Competency-based hiring could reduce ‘paper ceiling’ for leadership roles

Professional pedigree, academic credentials, references and experience are among the factors that play a role when it comes to hiring. But in leadership roles, hiring based on skills is becoming an important factor.

A Boston Consulting Group report — Competence over Credentials: The Rise of Skills-Based Hiring — says that focus on traditional hiring parameters create a “paper ceiling” (professional barriers for those without a formal degree) and does not give much value to skills. With the advent of more fast-paced technology, the report argues, skills trumps degrees in many cases; it also has additional benefits such as creating a more diverse workforce and ensuring higher retention rate.

What does this mean for hiring for leadership roles?
Competency mapping is a crucial process for organisations. But it becomes especially important when filling leadership positions, says Radhika Vivek, Senior Partner, TRANSEARCH India. These roles significantly impact a company's success, and a poor hire can have detrimental consequences.


“Competency-based hiring is a game changer in today's world,” says Nishant Chandra, Co-founder, Newton School. “A LinkedIn study shows that companies could increase and even diversify their candidate pool by an impressive 11 times by implementing competency-based hiring practices.”

Competency-based hiring can help ensure that selected candidates possess leadership attributes like high emotional intelligence, strategic thinking and long-term orientation, decision-making ability and adaptability. This approach can lead to a better hiring fit, reduction in time to full performance and reduced turnover, says Sonal Arora, Country Manager, GI Group Holding.

The areas of impact
Vivek says identifying the key competencies required for a leadership role is essential. These competencies are not only role-specific but also depend on the organisation's unique characteristics and stage of growth. For example, a CFO in a startup will require a different skill set compared with a CFO in an established corporation. A CFO in a startup has to take on a hands-on approach, combining financial expertise with strategic thinking and a trusted advisor mentality, balancing the role of “enforcer” with being a trusted advisor to the CXO suite. A CFO in an established corporation, on the other hand, typically requires extensive experience in various finance functions, such as controlling, treasury, audit, financial planning and analysis, or business unit finance.

As poor hiring decisions can have significant consequences for an organisation, a competency-based hiring approach can help to align the strengths of the shortlisted candidate with the specific needs of the role and the organisation. “This reduces the risk by targeting key qualities essential for effective leadership leading to more reliable and impactful hiring decisions,” adds Arora

Chandra says: “We've always believed that true leadership isn’t just about titles or the length of your resume — it’s about the real skills and qualities a person brings to the table. We've seen leaders with quick adaptability and impactful decision-making thrive, especially during rapid change.”

This focus has also led to more cohesive teams and improved morale, as leaders selected for their interpersonal skills and problem-solving abilities foster a more collaborative environment. Competency-based hiring doesn’t just fill roles; it creates leaders who embody our values and elevate the entire organisation, according to Chandra.

Organisations can significantly improve their chances of hiring the right individuals by carefully mapping and assessing competencies for leadership roles. Understanding the specific requirements of each role, considering the organisation's stage of growth, and evaluating candidates against these competencies are key factors in making effective hiring decisions, adds Vivek.