Jane Firth, Principal within the People & Culture Practice at Odgers Berndtson, explains why financial services firms are increasingly adopting skills-based hiring to secure top leadership talent
The financial services sector faces a wave of retiring leaders, an accelerating need for digital transformation, and increasing competition for top talent.
Traditional hiring methods have long emphasised qualifications and tenure. However, in today’s evolving sector, this approach is becoming obsolete, as adaptability, strategic thinking, and technological fluency now take precedence.
To stay competitive, financial services firms are rapidly embracing skills-based hiring – so much so that 87% of finance employers have already adopted this approach.
But why has it become essential? How can employers effectively implement skills-based hiring? And what challenges must they overcome?
The Imperative for Skills-Based Hiring
Relying solely on academic degrees and past roles can inadvertently exclude potential leaders who have developed relevant skills through non-traditional pathways.

We work with many leadership professionals who have honed their expertise via hands-on experience, cross-industry transitions, or self-directed learning. By limiting the talent pool to those with conventional backgrounds, financial services firms risk overlooking these high-potential candidates, especially as competition for leadership talent intensifies.
Adjacent sectors, such as technology, are increasingly attracting executives who possess the strategic and digital acumen necessary to navigate today’s complex financial services environment. Overlooking this pool of candidates is no longer an option for a sector with leadership skills gaps.
Implementing Skills-Based Leadership Hiring
To transition to skills-based hiring, financial services firms often begin by delineating the specific skills and behaviours essential for leadership roles. For example, these might include but are not limited to, strategic thinking, technological proficiency, intellectual agility, and visionary leadership.
From there, firms can develop comprehensive assessment tools and interview frameworks which are crucial for evaluating candidates based on competencies rather than tenure.
Likewise, incorporating scenario-based assessments, problem-solving exercises, and structured competency interviews ensures that hiring decisions are grounded in demonstrable abilities, not just qualifications.
The Benefits of Skills-Based Hiring
Adopting a skills-based hiring approach significantly expands the talent pool, enabling firms to identify candidates with proven abilities regardless of their academic background or previous job titles. This enhances workforce diversity, fostering innovative thinking and improving decision-making at leadership levels.
94% of finance employers who have adopted skills-based hiring also note it leads to improved retention rates. Employees who are hired based on their competencies are more likely to succeed in their roles, reducing turnover and the associated costs of repeated hiring cycles.
Additionally, this approach streamlines recruitment processes, enabling organisations to fill critical roles faster and with greater accuracy. Financial services firms that prioritise skills over credentials also position themselves as more agile, capable of adapting to technological shifts and regulatory changes more effectively.
Challenges in Adopting Skills-Based Hiring
Transitioning to a skills-based approach presents several challenges. Financial services firms still default to hiring individuals from familiar networks or similar backgrounds, perceiving this as a lower-risk strategy. There remains a strong preference for candidates with traditional qualifications due to their perceived predictability, which can inadvertently stifle innovation.
Moreover, shifting to a skills-based hiring model requires a significant upfront investment in designing new frameworks and integrating modern assessment tools. Establishing a culture that prioritises the continuous learning and development necessary in skill-based hiring, also demands sustained effort. For senior leadership and people and culture teams already under pressure, this can be a significant challenge.
Overcoming These Challenges
Addressing these obstacles necessitates commitment from senior leadership. Executives must actively champion the shift toward skills-based hiring, positioning it as a strategic imperative rather than a mere HR or people initiative.
Initiating small-scale implementations can help refine the approach, demonstrating its effectiveness and facilitating broader adoption. Part of this includes training hiring managers in competency-based assessment techniques – essential to ensure consistency and reliability in candidate evaluations.
Additionally, firms that succeed in implementing skills-based hiring focus on fostering an organisational culture that values diverse learning experiences and encourages continuous professional development. This further cements the benefits of skills-based hiring.
Creating a future-focused financial services sector
As the financial services industry evolves, so too must the strategies for identifying and appointing executive talent. By embracing skills-based hiring, organisations can expand their leadership talent pools, drive innovation, and secure leaders equipped to navigate the complexities of a rapidly changing industry.
This approach not only enhances organisational agility but also aligns with the broader goal of fostering a diverse and inclusive workforce. By making these changes, organisations are future-proofing their leadership pipeline and staying ahead in an increasingly competitive landscape.