Your hiring process directly impacts your organization’s performance, so it’s important to invest in strategies that yield the best returns. Inefficient hiring processes, such as traditional recruitment, lead to poor hiring decisions, which can cause significant losses and hinder growth. On the other hand, modern methods, like skill-based hiring, focus on what truly matters—candidate ability and job performance.
This approach reduces your chances of making hiring mistakes, which, in turn, reduces cost and increases productivity. In this article, we’ll break down the return on investment (ROI) of skill-based hiring, exploring why it’s not just an effective hiring strategy but a long-term business advantage. But first, let’s see what skill-based hiring is in a nutshell.
Overview of skill-based hiring in modern recruitment
According to Stacie Garland, Director of Assessments at Vervoe, “Most companies think that they’re hiring for skills, but are actually hiring based on assumptions without realizing it.” This misconception stems from traditional recruitment methods, which prioritize qualifications, degrees, resumes, and titles as primary indicators of a candidate’s potential. However, these credentials often represent perceived skills rather than proven competencies.
Relying on inferred ability has contributed to significant skill gaps within organizations. For instance, Hays statistics show that as many as 85% of hiring managers experience skill gaps. Similarly, Workday’s Global State of Skills report states that only 32% of business leaders strongly believe that the skills within their organization today are the same that they will need for future success.
Skill-based hiring makes up for this shortcoming by prioritizing a candidate’s job-relevant skills and ability to excel in the role rather than their background. Using practical assessments and job-based evaluations, skill-based hiring allows you to ask questions that gauge candidates’ performance in a role. From their responses, you can make objective, data-driven decisions rather than assuming competence based on a degree or resume. This method is quickly gaining ground with recruiters—86% are turning to skill-based hiring to mitigate skill gaps and improve quality-of-hire.
Challenges with traditional hiring methods
Traditional hiring methods introduce hiccups that create biased, inefficient hiring cycles, making talent identification and selection significantly more difficult. Below, we’ll discuss five pressing challenges in traditional hiring.
1. Hiring bias
Resume screening and unstructured interviews rely heavily on human judgment, which inclines recruiters toward their subconscious preferences. Factors like names, education, experience, or demographics may unconsciously influence decisions, while certain personality types naturally excel in interviews, creating a stronger rapport with the interviewer. While blind resume reviews attempt to remove these biases by hiding identifiable information, they still fail to assess a candidate’s actual skills and potential.
These traditional evaluation methods are imperfect yardsticks that don’t truly determine proficiency, especially when used alone. Instead, they encourage comparisons that make recruiters overlook equally skilled but unconventional candidates. Eventually, this leads to biased decision-making, reducing both accuracy and precision in the hiring process.
2. Lengthy hiring process
Traditional hiring is notoriously lengthy, especially with larger candidate pools. According to Robert Half, it can take anywhere from 5 to 11 weeks to screen numerous resumes, conduct multiple rounds of interviews, and verify credentials. This process drains the company’s human and capital resources and discourages applicants, dampening their enthusiasm for the role.
3. Inaccurate job fit and performance prediction
Resumes and regular interviews offer surface information and provide a limited view of candidates’ actual job knowledge. These hiring methods highlight past experiences and degrees, but credentials don’t always translate into job-relevant skills or performance.
For instance, a candidate may have years of experience, a degree from a prestigious school, or excellent articulation without mastering the role. In such circumstances, hiring solely based on these evaluation methods without thorough skill evaluation could result in poor hiring decisions and difficulty meeting performance expectations.
4. Limited talent pool
Traditional hiring often prioritizes specific degrees, job titles, or years of experience as rigid prerequisites for a role. While this may seem like a way to filter less qualified candidates, it also rules out promising candidates who may have the capacity to do the job but lack a certain credential.
This shrinks your talent pool, further reducing your chances of finding top candidates. It also reduces diversity, limiting opportunities to hire candidates from less conventional groups and unique career paths who could bring more innovation and creativity to your team.
5. High turnover
Basing hiring decisions on resumes and credentials rather than proven competencies often causes recruiters to hire candidates with poor job fit and skill gaps. When new hires lack the necessary skills to do their jobs effectively, they struggle to adjust to their roles and fit in with the rest of the team.
This reduces their productivity, causing dissatisfaction and frustration with the job, which prompts them to quit and search for other, more suitable roles. With the average cost-of-hire being $4,700, according to SHRM, the constant cycle of hiring, training, and replacing employees increases recruitment costs, demoralizes the team, and slows company growth.
