If you’re a hiring professional struggling with high turnover rates or difficulties in finding candidates with the right skill set, skills mismatches likely are to blame.
Studies reported that 75% of employers struggle to find the right candidate. With technology advancing, this gap is alarmingly widening.
Skills mismatch, where the competencies of job seekers do not align with the requirements of available positions, can have far-reaching consequences for both individuals and organizations. Let’s understand everything about it.
What is a skills mismatch?
A skills mismatch refers to the discrepancy between the skills required for a job and the skills possessed by a candidate. Simply put, skills mismatch happens when the competencies and skills possessed by a candidate don’t match the demands of the job.
This can occur in several forms, like underqualification, overqualification, outdated skill sets, or even a skill gap.
The manifestation of a skills mismatch harms both the employees and employers. For example, job insecurity among employees can significantly reduce productivity, leading to decreased revenue for employers.
In the U.S. alone, skills mismatches resulted in a loss of $15,000 for each bad hire and over $30,000 when a skilled employee departs due to dissatisfaction—often because their talents are not being utilized effectively in their roles. That’s a massive amount.
Different types of skills mismatches and their examples
Horizontal, vertical, and skills obsolescence are the three types of mismatches. Understanding its differences is crucial for overcoming any issue and achieving business growth.
Horizontal mismatch
A horizontal mismatch, also known as a field-of-study mismatch, occurs when an employee studies one field but works in another one.
While these employees possess the necessary qualifications, the skills required for their jobs often differ from their formal training and education. This means their education is not aligned with their specific field of expertise.
For example, a biotechnology degree might not be suitable for a marketer role. Or, a candidate with a computer science degree might be right for a software development role, but they might not possess the skills needed for a project management role, which is crucial for leading a development team.
Vertical mismatch
A vertical skill mismatch occurs when an employee’s educational qualifications exceed or undermine the job requirement. These mismatches occur when graduates apply for roles that are reserved for non-graduates.
Such type is denoted by using terms of qualification:
- Underqualified employees: individuals with a lower level of education or skills than a job’s requirement.
- Overqualified employees: individuals with a higher level of experience or education than a job’s requirement.
Someone with project management skills is hired for an associate role. Or, someone with basic coding understanding works in a job that requires complex frameworks. Both of these conditions are examples of vertical skills mismatch that leads to low productivity and a high employee turnover rate for companies.
Skills obsolescence
Skills obsolescence mismatch happens when the skills or knowledge that were once considered relevant and important become outdated. This occurs due to technological advancements that render a certain skill irrelevant. These are categorized into three groups:
- Technological obsolescence: This happens when certain skills become antiquated due to technological improvements. For example, professional photographers who relied on film cameras and darkroom processing faced obsolescence when digital cameras became widely available.
- Industry-related obsolescence: As an industry changes and develops over time, some talents may become less useful or even out of date. For example, a print journalist may become obsolete in their sector if they do not adjust to digital media and internet publishing.
- Knowledge obsolescence: When new techniques, procedures, and research are developed, information and knowledge may need to be updated. Professionals in disciplines like law, marketing, and medicine must always stay up-to-date on the most recent developments in their professions.
Skills mismatch vs skill gaps
Though skills mismatch and skill gaps might sound similar, they are two different concepts. Understanding the difference between these terms is crucial for effectively addressing workforce challenges.
Skills mismatch
This occurs when there’s a discrepancy between the skills and job requirements. This suggests that education and training programs aren’t equipping people with the skills that employers need, or that the economy isn’t generating jobs that match people’s skills.
Skill gap
Skill gaps refer to the specific skills that employees lack to perform their current or future job roles effectively. This could involve missing technical abilities, soft skills, or new competencies. Addressing skill gaps typically involves targeted training and development programs.
Why is it important to address a skill mismatch?
By now, you know that skills mismatch directly impacts companies and employers. However, upon closer inspection, its impact on the overall economy and labor market is tremendous.
For employees and job seekers
Skills mismatches might result in underemployment leading to poor job satisfaction, affecting both life and job performance. For example, tech startups in a developing country invest heavily in advanced software development tools but struggle to find local developers with the necessary skills.
This is because candidates might not have the required skills for the particular job. Such skill deficiencies massively lower the chance of securing a job.
