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Skills-based hiring has been in the news lately — and not in a good way.
A recent study from Harvard Business School and the Burning Glass Institute examined hiring data from 2014 to 2023 for companies like Amazon, Bank of America and Lockheed Martin. All three, like many other companies, have pledged to drop degree requirements for jobs. The promise was supposed to be a win-win: Companies can meet key talent gaps while people without degrees can get jobs.
How has it gone? Not so well.
The study found that only 20% of the employers in the study significantly changed their hiring practices, with 45% making the change in name only. Despite pledges, companies have not substantially decreased their percentage of hires with degrees, highlighting a gap between corporate promises and actions in promoting skills-based hiring.
What Is Skills-Based Hiring and Why Should We Care?
Skills-based hiring focuses on what candidates can actually do, not just the degrees they've collected. It's supposed to be a smarter, more modern approach that values real-world skills and practical experience over formal education.
By focusing on the specific abilities needed for the job, companies can tap into a wider, more diverse talent pool and find folks who are truly equipped to hit the ground running. Skills-based hiring just seems like common sense.
Maybe that’s why it’s unsurprising that the study found that non-degree holders in roles traditionally requiring degrees tended to stick around roughly 10% longer past the two year mark compared to their peers with degrees. It's a nod to the real-world value of skills-based hiring, not just in broadening the talent search but in boosting retention too.
The report also points out specific job categories, like construction management and IT support, as prime opportunities to open up around 250,000 positions to skilled non-degree candidates. In short, organizations that ignore skills-based hiring are missing a big piece of the talent puzzle.
While it’s easy to acknowledge the issue, it’s harder to do something about it.
What's Keeping Skills-Based Hiring From Catching On?
Unfortunately, skills-based hiring hasn't gained as much traction as one might expect, for a few intertwined reasons.
First, there's a significant legacy mindset and a number of hard to shake practices within organizations. Many employers, despite recognizing the value of skills over degrees, continue to lean on educational credentials as a less risky indicator of candidate potential. The practice is deeply rooted in a historical perspective where degrees were seen as the primary proof of commitment and capability.
Moreover, employers have a genuine fear about making the leap to a skills-based approach. Concerns about hiring the wrong candidate without the safety net of a degree qualification play a significant role here.
The reality is that degrees may not always equate to the specific skills needed for a job. The mismatch between degree-based hiring and the actual requirements of roles has been acknowledged, but changing entrenched hiring practices is a complex process that requires a shift in process and mindset at all levels of an organization.
Implementing skills-based hiring also requires a change management strategy internally, which involves redefining job descriptions, adjusting recruitment processes, and potentially investing in new assessment tools to evaluate candidates' skills effectively. The transition demands resources, time and a commitment to rethinking traditional pathways to employment to create more inclusive and equitable hiring practices.
Related Article: The Talent Marketplace: A Skills-Based Revolution in HR
Progress Is Still Possible
What can organizations do besides making empty promises about skills-based hiring?
The easiest step is rethinking their processes, including emphasizing the skills required for the role (rather than degrees), conducting skills assessments using objective data points such as challenges and gamification, and developing a talent marketplace that focuses on project needs rather than individual positions. Additionally, creating a skills-based inventory can help organizations identify employees with hidden potential to encourage internal mobility.
Technology also plays a role. Two possible tools include digital credentialing and employment assessments, which have gained popularity in recent years. Over 75% of organizations use these tools for evaluating applicants, creating job descriptions and assessing training needs. Digital credentialing became more prevalent due to the pandemic, prompting some educational institutions to develop these less-formal programs.
Other ways to encourage skills-based hiring with technology include leveraging AI and machine learning to analyze job descriptions and resumes for skills matches. While you still have to use caution when introducing AI to the hiring process due to evolving regulation, a hiring leader exploring skills-based matching is a starting point.
Gamified assessments can offer a potentially more engaging way to evaluate candidates' abilities in real-world scenarios. Additionally, using online platforms for micro-credentials or badges allows candidates to demonstrate their competencies in specific skill areas, making it easier for employers to find and hire those individuals.
Related Article: Internal Mobility Can Relieve Today's Tech Recruitment Pressures
Ultimately the Switch to Skills-Based Hiring Comes Down to People
At its core, skills-based hiring hinges on the people within an organization. It's ultimately the human element that interprets, values and acts upon the skills presented. People have to choose to reject the tradition of degree-based hiring.
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Technology can identify, match and suggest candidates based on skills, but it's the hiring managers and teams who understand the nuanced needs of their projects and can recognize the potential for innovation and growth that specific skills bring.
And while technology can facilitate the discovery and initial matching of skills, the successful implementation of skills-based hiring depends on people's judgment, interaction and decision-making.
We are capable of making the skills-based hiring dream a reality. It won’t be easy — but it's still worth it.
