Beyond Local Experience: How Skills-Based Hiring Unlocks Australia's Hidden Migrant Talent Pool

Australia is facing a major talent gap. Job vacancies are up 46.5% since February 2020, yet nearly half of skilled migrants can't use their qualifications. Skills-based hiring offers a solution by focusing on abilities rather than degrees or local experience. Here's why it matters:

• Unlocking Potential: 1 in 4 skilled migrants works below their qualifications, costing the economy $1.25 billion annually.
• Business Benefits: Skills-based hiring reduces mis-hires by 92.5%, improves retention by 91%, and boosts diversity.
• Proven Results: Companies using this approach are 107% more likely to hire the right talent and cut hiring mistakes by 79%.

How It Works:

1. Job Posts: Highlight skills, not degrees.
2. Skills Testing: Use practical assessments for technical and soft skills.
3. Tools: Leverage platforms to validate skills and reduce bias.

How skills based hiring differs from experience based hiring

Why Skills-Based Hiring Makes Business Sense

Australian businesses face ongoing challenges in finding qualified technical talent. Skills-based hiring tackles this issue by focusing on proven abilities rather than traditional credentials.

Skilled Migration in Australia

Australia's skilled migration system highlights a major gap between talent availability and job opportunities. Shockingly, one in four permanent skilled migrants works in roles below their qualifications, leaving a significant talent pool untapped [2]. This mismatch impacts both businesses and skilled professionals.

"I do not think they recognise my qualifications and experience. I showed my CV to many people, including some of my friends who are working in the field, and everyone says I am qualified. I feel discouraged and sometimes feel like I will never be able to work as an engineer in Australia. I am fed up with it." - Jenny, Telecommunications Engineer [2]

The Cost of Underutilized Skills

Underutilizing skilled professionals costs the Australian economy at least $1.25 billion annually [2]. These losses come from several areas:

Results of Skills-Based Hiring

Companies that adopt skills-focused hiring strategies report impressive outcomes. Recent findings reveal:

• Hiring Efficiency: Companies using this approach are 107% more likely to place the right talent in the right roles [1].
• Retention: High-performing employees are 98% more likely to stay with organizations prioritizing skills [1].
• Quality of Hire: Mis-hire rates drop by 92.5% with skills-based hiring [3].
• Diversity: At Steelcase, 55% of new hires were women, and 30% were racial or ethnic minorities after adopting this approach [3].

The benefits go beyond statistics. Hiring managers report that identifying qualified candidates becomes twice as easy compared to traditional methods [1]. Workers also respond positively - two-thirds show greater interest in joining and staying with companies that value skills over degrees and job titles [1]. For roles like solution architecture, data engineering, and business analysis, this hiring method is five times more predictive of job performance than education-focused approaches [3].

Next, we’ll explore how to put these proven strategies into action.

How to Switch to Skills-Based Hiring

To address the challenges mentioned earlier, focus on refining job postings, improving candidate evaluations, and using modern hiring tools.

Writing Better Job Posts

Shift the focus of job descriptions from traditional qualifications to specific skills. Skill-centered job posts can significantly improve how well candidates align with the role. Here's how to make job descriptions more skill-oriented:

• Remove unnecessary degree requirements that may exclude qualified candidates.
• Highlight critical technical skills needed for the role.
• Write in clear, straightforward language, avoiding industry jargon.
• Emphasize that international experience is valued.

Once job posts are updated, use structured skills assessments to evaluate candidates effectively.

Skills Testing Methods

Standardized assessments are a reliable way to measure technical abilities and reduce hiring mistakes by 79% [1]. Build a thorough evaluation process using different testing methods:

A solid testing process lays the groundwork for using specialized hiring platforms.

Hiring Tools and Platforms

Modern hiring platforms simplify skills assessment and candidate selection. Look for these key features:

1. Skills Validation Tools
   These tools verify technical abilities through standardized tests. Companies using such methods report a 34% reduction in time-to-hire [5].
2. Automated Screening
   Smart screening systems prioritize skills over keywords, ensuring qualified candidates aren’t missed due to traditional resume filters.
3. Collaborative Assessment
   Platforms that allow team-based evaluations ensure consistent and fair skill measurement.

Using these tools increases the likelihood of retaining top talent by 98% [1]. For technical roles like data engineering or solution architecture, prioritize platforms with:

• Advanced skill filters
• Accurate skill validation
• Flexible testing options
• Clear and consistent evaluation criteria

These tools help create a hiring process that focuses on true abilities, offering opportunities for skilled migrants to thrive.

Skills-Based Hiring Examples

Examples from various sectors show how skills-based hiring can change recruitment outcomes.