To avoid job mismatches, candidates should take proactive steps like continuous learning and upskilling, building a professional network, gaining hands-on experience by interning, apprenticeship, freelancing, etc.
For hiring professionals and employers
Skill mismatching hinders productivity and eventually impacts a company’s competitiveness. It becomes impossible to introduce a new service or product when the team lacks relevant skills. This in turn impacts the overall efficiency.
For a company, job mismatch results in missed opportunities, loss of revenue, and a high turnover rate. This makes it difficult for companies to adapt to changing market conditions, leaving them stranded in the highly competitive global marketplace.
To tackle this, HR professionals need to make sure their hiring criteria align with industry standards and job requirements, with special emphasis on both hard and soft skills.
For economy
The economy as a whole takes a huge hit as it can affect the unemployment rate and reduce investment opportunities.
A study found that skills mismatch in low and middle-income countries is more prominent. Thus it becomes a pressing issue as such mismatches directly impede countries’ growth. When skills mismatches occur, profits drop and economic growth suffers.
Addressing this globally boosts job matching, minimizes the unemployment rate, and aids tech adaptation. This in turn strengthens the economy and stabilizes society.
How can a skills mismatch affect your business?
Businesses pay a hefty amount due to skills mismatch. The price of skills mismatch in the global economy in 2020 was $10 trillion in unrealized GDP, according to Boston Consulting Group.
The study also found that more than 1.3 billion employed people are working in either overqualified or underqualified positions.
A major reason why companies often face a high turnover rate is due to mismatches. Either the new hires may not stay long-term, or overqualified employees may leave on their own. Adding on to this, research shows that managers hire the wrong candidate 74% of the time.
This is why skill mismatches should be avoided. Even though this is common, there are several measures organizations can take to prevent such scenarios.
How to measure a skills mismatch?
Now, you know that identifying and measuring skills mismatches are beneficial for companies in the long run. Below are some effective methods:
- Direct Skill Assessment: This is one of the most reliable methods. This includes conducting an assessment or standardized test to evaluate skills possessed by employees in addition to testing the knowledge required for the job. Integrating skills assessment platforms like Testlify in your hiring process can help in measuring skills mismatch tremendously.
- Vacancy Rates and Unemployment Rates (Beveridge Curve): This helps hiring managers understand the broader labor market dynamics and how they affect skill mismatches. High vacancy rates coupled with high unemployment might indicate a mismatch.
- Objective Statistical Measures: These provide concrete data on qualifications versus job requirements, helping HR identify gaps between the skills employees have and those needed for specific roles.
- Subjective Measures: Reports from employers and employees offer qualitative insights into skill mismatches and can complement quantitative data with real-world perspectives.
- Job Advert Data: Analyzing job ads reveals current labor demand trends, helping HR professionals adjust recruitment strategies and address emerging skill shortages.
What is the role of AI in reducing skills mismatch?
In a traditional hiring process, employers can take up to 30 days to fill a position. If the selected candidate has a skills mismatch, this results in a significant loss of time, which can be prevented using AI.
Research indicates that over 266 million companies are already using AI for various business operations. AI for hiring is transforming the recruitment landscape already by significantly enhancing the efficiency and effectiveness of hiring processes.
Hiring managers can use AI-powered assessment tools to customize tests to gauge a candidate’s skills and speed up the hiring timeline. Another advantage of using AI in recruitment is its potential to minimize unconscious bias.
This allows companies to better understand the skills needed for specific roles and align their recruitment strategies accordingly. Such a holistic approach improves the quality of hires and also supports long-term employee success by ensuring a better match between candidates and job requirements.
5 best tips to avoid skills mismatch
The chances of skills mismatches happening are high but that doesn’t mean it can’t be prevented. Below are the top 5 tips you can use to make sure your candidate’s skills align with the job requirements.
1. Identify the right skills
If you don’t know what skills you are looking for in a hire, there’s a minimum chance of finding a candidate that fits the position.
Conduct a thorough skills gap analysis to gauge the company’s long-term objective. Find the right mix of soft and hard skills required for the particular role.
- Soft skills or power skills include problem-solving, strong communication, project management, writing, interpersonal skills, etc.
- Hard skills are teachable abilities or knowledge sets that can be quantified and measured like technical skills or task-oriented skills.
