What Skills-First Hiring Means for Small Businesses Today

For generations, the American workforce was built by people who gained skills on the job through apprenticeships, military services, community college, or hands-on experience in the workplace. These workers powered local economies, kept businesses moving, and created lasting stability for their families and communities.  

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Over time, however, many employers began requiring four-year degrees for jobs that once relied on experience, skill, and potential. This shift has excluded more than 70 million workers in the U.S. who are Skilled Through Alternative Routes (STARs). These individuals bring proven expertise but are often filtered out by degree-based hiring systems.  

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As labor needs shift again – with more roles requiring adaptability, technical skills, and real-world problem solving – small businesses have an opportunity to rethink what qualifies someone for the job. Skills-first hiring offers a practical, data-driven approach to tap into a broader, more capable talent pool.  

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What Is Skills-First Hiring?

Skills-first hiring is the practice of evaluating candidates based on their skills and ability to do the work, rather than relying solely on formal education credentials. It recognizes that people build skills in many ways, and that those skills often translate directly to job performance.

This approach doesn’t lower standards; it refocuses them.

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Why Skills-First Hiring Works for Small Businesses

For small and mid-sized businesses (SMBs), the benefits of a skills-first approach are clear and measurable:  

• Stronger employee retention: Workers without degrees stay in their roles 34% longer than those hired based on degrees.  

• Higher organizational retention: 91% of companies using skills-first hiring report stronger team-wide retention.  

• Faster hiring: 81% of employers  say skills-first hiring shortens and streamlines the hiring process.  

• Improved performance predictions: 94% believe that skills assessments better predict job success than resumes alone.

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Skills-first hiring supports economic growth and expands opportunity by recognizing real-world ability—not just formal credentials—as a valuable qualification in today’s job market.

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By focusing on the capabilities that matter most, employers can fill roles more efficiently, reduce turnover, and build a workforce that reflects the communities they serve.  

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How to Get Started

Adopting a skills-first approach doesn’t require a complete overhaul, just a shift in focus.

1. Revisit Job Requirements: Evaluate whether each role truly needs a degree, or if specific skills and hands-on experience are more relevant.   Use clear, focused language in job descriptions that emphasizes tasks and measurable outcomes.

2. Use Practical Assessments: Incorporate skills tests, work samples, or problem-solving exercises to better understand a candidate’s strengths. Free and affordable tools are available to support this approach.  

3. Train Hiring Teams: Equip managers to recognize skill in all its forms – from previous jobs to freelance work, volunteer roles, or lived experience.

4. Support Long-Term Growth: Pair new hires with mentors, provide regular feedback, and set clear expectations. These practices help strengthen performance and retention.  

5. Invest in Learning: Offering on-the-job learning opportunities, mentorship, or stipends for professional development to increase employee satisfaction and build internal capacity over time.

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A More Resilient Workforce

Skills-first hiring isn’t a passing trend – it's a smart, practical solution for a changing economy. It helps small businesses stay competitive, strengthens teams, and creates new pathways for employment for skilled workers who have been overlooked – not due to lack of ability, but because the system wasn’t built to recognize it.  By focusing on what people can do, employers can meet today’s workforce demands and build a stronger foundation for the future.  

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Want to get involved or share your story?

• Learn to apply this strategy to your work: HERE

• Join Prosperity Now’s Action Network to connect with others advancing quality jobs.

• If you’ve implemented skills-first hiring, share your experience at storiesofprosperity.org and help shape the conversation about the future of work.

• Watch our webinar: Telling the Story of Good Jobs: Conversations That Drive Change.

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