindset of lifelong learning will prepare you for wherever your future takes you and help keep you fresh. Whether you are interested in knowledge mobilization, creative writing or web development, you can learn just about anything. With hundreds of readily available and easily accessible online courses, you can revamp yourself at anytime from anywhere.  

Ready to become a lifelong learner? Explore OpenEd’s courses and start preparing for your future.