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How to Implement Skills-Based Hiring: A Step-by-Step Playbook
The résumé was originally made for the factory floor, but we’re still using it to hire in the digital age.
Fewer people today have the traditional background of a four-year degree and a stack of five-year company tenures. Instead, there are standout candidates with online credentials, portfolio careers, and sharp skills they’ve actually worked to build, not just list on paper.
Companies that adopt skills-based hiring know exactly how to spot, attract, and scoop such talent from the labor market.
Our playbook breaks down why skills-based hiring outshines traditional methods, when to make the switch, and how to do it right — with insights from top Human Resources pros who’ve been there and done it:
The tale of two approaches: skills-based hiring VS traditional methods
Skills-based hiring is a talent acquisition approach that evaluates candidates' real-world abilities and competencies instead of using college degrees or educational credentials. It shifts attention from vague characteristics like "experience," "tenure," or "professional background" to quantifiable evaluation criteria like applied skills.
Unfortunately, not all technology designed to improve hiring hits the mark. For example, while popular applicant tracking systems (ATS) have accelerated candidate screening times, they’ve also introduced algorithmic bias.
That’s because traditional ATS tools struggle with nuance, like transferable skills, career pivots, or non-linear paths. They rank résumés based on keywords and penalize submissions based on formatting quirks.
In contrast, recruitment platforms with testing capabilities give all job candidates a fair shot. Skills-based assessments shift the focus from background to ability, letting candidates prove their value through real-world tasks rather than résumé gimmicks. It’s a more inclusive, data-driven approach that helps employers hire based on real performance potential, not assumptions.
“Our early issue was that CVs lie. We had a couple of really bad hires with really awesome CVs. We thought there had to be a better way to do this, and that’s how Toggl Hire came to life.”
— Dajana Berisavljevic
Skills-based hiring approachVS traditional methods
What happens when you focus on candidates’ skills?
Half of talent teams doubt their hiring process identifies the best candidates. To address this and other key challenges, almost half of the HR professionals we surveyed plan to adopt skills-based hiring practices. Here’s why you should join them.
You expand your talent pool
Focusing on skills over degrees unlocks access to 10–20X larger talent pools across industries. Skills replace “barriers” like college degree requirements, years of experience, and other vague competency quantifiers. It’s an approach that companies like Accenture and IBM are already taking, resulting in a 60% higher chance of making successful hires.
You tap new skills
One in four companies filled roles last year that demanded entirely new skill sets, and most HR teams found it tough. As technology and business needs evolve, demand is rising for niche skills like AI prompt engineering, TikTok marketing, and creative analytics, even in entry-level jobs. Skill assessments locate candidates with the in-demand skills, even if their résumés don’t reflect traditional experience.
You speed up your time to hire
Skills-based hiring helps companies move faster and hire smarter. FinTech company Monese slashed their time-to-hire rate by 86%, while Riotly Social built a qualified talent pool in just three weeks. Faster hiring times mean you can act faster on new business opportunities to stay competitive and confidently scale.
You increase employee retention
Skills-based hires tend to stick around longer, averaging 4.7 years versus 4.3 for traditional hires, likely because they’re placed in roles that truly match their strengths.
You improve DEI
When talent pools are deeper, you open the door to underrepresented talent and build fairer, inclusive workplaces. Assumptions and bias lead us to hire people who look or think like us, resulting in a lack of representation in leadership. But skills-based hiring attracts more diverse talent, especially among Gen Z and Millennials.
You create a stellar candidate experience
A slow, clunky hiring process loses top candidates. Nearly half walk away if they don’t hear back within two weeks. Skills-based hiring flips the script by replacing endless ATS loops with role-relevant challenges like coding tasks or case studies. The result? Candidates have a smoother, more meaningful way to show what they can do.
You lower your cost-per-hire
While the average hire costs around $4,700, a bad hire can drain $30k–$150k+ in wasted resources, lost productivity, and damaged morale. Skills-based hiring platforms lighten the load for teams by automating candidate screening, feedback, and collaboration, making hiring faster and more cost-effective. Beyond admin savings, pre-employment tests bring structure and objectivity, letting you compare candidates by skill, not background. With clearer data, you reduce hiring risks and save money in the long term. Take Proxify, for example, which reached 93% confidence in hiring for technical roles.
How to build a skills-first hiring playbook for your company
Switching to skills-based hiring is more than adding “some tests” to your recruitment process. It’s a strategic shift in how you approach workforce management and how new hiring practices align with your broader operating model.
