The pandemic has accelerated a trend that’s been in the making since 2009: the end of hiring based on college degrees.
Desperate to ease the pressure brought on by the pandemic and find skilled workers to fill roles, employers in the healthcare industry have, at least temporarily, moved away from hiring based on college degrees, according to the Harvard Business Review.
While it’s too soon to say if this shift is permanent, all signs indicate that it is. Google, Apple, and IBM are just a few top companies that no longer require applicants to have college degrees. Instead, companies are turning to skill based hiring to help evaluate potential new hires.
The skills-based hiring statistics we’ll share in this article show their potential to change the job market is huge. There are millions of unemployed and underemployed people looking for work. Many of those people are from diverse communities, workers who have traditionally lacked access to four-year degrees.
Expanding the talent pool helps everyone. Research conducted by Accenture shows that taking a skills based hiring approach creates positive growth with companies experiencing a 1-2% increase in revenue for every 10% increase in intersectional gender equity.
There’s both a business case and an ethical case to be made for implementing skills based hiring. Tackling degree inflation enables more American workers to find good jobs. Companies too, benefit from diverse candidates joining their team and transferring life experience and self-taught skills to new jobs.
[Read more: The Economic Benefits Of Diversity In The Workplace]
The difference between hiring based on degrees and skills-based hiring
Companies started adding degree requirements to job descriptions in the early 2000s. The trend became known as degree inflation, as many of the jobs hadn’t changed; rather, employers were seeking a proxy for skills and capabilities. A bachelor’s degree became a requirement for many well-paying jobs that didn’t necessarily require higher-level education.
Education remained an important marker of success through the Great Recession when many leaders realized degree-based hiring was excluding qualified candidates from finding work. An analysis of more than 51 million jobs posted between 2017 – 2020 shows that employers are “resetting” degree requirements in a range of middle-skill positions, according to Harvard Business Review.
So, what’s the replacement for hiring based on college degrees? Skills-based hiring is the practice of screening and hiring new employees based on the skills, capabilities, and talent they bring to the table — rather than their educational backgrounds or degrees. Skills based hiring practices have only accelerated in the wake of the pandemic, as companies are desperate to find skilled workers and often drop four-year degree requirements for jobs that really don’t need them.
The weaknesses of using degrees to hire
The intention behind using a college degree to make hiring decisions is to find candidates who have the hard and soft skills to perform well on the job. However, degrees are not a good heuristic for finding candidates with critical thinking, interpersonal skills — or even relevant skills for the open position.
At LinkedIn, recruiters shared the hard skills and soft skills they typically seek in potential candidates. These skills include:
- Cloud computing
- Artificial intelligence
- Analytical reasoning
- People management
- UX design
- Time management
Schools don’t offer a bachelor’s degree in persuasion, unfortunately. There’s a fundamental mismatch between what skills recruiters say they want, and what they actually look for on a CV.
Likewise, using degrees to hire often prevents diverse candidates from consideration. Companies that are seeking to increase diversity eliminate a huge segment of the population by requiring a college degree. 60% of American workers over the age of 25 do not hold a four-year degree, according to Opportunity@Work. Rural communities, Latinx workers, and African American employees are among the groups that do not have four-year degrees.
Put simply, requiring degrees screens potential employees out of open positions at many organizations. The result: employers miss out on top talent, fail to reach performance benchmarks, and continue to widen the opportunity gap for those in underserved communities.
The benefits of using skills-based hiring
Skills based hiring practices can have the opposite effect: rather than screening out job seekers, skills based hiring begins with the premise of screening people in.
[Read more: Pros And Cons Of Screening In Vs Screening Out]
Skill-based hiring allows companies to consider less “traditional” candidates. The hiring process considers how some skills may transfer over.
A former bartender, for instance, certainly has the customer service skills to work in a call center. A stay-at-home parent has developed a range of skills, albeit in a less formal setting: project management, logistics, communication, and critical thinking all play a role in childcare.
Skills based hiring can help hiring managers find candidates with a rare combination of skills that simply can’t be taught.
Research also shows that skill based hiring can help improve employee retention. LinkedIn data shows that employees without traditional four-year degrees stay 34% longer than employees who do have those degrees. Increased retention lowers hiring costs, improves productivity, and impacts a company’s profitability.
Beyond retention, skill based hiring enables HR managers to access a wider pool of talent. Dropping the degree requirement from job descriptions encourages diverse talent to apply. A bigger talent pool can increase a recruiter’s chances of finding the right fit and closing skill gaps.
More than 40% of HR managers say entry-level positions are among the most difficult to fill when four-year college degrees are required. Dropping the bachelor’s degree requirement empowers hiring teams to source, screen, and hire new employees who can grow and develop with the business.
The high retention rate means an investment in these new hires is an investment in the future of the business, making skills based hiring a win-win for everyone.
How to implement skills-based hiring at your organization
There are a few ways to implement skills based hiring.
First and foremost is to learn what skills are needed to be successful at your company. Conducting a skill gap analysis is one way to do this. A skills gap analysis helps you identify what skills your workforce needs, but doesn’t necessarily have yet.
Once you know what capabilities and expertise you’re seeking, you can move on to the skills matching phase. There are a number of ways to assess candidates, but the easiest and most common technique is to use a skill test.
Skill tests use a series of questions in different formats to give candidates the opportunity to show how they would approach the role. Questions can be immersive, such as a coding challenge or job simulation, or target soft skills: things like motivation, communication, and emotional intelligence. Coding challenges, mock sales calls submitted via one-way video interviews, and immersive task-related scenarios all provide accurate assessments of how well candidates can perform the requirements of the job.
Skill assessments like Vervoe can be tailored for each job posting. Our library of assessments includes templates for specific roles, or ones for specific skills, such as English competency or Microsoft Excel. We use AI to empower HR professionals to hire at scale, quickly ranking candidates based on their performance — not their degree.
There are other tools you can use to implement skills based hiring. Some companies use job auditions — a trial of the role for which a candidate has applied. Others use peer interviewing, job simulations, or realistic job previews (or some combination of all of these steps) to take a skills based approach to hiring.
Skill based hiring can change depending on the type of job. Of course, there will be some jobs for which a degree is absolutely necessary. Teaching jobs, or highly technical engineering jobs, may benefit from candidates who have advanced degrees. But, for other desk jobs, it’s most important to find someone with the capabilities to perform the tasks at hand.
Skill assessments won’t screen out those who have college degrees, nor should they. Instead, these tools help you close a skills gap with the person who is the best fit for the job — not who went to the best school. And, as part of a well-rounded recruitment process, these hiring practices can help you improve diversity, lower employee turnover, and improve the overall candidate experience.
Education degrees have long served as a proxy for hard skills — leading to degree inflation. As organizations seek to find talent, fill jobs, and support diversity hiring, they are beginning to realize that formal certifications aren’t the only way to develop skills. Furthermore, the college degree requirement limits the diversity of thought, skills, and attitudes that make a company and brand strong.
Many jobs can be sourced more easily by expanding the talent pool and implementing skills based hiring techniques. These techniques help close the opportunity gap for underserved members of the workforce and improve hiring outcomes for many employers. Check out Vervoe’s library of assessments to get started with skill hiring at your business.