Australian Company Results

IRESS showcases the impact of skills-based hiring by recruiting skilled migrants through a merit-focused process. In 2019, the company hired Derar Alkhateeb, a qualified software engineer, using this approach. Peter Ferguson, IRESS Group General Counsel, shared:

"It is done on merit so we get access to talent – talent that we urgently need. But it also improves the life of individuals like Derar and his family." [6]

This example highlights a broader issue: over 620,000 migrant workers in Australia are not fully utilizing their skills, with 45% working in roles below their qualifications [7]. Josh Griggs, CEO of ACS, emphasized the economic potential:

"By unlocking the skills and pathways for the underemployed, Australia could boost the country's annual GDP by $9 billion, enhancing our national productivity and global competitiveness." [7]

These private-sector efforts underline the importance of government programs to expand access to skilled talent.

Government Support Programs

Government initiatives play an essential role in supporting businesses and skilled migrants in adopting skills-based hiring practices.

Western Australian Initiatives
The Western Australian government has allocated $4.25 million for services under Job Connect [10]. These services include:

South Australian Programs
South Australia supports six partner organisations to connect skilled migrants with jobs in fields such as engineering, ICT, and construction [9]:

• Australian Migrant Resource Centre (AMRC)
• Committee for Adelaide
• South Australian Business Chamber
• SkillSmart Careers
• Community Corporate
• Master Builders Association of SA

A representative explained the approach:

"This isn't charity, this is employers filling skill gaps that they struggle to fill locally." [6]

Additionally, the Skills for Education and Employment (SEE) Program offers training in language, literacy, numeracy, and digital skills to eligible visa holders [8]. This helps migrants demonstrate their technical expertise in Australian workplaces effectively.

Steps for Business Implementation

Getting Started Guide

Shifting to skills-based hiring requires a clear, step-by-step process to focus on core competencies. Research highlights that organizations using this approach are 107% more likely to match talent effectively and 98% more likely to retain top performers [1].

Here’s how to begin:

1. Analyse Roles
   Break down job roles to identify the critical skills needed. Remove degree requirements and biased filters, focusing instead on specific technical and interpersonal abilities.
2. Update Recruitment Process
   Adjust your hiring workflow to centre on skills validation:

1. Train Your Team
   Equip recruiters and hiring managers with the tools to create skills-focused job descriptions, evaluate global qualifications, conduct structured interviews, and use skills-testing platforms.

Finally, ensure fairness in your evaluations by actively addressing hiring biases.

Reducing Hiring Bias

Unconscious bias can skew hiring decisions, particularly when assessing skilled migrants.

"I've had to be very careful to address it head on" - Chuck Edward, Microsoft's head of global talent acquisition [11].

To combat bias, implement these practices:

• Create structured interview guides
• Apply consistent scoring methods
• Use blind recruitment techniques
• Form diverse hiring panels
• Incorporate realistic job simulations
• Rely on standardised technical evaluations
• Focus on proven capabilities
• Clearly document decision-making criteria

"A culture of equality is a multiplier. We can't achieve a culture of equality if personal unconscious bias is not addressed first and foremost" - Michelle Gadsen-Williams, Managing Director and North America Lead for Inclusion and Diversity at Accenture [11].

Improving Hiring Results

By reducing bias and focusing on skills, organisations see real improvements. Recent data shows 79% of hiring managers report fewer mis-hires, and 62% have built more inclusive teams [1].

To enhance results further, consider using skills management software to:

• Monitor workforce capabilities
• Spot skill gaps
• Conduct objective assessments
• Leverage data for better hiring decisions

Regularly review key metrics, collect feedback, and refine your processes. Periodic audits help keep your tools accurate and fair.

Conclusion

Main Points Review

Skills-based hiring is reshaping recruitment in Australia, addressing talent gaps and improving outcomes. By 2024, 91% of employers are expected to adopt this approach, showcasing its ability to tap into overlooked talent pools [12].

Companies using structured skills testing report impressive results:

• 94% improvement in retention and fewer mis-hires
• 94% increase in workforce diversity
• 83% reduction in hiring costs [12]

This shift also benefits skilled migrants, with 81% of candidates securing roles through skills-based assessments [12]. The effect is particularly strong in technical fields like AI, machine learning, and cybersecurity, where Australia faces critical shortages [4].

"We are three years into producing The State of Skills-Based Hiring reports, and the trend is undeniably clear – skills-based hiring is becoming the dominant and preferred recruitment method, not just for businesses, but for employees seeking new jobs."
– Wouter Durville, Chief Executive and Co-founder, TestGorilla [12]

Next Steps

To harness the full potential of skills-based hiring, consider these actionable steps:

• Define Core Competencies: Map out the essential skills for each role, eliminating outdated barriers.
• Update Assessment Methods: Use structured evaluations that highlight candidates' abilities fairly.
• Leverage Government Support: Explore programs like the Skilled Refugee Labour Agreement Pilot, which offers 500 visa places until June 2025 to address critical skill shortages [13].

"This program is win-win. Businesses have the opportunity to fill genuine skills shortages and it gives workers the dignity and economic security only a job can provide."
– Jennifer Westacott, Chief Executive, Business Council of Australia [13]