Use assessment tools and skills testing to evaluate an employee’s skill levels. This approach minimizes the risk of mismatches and serves as an effective candidate screening method, as many applicants may misrepresent their qualifications on their resumes.
82% of companies already employ pre-employment skills assessments to evaluate their candidates. These assessments can be of several types, like a basic skills test, 360-degree analysis of a candidate’s knowledge and skills, video interviews, etc.
Testlify provides customized assessments created by industry experts that can help you rank candidates, saving time and money.
2. Write a detailed job description focused on skills
Job descriptions are crucial in the hiring process, as they communicate the expertise needed for candidates to apply for the job.
Poorly written job descriptions are the leading cause of hiring failures, affecting over 50% of executive and management hires. Consider the below pointers:
- To start, choose specific job titles that are clear and avoid company jargon.
- Explain your expectations on skills and expertise on a mandatory-to-preferred scale, not just based on a desired education level.
- For experienced individuals, mention what you expect from their experience, such as specific tools, experience leading teams, or results from a specific process.
This will help avoid job mismatches and ensure a successful hiring process.
Example of poorly written job description
“We are seeking a content ninja to work with us. The person will be responsible for creating informative articles. This position is perfect for someone who works well under pressure and can manage their own projects.”
Example of well-written job description
“We are seeking a Social Media Manager to join our Marketing team. In this role, you will be responsible for developing and executing social media strategies to enhance our brand presence and engage our audience across various platforms, including Facebook, Twitter, Instagram, and LinkedIn. The ideal candidate will possess:
- 3-5 years of experience in social media management, with a proven track record of successful campaigns.
- Proficiency in social media analytics tools such as Hootsuite, Buffer, or Sprout Social, and the ability to analyze data to inform strategy.
- Strong writing and editing skills, with the capability to create compelling content tailored to different audiences.
- Experience with graphic design tools like Canva or Adobe Creative Suite to create visually appealing posts.
The above job description clearly covers the skills required for the role, eliminating any ambiguity. Unlike the first one, this job description reduces the likelihood of a skills mismatch and provides candidates with a better understanding of what is expected in the role.
3. Conduct interviews for transferable skills
It is essential to interview candidates to learn more about their backgrounds, especially transferable skills. Interview questions that ask behavioral and situational inquiries are crucial because they let candidates talk about real-world scenarios and explain how they handled them.
Transferable skills are competencies that can be applied across various jobs and industries, regardless of the specific technical skills required for a particular role.
Examples of such skills include critical thinking, problem-solving, teamwork, and project management abilities.
Although time-consuming, interviews offer important insights about a candidate’s capacity to use their skills effectively in the workplace.
4. Outsource to combat regional skill shortage
Regional shortages of skilled labor may result from either low or excessive supply in a given area. High-speed internet and technology have made it possible for businesses to recruit people anywhere in the globe through job outsourcing.
Onboarding external workers, especially freelancers, is made easier by websites like Fiverr and Upwork, and creating remote teams is aided by remote job forums like WeWorkRemotely and Remotive.io.
5. Optimize the onboarding process
An effective onboarding process enhances new hires’ skills very quickly. It also helps identify skill mismatches with the existing team early.
Create comprehensive onboarding programs that teach essential practical skills effectively. Include your company’s core values and best practices in the training. For instance, emphasize communication and critical thinking if they are vital.
Pairing new hires with mentors aids their navigation during onboarding. This support helps them settle in during their first weeks effectively. Make sure that regular feedback is integrated as a part of the onboarding process.
Encourage questions and discussions about challenges through scheduled check-ins. New hires must feel valued and supported to thrive in their roles. Additionally, provide access to online courses or internal training for their growth.
Prevent skills mismatches and hire the right candidate
A skills mismatch may seem harmless, but that is far from the reality. A wrong hire could harm your company’s revenue.
Even though it’s hard to stop a mismatch from showing up in your hiring process, there are certain steps you can take to minimize a mismatch from happening.
Right from posting a job requirement online to extending a job offer, there are multiple touchpoints hiring professionals can take to eliminate mismatches. And with the help of an AI-powered assessment platform like Testlify, HR can save a lot of time and money while also finding the right talent.
Eliminate skills discrepancies in your organization by utilizing skills assessments with Testlify.