Diversity, equity, and inclusion (DEI) has become a controversial term in the Lone Star State. With DEI initiatives up in the air, merit-based practices have been experiencing a resurgence.
Merit-based hiring and promotion aren’t new concepts, but use of them can be a helpful tool to ensure qualified individuals aren’t being overlooked simply because they don’t have the “pedigree” of other applicants. What is merit-based hiring? Simplilearn defines it as a process of determining which candidates have the abilities, knowledge, and skills considered the most suitable for the job.
“The merit-based system obliges applicants to compete for the position, which generally includes a written application, selection interview, and any associated testing,” Simplilearn explains. “You can make a good argument for skills-based hiring being a subset of merit-based recruitment. The former focuses almost exclusively on the applicant’s skill set, while the latter considers additional factors as well.”
Many employers see merit-based hiring as a useful tool in their hiring practices, especially when strict degree-based hiring has been found to rule out about 70% of American adults who may otherwise be qualified candidates. Harvard Business School, Accenture, and Grads of Life researchers found that three in five HR leaders and senior executives admitted to rejecting qualified talent simply because an applicant lacked a degree.
We compiled some tips and thoughts below as a refresher on merit-based hiring and promotion practices. We don’t necessarily align with each viewpoint; Rather, we found them interesting and helpful ways to understand merit-based practices better.
- Talent assessment platform eSkill offers this article about the benefits of merit-based recruitment and how it “extends beyond hiring because HR teams can use skills assessments to enhance employee development efforts.”
- Since skills assessments are essential to this process, we found this Forbes piece about skills-first hiring helpful. “The real worth of an employee is not what they achieved in the past, but what they are capable of in the future. And this, in essence, is why hiring for skills…is gaining momentum as a powerful way to discover and engage top talent—no matter where that talent comes from,” it reads.
- Sheer Partners principal and former senior advisor at the U.S. Department of Education Michael Brickman shares here how the federal government began moving forward with merit-based hiring in 2020 to focus more on skills and less on degrees when recruiting.
- Morgan HR offers thoughts about the difference between merit increases versus other promotions (and why HR leaders need to know the differences) here. “Knowing the details of both will help you more easily calculate the employee’s new pay level once a merit increase or a promotion is awarded and feel better prepared if you come up against difficult questions from employees,” they state.
- How do other organizations budget for merit-based increases? Mercer offers research that includes this tidbit: Organizations projected a 3.5% budget increase for merit in 2024, with industries including energy and consumer goods exceeding those projections. More details in the article here.
- And how is merit-based pay structured? Built In offers insights here, with ideas on successfully constructing a merit pay system. “The merit pay model gives managers a lot of freedom to decide why and how they reward good performance, as well as what good performance looks like. Promotions, salary bumps and bonuses are all types of merit pay, which employers can offer as a thank you to folks who exceed expectations,” writes Built In’s Sunny Betz.
- Every hiring practice can be viewed as unfair in some way, merit-based is no exception. It’s important to be aware of those viewpoints, including one based on this recent study by the American Psychological Association, which found that knowing about socioeconomic disparities impacts the perception of fairness in merit-based
- Why is this discussion more critical than ever for Texas employers? Read up on DEI’s confusing plot twist in our recent post, Navigating DEI Daze in Texas. “Most HR professionals define DEI to mean what it stands for—diversity, equity, and inclusion efforts to help ensure a discrimination- and harassment-free workplace,” Employment Attorney Amy Beckstead told attendees at our latest HR Employment Law Update in January 2023. “But what’s up is down, and what’s down is up in the Texas legislature.”
Merit-based hiring isn’t new, but it’s giving renewed hope to many employers exasperated by the confusion and controversy over other practices, including degree-based hiring that can then tend to exclude otherwise qualified candidates. Plus, merit-based practices can extend beyond hiring and help nurture retention by focusing on and rewarding actual skills and performance. We can’t tell you if it suits your organization, but it could be worth understanding better and exploring for yourself.