Many companies say they want to go “skills-first,” but only 20% actually change their hiring practices after dropping degree requirements, according to Harvard Business School. Worse still, 45% make the pledge to change but never go through with it. This indecisiveness is a huge issue, as Ro Hennigan points out:
So, before you dive in, get clear on your why?
Then, develop an effective hiring process based on your goals. Here’s how.
Start with a hiring process audit
Map every step from your initial job posting to signed offer and document where candidates first engage with you, who’s involved at each step, and how you move people forward.
To zoom in on the current health of your hiring process, benchmark and analyze these recruitment metrics:
Also look for long idle periods between steps, high drop-offs, and low offer acceptance rates — all signs of deeper issues.
Next, review your candidate screening methods:
Screening is where most unconscious biases creep in, tripping companies into hiring the wrong people — those who look great on paper but don't vibe well with the rest of the team.
Shifting to clear, skills-based requirements — verified through practical skills assessments and problem-solving tasks — helps you move from opinion-based hiring to evidence-based selection, improving both quality of hire and employee attrition rates.
Overhauling your recruitment process can feel like you’re building a plane mid-flight — tricky and high-stakes. But with Toggl Hire, it’s easy. You can start with a premade template, then use drag-and-drop hiring stages to fully customize your hiring workflow.
From there, add skill assessments to fit the role, such as competency tests for customer success, network security, or general sales, and use them as a quality filter for all applicants.
This way, you can easily pre-screen 200+ applicants in one afternoon (real story!) to progress only the best potential hires.
Alternatively, place skills tasks after the initial screening with a talent acquisition specialist. You’ll retain the human touch and also explore someone’s job role a bit deeper with a homework assignment or a soft skills test.
Determine which skills you need
Skills-based hiring isn't magic — it's a mirror. It shows you what candidates can actually do. But if you haven't defined what your ideal candidate profile looks like and what the job entails, even the best tool won't save you from a bad hire.
— Cost of Bad Hire Report
Without strategic clarity on company operations, workflows, cultural values, and desired behaviors, it's really hard to determine the important qualities and skills of new hires. Training people to thrive and magnify the produced cultural impacts is even harder, especially in a remote-first culture.
Ro Hennigan encourages leaders to start with some self-reflection and document how the company does the work and what competencies are essential for different job titles. Then, think about measurable criteria and methods to vet for these competencies.
A skills matrix compels you to define what “qualified” actually means for each role, visually presenting all the must-have skills, nice-to-haves, and role-specific traits. This clarity enables better job descriptions, tighter alignment across hiring teams, and fewer candidate review rounds.
Once set up, the matrix screens candidates objectively. Instead of scanning résumés for keywords, measure each against specific competency benchmarks, which is also great for pinpointing high-potential candidates with non-traditional backgrounds. Over time, your skills matrix becomes a repeatable framework for smarter hiring, workforce planning, and employee development.
Challenge your perception of the ideal hire
Skills-based hiring doesn't force you to drop all qualifications or banish résumé screening immediately. But it does challenge your assumptions.
Giving too much weight to specific credentials feeds an already broken job market — candidates will exaggerate to get noticed, while top talent gets overlooked for not fitting the “checkbox”.
At Toggl Hire, we use seniority levels rather than peg a precise ‘minimal years of experience’ number to an open role. Someone with five years in a teaching position and a year in project management can be as great at managing expectations and negotiating as a tenured professional.
Joelle Murchison encourages leaders to think carefully about how to use skills assessments. In her opinion, evaluations don’t necessarily have to be equal, but equitable.
One thing I would say to leaders leveraging skills assessments in their hiring process is to really remove the bias. For certain positions it may really diminish your ability to receive certain candidates who have the skill set or expertise that you’re looking for.
Test for the competencies you really need with Toggl Hire. Our library of expert-made skills assessments includes a range of multiple-choice questions, open-ended assignments, and home task formats to verify candidates’ hard and soft skills. You can mix, match, edit, and update these as required.
Pre-built tests save hours by cutting out the busywork of creating assessments from scratch. Designed by experts, they zero in on real chops — Android app development, financial reporting, product development, or even remote work readiness — and you can customize them to fit any type of role description.
Combine skills tests with other evaluation methods
Skills assessments don’t negate other stages in the hiring process. Rather, they make a candidate pool more manageable, saving TAs and hiring managers heaps of time in the selection process — something most teams crave.
By confirming functional competencies through testing, you carve out more “face time” to assess other candidates’ strengths: their leadership potential, personality traits, or problem-solving abilities.
“We don't use CVs for screening, but we may look at people’s CVs and LinkedIn profiles to see how they are communicating in writing.”
