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Skills-based hiring has so far been all talk and little action. A study conducted by Burning Glass Institute and Joe Fuller of Harvard Business School revealed that "for all its fanfare, the increased opportunity promised by Skills Based Hiring was borne out in not even one in 700 hires last year."
This is problematic — not only for skilled job seekers without degrees, but also for the companies that don't employ them.
By focusing on skills, employers can hire the individual who can do the job versus someone who has a college degree and the potential to do the job. Moreover, by not making the degree a “must have” requirement, skills-based hiring employers gain access to a larger pool of qualified candidates, which could in turn lead to a more diverse and inclusive workplace that brings a greater variety of perspectives and experiences to the table.
And there’s proof that skills-based, non-bachelor degreed hires tend to hold on to their jobs longer, and are more engaged and excited to come to work than their matriculated colleagues. Those qualities result in a decrease in spend associated with recruiting and onboarding, according to Sorby Grant, president and CEO of Climb Hire.
To employers that don’t have or aren’t acting on skills-based hiring, Grant has this to say: “You are missing out on talent that you may not even be thinking about."
"Employers complain that they can’t find the talent they need (while at the same time) there are a large number of workers who have skills and want jobs that will pay a living wage and they don’t have them,” Fuller told Reworked.
So what is standing in the way of today’s employers from moving to skills-based hiring?
Get Over the Fear Factor
First, consider that many managers lack confidence in assessing and validating skills especially in comparison to educational credentials. They have also expressed doubts about the reliability and consistency of skills-based hiring assessments, especially when comparing candidates. There are also doubts about the subjectivity involved in skills-based assessments and a lack of standardized evaluation methods. Ditto for concerns about the transparency of these assessment processes, making it difficult to justify hiring decisions.
And mis-hires are expensive. Dr. Bradford Smart of Topgrading estimated the cost of a bad hire ranges from five to 27 times the amount of the person's actual salary.
Related Article: Why Companies Are Turning to Skills-Based Hiring
Minimize the Risks of Skills-Based Hiring
Start by defining what skills-based hiring means and why it’s important to your organization. While in most cases it involves assessing skills during interviews, the danger is that such interviews may not be “materially different from pedigree and degree-based days of yore,” wrote Ryan Craig, author of "Apprentice Nation: How the 'Earn and Learn' Alternative to Higher Education Will Create a Stronger and Fairer America." He cautioned that some managers may well intend to probe for skills but soon default to something superficial and more familiar. “’Hail and well met, and how is dear old professor Snodgrass?’” even the most clubby and noxious interviewers would probe for some skills,” wrote Craig.
And while unstructured interviews where managers hire from the gut or go for something familiar is problematic, it dwarfs that fact that only a small fraction of those who apply for jobs are interviewed let alone considered.
One solution is to ask everyone who applies for a job to take a skills-based assessment. Conduct such assessments before a resume or job application is reviewed (sans the contact information). Employers who choose this type of skills-based hiring approach might test those who, for example, apply for accounting and finance jobs on their knowledge of tax laws, retirement planning options, Excel skills, while they'd test sales applicants on prospecting, CRM skills, negotiating, closing and so on. Customer service reps might be tested on record keeping, communications, reading, writing and so on.
The idea is that everyone applicant begins at the top of the funnel and then those who score the highest are the first ones considered for the role. The downside of this approach is that it might miss essential soft skills or unfairly disadvantage experienced workers unfamiliar with the latest tools. Test anxiety might also hinder strong candidates.
Related Article: Microsoft Patents AI-Generated Talent Screening for Hiring
A 'Supply Chain Model' Approach to Skills-Based Hiring
Professor Fuller, who co-leads Harvard Business School’s Managing the Future of Work initiative, takes an altogether different approach. In this case, it centers on training workers specifically to meet employer needs. “It’s a supply chain model,” he said, in which employers partner with community colleges, learning institutions and others to supply job-ready workers.
Programs like these are enacted at Climb Hire (primes and trains working adults for jobs in tech free of charge and then readies them for interviewing and employment), Coop Careers (trains underpaid, underemployed college graduates in data analytics, digital marketing, financial services and then connects them with alumni and employers), First Course NYC (no-cost training programs for jobs in the food services and hospitality field), NYC Cool Roofs (paid work experience and credentials in the construction sector) are all good examples.
In each case, the skills providers worked with employers to learn what kind of skill sets are or will be needed and then created learning and training programs to ready participants to meet their needed. They then paired their graduates with employers. We already know that this approach works. Coop Careers, for example, has successfully trained workers for employers like Horizon, Disney, Google, Havas, Publicis Media and many more.
While these programs may be successful, they’re just a drop in the bucket. Fuller advocates for a supply chain approach which expands beyond individual programs and into schools and institutions, which provide specific training and then feed graduates into the workplace.
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At the end of the day we know that there’s a labor shortage in the United States and that 25% of U.S. workers earn hourly wages below the federal poverty line for a family of four. Providing in-demand skills training can tackle both of these issues to create a more robust economy and a healthier society.
