Research nationally and internationally found that technical graduates are lacking in employability skills. As employability skills are crucial in outcome-based education, the main goal of this research is to develop an Employability Skill Assessment Tool to help students and lecturers produce competent graduates in employability skills needed by the industry. The employability skill Assessment Tool was developed using the Kepner-Tregoe (K-T) method. Samples were 107 employers from five types of Malaysian manufacturing industries. The findings showed that employers agreed on the importance for all seven of the employability skills: interpersonal skills, thinking skills, personal qualities/values, resource skills, system and technology skills, basic skills and informational skills. These skills were ranked and chosen as items for the Employability skills assessment tool. The tool developed was tested and validated by manufacturing employers and lecturers in institutions. The agreement coefficient was found to be between substantial agreement and almost perfect agreement.