Hiring metrics for tracking ROI in recruitment
How do you track your hiring process and measure its effectiveness? In recruitment, there are certain metrics you should monitor to determine whether your hiring cycle is yielding results and where you can make improvements.
With that in mind, here are six hiring metrics for tracking ROI in recruitment:
1. Time to hire
Time to hire measures the length of time between a candidate’s first interaction with your hiring cycle, typically their application submission, and their acceptance of your job offer. This metric indicates how long it takes your company to fill a position after your candidates indicate their interest.
Generally, the shorter your time to hire, the more effective your hiring strategy. This is because prolonged hiring cycles cost more money and risk losing top talent to competitors. Research by The Josh Bersin Company shows that, on average, time to hire is about 42 days; however, this number could vary depending on the complexity of the role in question.
2. Cost per hire
Your cost per hire refers to the total amount your organization incurs to fill a single position, including internal and external costs. Internal costs are expenses incurred within the organization, such as recruiter salaries or referral bonuses. In contrast, external costs are sums paid to other companies for outsourced services like advertising or candidate assessment. Knowing these figures keeps you aware of your hiring expenses and lets you budget accordingly to avoid mismanaging resources.
Like time to hire, the cost per hire should also be as minimal as possible without compromising hiring quality. According to SHRM, this figure is currently around $4,700, but it varies depending on role complexity, seniority, and industry.
3. Hiring diversity
Hiring diversity measures demographic differences like gender, race, or background in your new hires and applicant pool. To track it, your job application should include demographic surveys to provide insight into the number of applicants you attract from each group.
Diversity matters because it brings fresh ideas and different ways of solving problems, making teams more creative and innovative. A McKinsey & Company study proves this, finding that companies with more ethnic and cultural diversity are 36% more profitable than those with less. Diversity also promotes fairness and strong company values, while hiring people with similar backgrounds can lead to limited thinking and weaker problem-solving.
4. Offer acceptance
Offer acceptance measures the number of successful candidates who accepted your offer compared to the number of offers your organization extended. To calculate it, divide the number of accepted offers by the total number of offers extended, then multiply the result by 100 to get the percentage. According to PwC’s Saratoga Workforce Index, the national average in 2022 was 84%. However, the higher this number is for your organization, the better your hiring process.
Higher offer acceptance rates indicate your organization’s desirability and the effectiveness of your hiring process, while lower rates are a signal that your recruitment strategy is lacking. Essentially, the more your company meets candidates’ expectations, the more they accept your offer.
5. Employee retention
Employee retention measures the percentage of new hires who stay with a company over a set period, typically the first year. High retention rates indicate a strong hiring strategy that selects well-suited candidates for long-term success, reducing turnover costs.
Contrary to popular opinion, offer acceptance alone doesn’t guarantee an efficient hiring cycle. Alarmingly, Jobvite found that 30% of new hires leave their jobs within the first 90 days, often due to mismatched expectations or poor onboarding. Overall, measuring employee retention rates shows you how conducive your company is to candidates, allowing for quick corrective action to prevent rehiring and extended hiring times.
6. Candidate experience
This metric tells you how satisfied candidates are with your entire recruitment process, from application to onboarding. Companies usually measure this at the end of the hiring process through surveys and feedback requests sent directly to every candidate, whether successful or not.
While this may seem minute, CareerPlug’s 2025 research showed that 66% of candidates said a positive experience influenced their decision to accept a job offer. Poor candidate experiences reflect badly on your company and present a poor public image, which could dissuade top talents from joining your team. On the other hand, a positive candidate experience enhances your brand, increases the likelihood of offer acceptance, and encourages future applications for candidates who didn’t make the cut.
How skill-based hiring yields high ROI
Skill-based hiring’s focus on skills and competence rather than traditional credentials yields several advantages that contribute to a higher ROI for organizations. We’ll discuss five of these below.
1. Faster hiring cycles
Traditional hiring is slow, but skill-based hiring spots quality candidates instantly. Using pre-employment skill assessments, job simulations, and other skill-based tests, recruiters can easily determine a candidate’s aptitude for a job.
AI-driven assessments and automated processes accelerate the cycle even more, automatically grading and ranking candidates with respect to your predefined criteria. This replaces manual, tedious, weeks-long screening with faster decision-making and streamlines your talent pool to let you focus on the best. PwC UK’s skills-first approach leaves no doubt in this area, reducing the mean hiring time by 45% compared to traditional hiring methods.