— Dajana Berisavljevic
Toggl has used this hiring process for 10+ years hiring 200+ people from 40+ countries. Loads of hiring teams also pair skills testing with case study interviews or scenario-based assessments to evaluate how candidates think, prioritize, and problem-solve.
In contrast, other companies put the emphasis on culture fit (or culture add). Amazon screens for its Leadership Principles across a series of technical and behavioral interviews. Similarly, Netflix provides all applicants with a transcript of the company's core values and culture at the start of the hiring process.
“We have to be cognizant about ensuring there are multiple ways for candidates to demonstrate their capacity. ”
— Dajana Berisavljevic
There’s no definitively right approach to hiring people. Rather, there are some tactics that work better than others. And it’s your goal to figure out the optimal combo of assessment methods and hiring steps that deliver the best hires (don’t worry — mistakes are a natural part of this process).
How to optimize your hiring funnel:
1. Reverse-engineer your best hires
2. Document key metrics to optimize for
3. Get input from hiring managers
4. Test and tweak your funnel
You can do all of the above in Toggl Hire. Analyze sourcing channels, distribute skills tests, get structured feedback from hiring teams, and monitor key metrics in real-time with dashboards for each open role.
Prioritize candidate experience
As a best practice, Joelle Murchison encourages companies to include “a few more touch points to make candidates feel better about their engagement,” like:
Skills-based hiring enables the above. Using skills matrices, you can make better job descriptions to attract more candidates. Then, streamline assessments via tests, offering instant feedback on the applicant’s status. Paired with smart workflow automation for candidate scheduling and communication, you have more time for personalized engagement, feedback, and ongoing relationship management.
Another key element of great candidate experience is transparency. The Internet is full of “crooked, scamming employers” stories, where candidates complain about wasting days on jobs with low-ball offers, positions with an unrealistic range of duties, or even accepting roles that were grossly oversold by recruiters.
“Salaries were always included in the job description at Toggl. I believe it’s fair because it makes our candidate pool more manageable. People can see the salary and be like ‘This is just not for me”, so no one’s wasting time.’”
— Dajana Berisavljevic
Deliver a standard candidate experience by investing in public hiring resources — a candidate-facing pitch deck explaining who you are, how you work, why others should join, and what your hiring process looks like.
This builds trust, reduces uncertainty, and creates a more equitable experience, especially for candidates from non-traditional backgrounds. When people feel informed and respected, they’re more likely to stay engaged, refer others, and re-apply for future roles.
Keep those budding relationships warm with Toggl Hire. Our platform autosaves all past test takers in a private database (we don't have access to that!). You can also add new talent manually, update candidate records, search by skills, location, or other parameters, and restart conversations when you're ready to hire again.
Adopt the right metrics to figure out what’s working
Just like any other type of organizational change, skills-based hiring adoption works best when it’s rooted in data. Metrics prove which hiring steps drive better outcomes, where candidates drop off, and which changes pay off in performance, retention, or time-to-hire.
“We're looking for data we can take action on, that we can add to our process of continuous improvement for our next hiring round, that we can observe and see what's driving results.”
— Ro Hennigan
Toggl Hire makes it easy to debug your hiring. For each open position, you get a real-time dashboard to instantly see how you’re doing. Track essential metrics like time-to-fill and time-to-hire, and drill down into each pipeline efficiency to get a deeper view into the candidate flow.
Want to fine-tune your assessments? Monitor test completion rates, pass thresholds, and time spent per question to spot friction points and optimize test design for specific skills.
Expand your talent pool via employee advocacy
Add a strong, values-driven culture to skills-based hiring, and you’ve got the perfect foundation for employee advocacy — a powerful method for improving the speed and quality of new hires.
“Every employee at your company has really strong connections. Identify those community ties and think about how your employees can become advocates of your organization. What story can they tell?”
— Dajana Berisavljevic
People who strongly connect to your mission and values show up engaged and productive. Instead of just chasing a paycheck, their emotional investment translates into better performance, higher retention, and a ripple effect of positivity across your team.
Ready to make your next hire your best-ever hire?
If you're rethinking how you hire, test your skills-based methods on a single role. You'll quickly see how much easier (and fairer) it is to spot real talent when you don’t filter by résumé fluff or degree prestige. Measure what metrics improve, learn from the process, and expand from there.
Toggl Hire makes it simple to get started. Build customizable skills assessments to match the actual work, compare candidates by score, not just background, and automatically move top performers to the next round. All while keeping the hiring experience smooth and respectful for everyone.
