Why Employers Must Improve Skill Signaling in Hiring
In today’s labor market, employers face a persistent challenge: effectively identifying candidates with the knowledge, skills, and abilities (KSAs) necessary to succeed in their organizations. Despite advances in hiring technology and the growing use of assessment tools, many companies still rely on “overstuffed job postings” that attempt to capture every possible requirement. [i] To build stronger, more effective pipelines, employers must do better at signaling the KSAs they need and ensure alignment between pre-hire assessments, position requirements, and the recognized credentials—such as certificates and certifications—that best prepare candidates for the role.
Why Clear Skill Signaling Matters
Clear skill signaling reduces inefficiencies in the hiring process. When employers fail to specify the exact KSAs required, job seekers are left to interpret ambiguous requirements. This leads to mismatches: unqualified applicants apply for roles they are not prepared for, while highly qualified candidates self-select out because they cannot see how their skills apply. [ii] The result is wasted time, higher turnover, and prolonged vacancies.
By articulating the precise technical, cognitive, and interpersonal skills needed, employers can better ensure their pre-hire assessments measure what truly matters for success. Precision in skill signaling can streamline hiring, accelerate onboarding, and ultimately improve productivity.
Linking Skills to Credentials
Better signaling also strengthens the connection between hiring practices and the broader ecosystem of industry credentials. Certificates and certifications play an increasingly important role in validating workforce competencies, yet without employer clarity, it is difficult for candidates and training providers to know which credentials have real labor market value. [iii]
When employers explicitly link required KSAs to recognized credentials, they provide a transparent roadmap for workers to pursue meaningful, stackable qualifications. Job seekers can then invest in training with confidence, while employers benefit from a workforce vetted against industry standards.
Equity and Access to Talent
Improved skill signaling also advances equity. Traditional hiring practices often privilege candidates with four-year degrees—even when a degree is not essential for job success. By specifying KSAs and highlighting the credentials that validate them, companies shift the focus from pedigree to proven competence. [iv] This opens doors to candidates who have gained skills through certifications, apprenticeships, or community college programs. In turn, employers gain access to more diverse perspectives and experiences, strengthening innovation and competitiveness.
The Shift Toward Skills-Based Hiring
Employers are eager to transition to skills-based hiring: 90 percent of global companies want to do it. [v] This growing recognition of the importance of skills is fueling a broader shift toward skills-based hiring. With more than 50 percent of U.S. adults age 25 or older holding only a high school diploma or less, rigid degree requirements exclude millions of capable workers—disproportionately impacting individuals underrepresented in the labor market. [vi]
In response, a range of employers—both private and public—are removing degree requirements and adopting skills-based hiring approaches. These models assess candidates based on demonstrated KSAs rather than educational background or years of experience.
Aligning Skills-Based Hiring with Assessments
Shifting to skills-based hiring requires new policies and procedures to validate the skills that best predict job success. Employers must categorize and assess both foundational skills (e.g., communication, resilience, teamwork) and technical skills (e.g., project management, cybersecurity, database administration).
However, implementation is not easy. Only 26 percent of employers have adopted skills-based hiring, reflecting the difficulty of aligning rapidly changing job skills with assessment tools. [vii] One study found that the number of skills listed in postings increased 10 percent each year, and one in three skills was obsolete within five years. [viii] To be effective, employers must focus on essential, enduring skills while ensuring agility to adapt as roles evolve.
A Symbiotic Relationship: Assessments and Credentials
Employers have access to a variety of pre-hire assessments—personality tests, situational judgment tests, work samples, job knowledge tests, AI-enabled assessments, and simulations. Yet many hesitate to adopt them, citing concerns about whether assessments accurately measure the skills they value. [ix]
This is where credentials can play a complementary role. Certifications and assessment-based certificates validate specific skills and learning outcomes, serving as trusted, third-party verification. Combined with pre-hire assessments, they provide a more complete picture of a candidate’s capabilities.
Together, pre-hire assessments and credentials create a symbiotic system: assessments help employers evaluate candidates in real time, while credentials ensure long-term skill validation. When used in tandem, they improve the quality of hire,[x] reduce bias,[xi] expand the talent pool,[xii] and better retention.
Conclusion
Employers that invest in clearer skill signaling stand to benefit from more efficient hiring, stronger alignment with credentials, and expanded access to diverse talent. By clarifying what they need—and validating it through both assessments and credentials—employers not only strengthen their organizations but also contribute to a healthier, more transparent labor market. This dual focus on skill signaling and skills-based hiring is not just a recruitment strategy; it is a reimagining of how talent is defined, developed, and rewarded in the modern economy.
[i] https://avenica.com/insights/employers-demand-too-much-and-it-makes-hiring-harder-with-gb/
[ii] https://vervoe.com/skills-mismatch/
[iii] https://www.jff.org/blog/too-many-credentials-not-enough-value-lets-change-that/
[iv] https://www.ft.com/content/2c2558fe-fc6e-4a92-b54a-c78aede7336b
[v] https://www.hbs.edu/managing-the-future-of-work/Documents/research/Skills-Based%20Hiring.pdf
[vi] https://www.uschamber.com/workforce/understanding-americas-labor-shortage
[vii] https://www.hbs.edu/managing-the-future-of-work/Documents/research/Skills-Based%20Hiring.pdf
[viii] https://www.gartner.com/smarterwithgartner/stop-training-employees-in-skills-theyll-never-use
[ix] https://www.shrm.org/about/press-room/shrm-report-survey-finds-rise-alternative-credentials-hiring#:~:text=Alternative%20credentials%20are%20popular%20with,increase%20their%20chances%20of%20being
[x] https://www.testgorilla.com/skills-based-hiring/state-of-skills-based-hiring-2024/
[xi] https://www.forbes.com/sites/chriswestfall/2023/11/04/is-the-rsum-dead-new-report-shows-skills-based-hiring-on-the-rise/
[xii] https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/taking-a-skills-based-approach-to-building-the-future-workforce