2. Quality hiring decisions
Skill-based hiring focuses on actual job capacity rather than credentials alone, improving hiring quality and helping you attract employees who can effectively meet job expectations. Rather than making assumptions from resumes, objective assessments evaluate ability in relevant skills for the job. High performance in such tests directly indicates job fit and competence, which makes for more productive employees.
For example, when recruiting for a financial analyst position, you can evaluate candidates using risk analysis or compliance assessments instead of just targeting high-profile schools listed on resumes. McKinsey & Company’s research backs this point, noting that skill-based hiring was five times more predictive of job performance than hiring based on education.
3. Lower hiring costs
Skill-based hiring reduces hiring time, which, in turn, lowers costs. Traditional hiring involves multiple interview rounds, reference checks, and prolonged vacancy periods, all of which add to the overall cost of hiring. With skill-based assessments, recruiters can evaluate candidates in shorter, automated steps, eliminating unnecessary back-and-forth and the associated expenses.
Moreover, hiring the wrong candidate can be expensive due to retraining, lost productivity, and potential rehiring. Skill-based hiring’s precision and accuracy prevent such mishires and save the ensuing cost, keeping hiring expenses at a minimum.
4. Eliminates hiring bias
Well-polished resumes showing prestigious degrees, impressive connections, or years of experience appeal to recruiters and may prompt unconscious bias. Skill-based hiring removes these biases by assessing candidates solely on their ability, removing demographic or discriminatory factors that may sideline other candidates. It provides a level, uniform evaluation system, ensuring that successful candidates get the role based on merit alone.
Bias-free hiring also promotes diversity, as candidates from all walks of life receive equal opportunities. Here are supporting numbers—PwC’s skills-first hiring approach increased gender and neurodiversity in its talent pipeline, raising female hires by 20% and STEM or non-finance degree hires by 17%.
5. Higher employee retention
Skill-based hiring selects candidates who have the necessary skills for their jobs, which helps them be more productive in the role. Because they are equipped to carry out their jobs seamlessly, they struggle less and swiftly adapt to that position.
Moreover, skill-based hiring fosters a sense of fairness and transparency, as employees know they were selected for their actual competencies rather than external factors. When content, employees are less inclined to look for new jobs actively, increasing their commitment to your organization. Data from Boston Consulting Group supports this, showing that skills-based hires have a 9% longer tenure at their organizations compared to traditional hires.
Pro tip: Skill-based hiring offers several statistically proven benefits. However, to enjoy its results, you must implement it properly in your organization. Our ebook, The Recruiter’s Guide to Skill-Based Hiring, provides step-by-step directions for integrating skill-based hiring and onboarding new hires.
Skill-based hiring case studies
Several companies have implemented skill-based hiring and experienced greater hiring success than their initial traditional hiring process yielded. Below, we’ve compiled a few of these organizations’ stories, discussing their hiring challenges and how Vervoe’s skill-based hiring software tackled these issues.
1. Bank of Queensland (BOQ)
Customer satisfaction is paramount to Bank of Queensland’s services, and with their contact center being a defining factor, they needed employees who could bring their A-game. However, the hiring process for the contact center consisted of resume screening, phone screening, and an assessment center, which facilitated a slow, inefficient, and costly hiring cycle. Poor candidate experience led to job shock and attrition, with turnover rates as high as 27.5%.
To solve this problem, BOQ partnered with Vervoe to create assessments that evaluated specific skills for a customer service role. These assessments mimicked real-life day-to-day tasks handled by customer service consultants and probed proficiency in required skills like communication, multitasking, and resilience.
This approach transformed their hiring results in just 60 days, reducing their time-to-hire by 2340 hours annually and improving candidate quality. Where the assessment center’s interview conversion rate was previously 40-50%, after integrating Vervoe, this figure surged to 90%. Candidates also reported a smoother experience, rating the new assessment procedure a 4.59 out of 5.
2. Dentsu
Daniel Stockdale, Talent Acquisition Director at Dentsu, a global advertising agency, discovered that several entry-level applicants were unaware of the everyday requirements of their desired roles. Seeking to address this gap, Daniel wanted a bias-free solution that could provide a realistic preview of the open job and insights into candidates’ proficiency in the skills needed for those tasks.
Vervoe handled this efficiently using AI-powered assessments to simulate a typical work environment for candidates. For comprehensive evaluation, these questions came in various formats, including multiple-choice, spreadsheet, text-based, and video. Dentsu also integrated Vervoe at the top of the hiring funnel to provide equal opportunity to all candidates regardless of background.
