Here on the Finn Blog, we tackle the hiring challenges and opportunities for business owners, and today, we’re taking on the question: What’s more important when hiring, job titles or skills?
As we navigate the ever-evolving economic landscape, employers in Australia’s business and finance sectors continue to face many new challenges. Chief among them is one indispensable (and never-ending) aspect of operations – recruitment.
In May 2023, Australia’s economy added a staggering 76,000 jobs, defying signs of slowing demand. This remarkable achievement led to a decrease in the unemployment rate to 3.6%, down from 3.7% in April, surprising economists.
According to Treasurer Jim Chalmers, the May figures were “a remarkable achievement” and brought the number of jobs added in the current government’s first 12 months to 465,000.
The shrinking pool of available Australian talent
Whilst unemployment generally causes celebration, these figures also highlight an inconvenient truth: talent scarcity and skill shortages persist across almost all industries in Australia. In tandem with inflationary pressures, this leads to increased competition and wage pressure whilst intensifying the need for organisations to attract and retain top-tier talent.
In this highly competitive environment, traditional hiring practices are being replaced by a “recruitment mix,” which includes looking beyond job titles and exclusively within industry sectors. Instead, recruiters are refocusing on skills-based hiring as a more demonstrably effective and real-life solution to today’s recruitment pressures.
Job titles versus skills
Of course, job titles are indispensable. Job titles establish a structure that helps us and others quickly comprehend our functions and navigate the corporate realm. On the other hand, skills are the enchanting qualities that bring our job titles to life. They encompass our abilities, honed through education, training, and experience ( and sometimes pure genetics). Skills equip us with the aptitude and proficiency needed in our chosen fields and other professions.
Have you ever encountered someone in your day-to-day interactions and thought, “You would have been a great salesperson or manager?” Or you’ve observed someone’s exceptional interpersonal skills at a local cafe and imagined them flourishing in a business environment. Skills-based hiring allows employers to evaluate candidates based on their actual skills and abilities rather than solely relying on education, degrees, or direct experience.
This approach allows organisations to tap into a wider talent pool and significantly increase their chances of finding the perfect match for their available roles. Moreover, businesses often discover that this inclusive embrace of skills from various industries brings in fresh, inspired talent and new ways of thinking.
Hiring on skill fits leads to great satisfaction, retention and results
When employers prioritise skills and abilities, employees are predictably more likely to feel competent and engaged in tasks aligned with their strengths, are more motivated, and perform better. Skills-based hiring fosters a culture of learning and growth, as employees are eager to develop their abilities. By investing in professional development and offering challenging opportunities, organisations cultivate loyalty and commitment from their staff.
Matching skills to roles and creating an environment that encourages continuous improvement leads to a motivated, engaged workforce crucial for long-term success.
Skills are king
Skills-based hiring enables organisations to tap into a broader talent pool but fosters skills diversity, which drives innovation within the workforce.
By looking beyond job titles and traditional industry boundaries, recruiters can identify individuals with unique skill sets and perspectives who may not have traditionally stood a chance of obtaining the role.
This approach brings in fresh and inspired talent, fostering a dynamic and creative environment that encourages collaboration and the exchange of ideas. Moreover, skill-based hiring is a cost-effective solution that helps fill skill gaps in a highly competitive hiring market.