Why do younger generations prefer skills-based hiring?

According to a recent survey for our 2024 State of Skills-Based Hiring report, 68% of employees prefer a skills-based hiring process. For 25 to 34-year-olds, this number goes up to 82%. 

The question that naturally follows is – what makes skills-based hiring so appealing to younger workers?

In this article, we take a look at millennial and Gen Z workers and what drives their preference for skills-centric recruitment processes. 

Who are these younger workers, and why does it matter?

When we talk about 25 to 34-year-olds, we’re referring to younger millennials and Gen Zs. 

Most are millennials – born between 1981 and 1996 and currently aged 28 to 43. Gen Z, born between 1997 and 2012, is now 12 to 27. 

While avoiding overgeneralization of people based on their years of birth is important, understanding generational traits in the workplace can provide valuable insights for employers. This knowledge can guide strategies for best motivating, managing, and hiring workers – including those in the younger generation. 

Our finding is especially relevant given millennials and Gen Zs represent a significant part of the working population. According to John Hopkins University, millennials comprise 39.4% of the US workforce, while Gen Z is projected to reach 30% by 2030. 

And what’s skills-based hiring?

Skills-based hiring is an approach that prioritizes candidates' skills and abilities over qualifications or past employment. For our 2024 report, we surveyed 1,019 employers and 1,100 employees across various countries, including the US, Australia, and Latin America. We found that:

• 81% of employers use some form of skills-based hiring, a sharp increase from 73% in 2023 and 56% in 2022.

• 90% of employers experience improved diversity – and 91% experience improved retention – with skills-based hiring compared with traditional recruitment methods.

• 98% confirmed that skills-based hiring is more effective than resume screening.

While it’s clear that a skills-first approach is great for employers, why is it attractive for young workers?

Understanding why this approach appeals to these workers can help you tap into large talent pools, find quality hires, and future-proof your businesses. 

Why do younger workers favor skills-based hiring?

Here are some reasons why millennials and Gen Z candidates seek out skills-based recruitment processes. 

Younger generations are more likely to be career switchers and job-hoppers

For previous generations, staying with the same employer for one’s entire career was common. However, for millennials and Gen Z workers, changing employers, roles, and industries is the norm. 

Millennials were the most likely to change jobs until Gen Z entered the workforce. 

For its recent report, “How Millennials Want to Work and Live,” Gallup collated data from various sources, including its Gallup Daily tracker and employee and customer engagement databases. It found that six in 10 millennials were currently looking for another job. Additionally, 21% of millennials reported changing jobs in the previous 12 months – over three times the rate of any other generation.

Gen Z is equally, if not more, comfortable with regular job changes. Lever’s 2022 Great Resignation report surveyed 1,200 full-time workers across various industries and found that 65% of Gen Z employees intend on staying less than a year with their current employer.

Younger workers are equally comfortable changing careers, with Gen Z expected to switch industries at least 3 times during their careers. 

Why is this? Younger generations have been criticized for having short attention spans or lacking employer loyalty. But let’s look at this phenomenon from a different perspective. 

Younger generations are arguably seeking a better return on investment. They want workplaces with values and benefits that best reflect their expectations, skills, and qualifications. When they feel disengaged at one job, they might seek new, more engaging job opportunities – even if that means changing careers or industries. 

Millennials and Gen Z also take a different approach to work than other generations. A large percentage are involved in the gig economy or start side hustles in addition to their main source of income. A survey by the Upwork Research Institute involving 3,000 professionals found that 45% of freelancers are millennials. 

For these workers, flexibility in a role is key – and they’re not afraid to shop around for employers until they find it. 

…And skills-based hiring caters to the job-hopping generations

A skills-first approach demonstrates that an employer prioritizes skills over tenure or experience. This likely appeals to younger workers with a more varied employment history, including those with shorter periods of experience but the necessary skills to thrive in a role. 

Job-hoppers often change industries when changing jobs. They may look for employers who prioritize skills in the selection process, knowing their skills will be objectively assessed even if their experience isn’t directly related to the role at first glance. 

Skills-based hiring levels the playing field for younger workers wanting to access roles in new industries. In fact, 81% of employees in our 2024 report said this approach has helped them gain access to new employment opportunities. 

Job-hopping is often framed as a negative – and expensive – phenomenon for employers. However, by taking advantage of a mobile workforce through skills-based hiring, employers can access a talent pool of fresh perspectives. 