The result was a streamlined, faster hiring process with more reliable results. Rather than filling 4-5 roles per month, Dentsu was able to fill up to 25 positions monthly, increasing their volume of recruitment without sacrificing quality-of-hire. Being an online platform, Vervoe also provided scalability, transforming hiring cycles in all of Dentsu’s branches worldwide.
3. Prosper Insurance
Prosper Insurance, an auto insurance company, aimed to hire 15 to 30 new employees yearly. However, they struggled to find quality sales agents who understood the insurance market and aligned with the company’s culture. Initially, the company used personality tests in their hiring process, but this provided a false view of candidates’ job performance.
Vervoe’s detailed assessment library solved this problem, providing insightful questions that probed the candidates’ skill sets and better portrayed their abilities. With our assessment builder and library, they created custom assessments that reflected their exact needs for each role and allowed candidates to highlight their strengths.
This improved the selection process, giving hiring managers a stronger sense of their candidates and whether they would make suitable employees. Pamela Camper, Talent Acquisition, Prosper Insurance, says, “Vervoe has helped me get a more accurate feel for the candidate, and it has helped hiring managers be able to view the candidates’ responses before going into a second interview”.
It also gave candidates a better understanding of the role, which prepared them for further interviews and the job in question, helping them adapt faster. Using Vervoe’s skill-based approach, the company was able to achieve its goal of hiring more efficiently within a shorter time frame and simultaneously enhance employee retention.
4. ConnectCPA
ConnectCPA, an online chartered accounting firm, emphasizes efficiency and innovation in all its processes. Despite this resolve, the company’s hiring process was burdensome and made it difficult to achieve the annual hiring goal of 20-30 employees. Recruitment involved screening thousands of resumes, 2-3 interview rounds, 2-4 recruiters, and several hours of painstaking labor. As a result, candidates weren’t properly evaluated, and the hiring process drained company resources, including time, people, and money.
ConnectCPA tackled this problem with Vervoe’s skill assessments, tailoring tests to each specific role. Using our assessments, they evaluated technical and soft skills like stress management and task prioritization, noting exactly how these skills would be applied to the job.
This automation removed the need for multiple interviewers and interview rounds, making their hiring cycle faster and cost-efficient. Maggie Miller, People & Culture Manager at ConnectCPA, says, “Our hiring speed increased significantly because we needed fewer interviews.”
Hiring time was reduced by about 50 hours monthly, and candidates better understood the role’s requirements, speeding up the hiring process. Moreover, Vervoe’s iterative features used their hiring data to continually refine their strategy and suggest coaching opportunities, improving onboarding and reducing turnover.
5. iSelect
iSelect, an insurance comparison site, faced high attrition in sales roles within the first 3-6 months, leading to financial losses. Their traditional hiring process, which consisted of phone screenings, group assessments, and final interviews, was time-consuming and failed to identify skilled candidates. Inconsistent evaluation criteria among hiring managers further weakened hiring decisions.
To address this, iSelect implemented Vervoe’s skill-based assessments at the initial hiring stage, focusing on required skills rather than resumes. They also replaced one-on-one interviews with structured assessment centers, ensuring objective, skills-based evaluations. This streamlined hiring, eliminated bias, and improved candidate selection.
As a result, their hiring process improved instantly, with time-to-hire dropping by 50% and assessment center attendance rising from 50% to 75-100%. Candidates arrived better prepared, and the recruitment team saved significant time by eliminating resume reviews. Ultimately, Vervoe’s approach improved hiring efficiency, reduced attrition, and strengthened overall candidate quality.
Enjoy the benefits of skill-based hiring with Vervoe
Skill-based hiring helps companies make better hires while reducing turnover and recruitment costs. Unlike traditional methods, it evaluates candidates on actual abilities, leading to faster hiring, improved diversity, and stronger retention. But, for seamless, easy skill-based hiring integration, you need a reliable skill assessment solution like Vervoe.
Vervoe’s features are perfect for implementing skill-based hiring. Our robust assessment library contains over 300 templates that comprehensively evaluate candidates’ skills in a variety of roles, including leadership and customer service positions. One of our star features is our AI assessment builder, which instantly creates personalized assessments that match your job description, taking the load off your hands. Vervoe also offers job simulations, AI-powered grading, and an intuitive, user-friendly interface to provide objective, bias-free, accurate hiring data without skimping on candidate experience.
Ready to enjoy skill-based hiring’s advantages? Schedule a demo with Vervoe today to see how skill-based hiring can improve your recruitment strategy.
