Skills-Based Hiring: Everything You Need To Know

In 2025, an increasing number of hiring managers are starting to realise that a polished CV and a prestigious job title don’t always equate to on-the-ground capability. In many cases, what truly drives performance is far less about where someone has worked, and far more about what they can actually do. That’s where skills-based hiring comes in.

Rather than screening candidates based only on designations, education, previous employers or years of experience, this approach puts demonstrable skills front and centre. Essentially, it prioritises ability over background – and for businesses looking to hire smarter, faster, and more inclusively, it can prove to be a genuinely effective model.

What Is Skills-Based Hiring?

At its most basic, skills-based hiring means selecting candidates based on the specific skills required to perform a job well – regardless of how or where those skills were developed. It moves away from credentialism and designation; the idea that degrees or corporate logos determine competence. Instead, it focuses instead on evidence: can this person do the work?

This might involve:

• Assessments, either technical or situational;
  
• Practical tasks, such as case studies, sample projects or timed exercises;
  
• Structured interviews focused on skills application, not just job history.
  

When done correctly, this method raises the bar, because it tests for substance, not just surface-level indicators.

Why It’s Taking Hold

In job markets like Canada, employers are being forced to rethink how they define “qualified.” Experience remains valuable, of course. But it’s no longer enough to rely on rigid checklists of previous roles, industry tenure or educational prestige. Those markers are increasingly poor predictors of success – particularly in fast-evolving functions like payroll, where legislation and systems shift rapidly and adaptability matters more than legacy.

We’ve seen this first-hand – we’re often approached by clients who’ve spent months searching for candidates who “tick every box” – only to realise those boxes might not be the right ones in the first place. 

Skills-based hiring flips the focus: instead of relying solely on a CV or specific credentials, it assesses a candidate’s actual ability to perform key tasks. This not only opens the door to people who may have the right skills but didn’t think to list them – it also reveals hidden potential in candidates who might otherwise be filtered out by rigid role requirements. In short, it helps employers focus on what someone can do, not just what they’ve written down.

The Business Case for Skills-Based Hiring

1. Better alignment between role and candidate

You’re hiring someone to do a job – so it makes sense to assess them based on whether they can do that job. Skills-based processes remove ambiguity and surface-level assumptions.

2. Faster time-to-hire

When you’re clear about the skills you need and test for them directly, you waste less time on irrelevant CVs or drawn-out interviews that fail to provide real insight. At The Portfolio Group, we offer an exclusive, NPI-created payroll test that tests candidates’ knowledge for you.

3. Improved diversity and inclusion

By decoupling hiring from traditional credentials, you reduce bias and open the door to candidates from non-linear backgrounds – people who may not look “right on paper,” but who are more than capable in practice.

4. Future-proofed teams

Roles change. Industries evolve. Hiring based on adaptable, transferable skills rather than rigid histories creates teams better equipped for long-term success.

What Skills-Based Hiring Isn’t

It’s worth noting that skills-based hiring works best when it’s implemented with rigour and consistency – not when it’s used to justify gut-instinct decisions or dismiss industry knowledge altogether. You still need to map role requirements clearly, define what success looks like, and apply objective criteria throughout the process.

The best approach is to combine skills-based assessment with other forms of evaluation. Use interviews to explore cultural fit and carry out reference checks to validate behaviour, but let skills carry the most weight. That way, you’re not just hiring people who look the part – you’re hiring people who perform the part.

How to Implement It 

A few steps can go a long way:

• Start with a clear skills map – What specific abilities are essential to this role? Think both technical (e.g. payroll systems, Excel modelling)
  
• Design your hiring process around evidence – Include tasks or assessments that allow candidates to show their capabilities directly.
  
• Train your hiring managers – A skills-first approach can feel unfamiliar. Give your internal team the tools to apply it properly, without falling back on shortcuts or unconscious bias.
  
• Be transparent with candidates – Let them know what you’re looking for, how they’ll be assessed, and what success looks like. That clarity improves candidate experience and increases engagement.
  

Again, you don’t need to overhaul your entire recruitment model overnight. But starting with one or two roles – particularly those with high turnover or hard-to-fill requirements – can demonstrate immediate impact.

A Final Word on Skills

The way we hire is changing – not because of trends, but because of necessity. In competitive markets like Canada, where demand for experienced talent routinely outpaces supply, organizations need to be more flexible, more focused, and frankly, more realistic about what makes a great hire.

Skills-based hiring offers a way forward. It doesn’t eliminate subjectivity entirely, nor should it – but it does create a more level playing field, where candidates are evaluated on what they bring to the table today, not just where they’ve been.

Looking to strengthen your procurement function? As one of the leading procurement recruitment agencies, we understand how to connect businesses with professionals who have the exact skills to deliver results.