Millennials and Gen Z prioritize diversity and equality

Millennials and Gen Z workers also demand more than just lip service to diversity from their employers. They expect tangible, meaningful commitment. 

This is hardly surprising given that Gen Z is often considered the most diverse generation to date. Younger workers want to work in environments that reflect them and their values. 

According to advisory firm Gallup, a diverse and inclusive workplace is among the top three features young millennials and Gen Z look for in an employer. 

Deloitte has been surveying millennials and Gen Zs for 13 years, and the data provides fascinating insights into their attitudes and expectations in the workplace. For its 2024 report, Deloitte surveyed 14,468 Gen Zs and 8,373 millennials across 44 countries. 

It found that younger workers expect broader corporate commitments to social equality, with 38% of Gen Zs and 39% of millennials identifying inclusive employment opportunities as one of the most effective ways businesses can support social equality.

This means that diversity washing – when a business gives the appearance of diversity without meaningful steps to address it – won’t cut it when it comes to attracting and retaining younger workers. Instead, they’re looking for employers who demonstrate meaningful efforts to ensure diversity and inclusion are priorities in the workplace and beyond. 

As JT Saunders, Chief Diversity Officer at Korn Ferry, emphasizes, “Younger employees demand action… [they] want to see how your words are leading to action and how your actions are elevating a DE&I agenda that promotes progressive social change within and outside of your doors.”

…And skills-based hiring supports equal opportunity and is key to a diverse workforce

Taking a skills-based approach to hiring is one of the best ways to improve diversity in your organization. It helps you take an objective approach to hiring based on each candidate's job-relevant abilities rather than their personal characteristics. 

The data makes this evident. 

For example, 90% of employers using skills-based hiring that we surveyed reported improved diversity, a 5% increase from last year’s survey.

Even more convincing are the reports on skills-based assessments. Ninety-four percent of employers we surveyed who use multi-measure testing as part of a skills-based hiring strategy reported improved diversity. 

Unfortunately, unconscious biases can profoundly affect hiring decisions – and diversity. Rather than relying on college degrees or other information in resumes that could result in unconscious bias entering the process, skills-based assessments focus on objective criteria like hard and soft skills and a candidate’s ability to enhance a company’s culture. They ensure each candidate has the same opportunity when applying for a role by purely judging their job-relevant abilities. 

In contrast, minimum education requirements can impact access to employment opportunities by excluding otherwise suitable candidates due to their backgrounds and socio-economic statuses. 

A skills-based approach isn’t a silver bullet solution to hiring discrimination, but it’s a crucial step. Coupled with other strategies for improving diversity and inclusion – like blind hiring, pay transparency, inclusive language – and robust internal policies and practices, it demonstrates a genuine commitment to diversity and equal opportunity. 

Younger workers are less likely to hold college degrees

Millennial and Gen Z workers are increasingly moving away from traditional four-year degrees and towards alternative employment pathways. In Deloitte’s 2024 Gen Z and Millennial Report, a third of young workers surveyed had chosen not to pursue higher education. 

The main reason for this shift? Financial constraints play a large role, with 32% of Gen Zs and 40% of millennials citing cost. However, family considerations and a preference for vocational training also play a part. Gen Z in particular values vocational training over a university education, as it lets them qualify and start earning in a much shorter time. 

These sentiments are understandable given that younger workers have come of age during various economic, cost-of-living, and housing crises. It’s only natural that they want to avoid the overwhelming student debt many other workers – especially older millennials – are burdened with. 

This trend also makes sense in a broader context, with general confidence in higher education in decline. A recent Gallup poll of over 1,000 US participants found that only 36% of Americans have “a great deal” or “quite a lot” of confidence in higher education, a sharp decrease from 48% in 2018 and 57% in 2015. 

Why’s this happening? There’s another reason beyond financial factors: College degrees are becoming less relevant to specific industries where new skills emerge rapidly. The tech industry exemplifies this shift. As Jarir Mallah, HR Manager at Ling, explained to us: 

Universities and colleges still hold immense value; however, they are no longer the only route to successful careers, especially in dynamic industries like tech. A shift in such perspective has led younger generations to prefer a skills-driven recruitment process, which aligns with their focus on practicality and future-readiness. 

A college education is still essential for certain professions, but for many others, degrees aren’t the only route to a successful career. This change in perspective has led younger generations to prefer a skills-driven hiring process that aligns with their practical and forward-looking focus. 

…And skills-first hiring helps workers without degrees gain access to meaningful employment

A skills-based approach to hiring resonates with younger candidates who are less likely to hold college degrees. 

Recognizing this, many employers – in the private sector and the government – are removing minimum education requirements from job advertisements. The move has been especially popular in the tech sector, with companies like IBM, Google, and Accenture leading the way. 

These employers prefer using skills-based hiring strategies to reveal candidates' abilities rather than a piece of (expensive) paper.  

With skills-based hiring, millennials and Gen Z are reassured that their skills will be recognized – regardless of how they obtained them. With more workers learning on the job, via volunteering, through short-term freelance work, or with self-teaching, a skills-first approach communicates an openness to alternative educational pathways, welcoming all applicants. 

Continuous learning is a strong driver for younger workers

For many younger workers, professional development and learning opportunities are crucial to job satisfaction. 

Lever’s 2022 Great Resignation report – which surveyed 1,200 full-time US workers – found that 17% of Gen Z workers identified upskilling/reskilling offerings as a motivator for staying with their current employer. This was the highest percentage among generations. 

This also rings true for millennials. In Deloitte’s Gen Z and Millennial Report, a lack of learning/skills development opportunities was among the top reasons millennials left their previous roles. 

What might explain this focus specifically for younger workers? Perhaps it’s because they see that the job market and required skills are constantly evolving and understand the need to develop their skills to future-proof their careers. 

Speaking to Forbes, Scarlett Howery, vice president of Public Workforce Solutions at DeVry University, points out, “Up-skilling is incredibly important now more than ever, especially for vulnerable groups in our workforce like young adults, women, and people of color.”

Many younger workers finished school or university remotely due to the COVID-19 pandemic. Others were already in the workplace and saw first-hand how quickly the nature of work and job markets can change. As a result, younger generations have become more flexible and adaptable. 

Given this context, it makes sense that younger job seekers look for employers who also recognize the importance of continuous learning. 

…And skills-based hiring cultivates a culture of continuous learning

Incorporating skills-based strategies – like talent assessments – into your hiring processes shows potential hires that you’re genuinely interested in their skills and serious about skill development. 

The results of skills-based testing provide a solid basis to develop personalized learning and development plans for successful candidates. They provide insights into individuals’ strengths, potential areas of improvement, and ways the employer can support their professional growth. 

Centering skills in your hiring process helps potential hires see a clear path for advancement. It signals that skill acquisition is a priority in your company culture, reassuring younger applicants that they’ll have ongoing development and growth opportunities.   

Millennials and Gen Z are digital native generations

Younger millennials grew up with the internet and were familiar with using technology from a young age. Gen Z is even more so. As the first generation born after the introduction of the iPhone, this generation’s title is “the first generation of true digital natives.” 

Employers recognize the need to meet the digital expectations of younger workers. According to a survey by Riverbed of 1,800 IT and business decision-makers, 91% believe they’ll need to provide more advanced digital experiences to meet the needs of millennials and Gen Z workers. 

Riverbed’s CEO, Dave Donatelli, highlights the significance of this. “With over two-thirds of leaders believing younger generation employees would consider leaving the Company if their digital needs are not met, the [Chief Information Officer] is essentially becoming a Chief Talent Officer too.”

Using technology in their job-hunting and working lives is second nature to younger workers.  

They use platforms like LinkedIn and Glassdoor to find job opportunities, network, and review employers. They learn new, job-relevant skills via online courses with Coursera, Udemy, and Skillshare. They build personal brands on X and TikTok to showcase their expertise and abilities. They prefer communicating via email and instant messaging rather than over the phone.

…And skills-based hiring naturally aligns with a tech-forward approach 

With these digital tools at their fingertips, younger candidates seek innovative, efficient, and tech-driven recruitment strategies. These include online job postings and remote interviews that focus on their skills. 

Plus, online skill assessments offer an interactive and engaging experience in a familiar format to younger candidates. They align with the expectations of these digital natives who value a hiring process that prioritizes abilities over qualifications. 

And adopting a skills-based approach by using online talent discovery platforms like TestGorilla also reduces time to hire – aligning with the efficiency digital native candidates value. 

Attract young workers and future-proof your business with skills-based hiring

As technology and industry demands continue to evolve, the future of work will increasingly prioritize skills and adaptability. Younger workers already know this, and employers must understand how to use skills-based hiring to attract and retain these candidates. 

Companies that embrace skills-based hiring today aren’t just appealing to younger generations. They’re future-proofing their businesses for a world where skills are crucial.