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Skills-based hiring focuses on skills, not degrees. To succeed at a job, an employee needs the skills to perform their role and duties; this is the foundation of skills-based hiring. The increasing focus on skills is a driving force in the learn-and-work ecosystem.
The prevailing hiring model is for companies to prioritize degrees and academic achievements over practical skills in looking at job applicants’ qualifications. The recent global pandemic has forced companies to re-evaluate their hiring methods and shift to skills-based hiring. Skills-based hiring emphasizes practical, working knowledge; it prioritizes what an applicant can do, rather than the education they have.
Two major factors are contributing to the increased emphasis on capabilities rather than academic credentials:
In 2020, LinkedIn reported an increase of 21% in job postings that advertise skills and responsibilities rather than qualifications, and an increase of almost 40% in the number of postings for jobs requiring no degree.
While technical or “hard,” skills can be confirmed through pre-employment testing, certification, and employment history, social or “soft” skills—the ability to work in groups, to communicate efficiently, or to prioritize tasks—are harder to assess. An analysis of employers in the IT industry strongly suggests that as a result, many employers are using college degrees as a proxy for them. Employers who eliminated degree requirements frequently added more detailed requirements in their postings for soft skills.
This shift to skills-based hiring has the potential to open opportunities to a large population of potential employees—often described as hidden workers—who in recent years have frequently been excluded from consideration because of degree inflation.
Also, after reducing their reliance on degree-based hiring, employers (at least, based on a study of employers in the IT industry) appear to be thinking more carefully about what capabilities they are looking for, and describing them more explicitly. This, in turn, is making job applicants more aware that they need to develop soft skills and is encouraging providers to consider how they can update their programs to include those skills.
A 2018 survey of 750 human resources leaders at U.S. employers, spanning all industry sectors and organizational sizes found that skills-based (or competency-based) hiring appears to be gaining momentum. A majority of HR leaders reported either making a formal effort to de-emphasize degrees and prioritize skills (23%) or actively exploring and considering this direction (39%). The research concludes that, in coming years, pre-hire assessment, talent analytics, microcredentialing, and other innovations will challenge the historical emphasis on college degrees in hiring. Key takeaways from the research:
In 2020, the U.S. Office of Personnel Management issued an Executive Order promoting skills-based hiring for federal jobs. This included increased use of valid, competency-based assessments as an alternative to academic credentials in determining qualifications for federal jobs.
Five key benefits for skills-based hiring include:
Competency-based hiring
Skillful, an initiative originally of the Markle Foundation, developed skills-based training and employment practices in collaboration with state governments, local employers, educators, and workforce development organizations to help Americans get good jobs based on the skills they have or the skills they can learn.
The U.S. Chamber of Commerce Foundation’s Job Data Exchange (JDX) is designed to help employers move toward competency-based hiring in a scalable and sustainable way. JDX is modernizing how the internet reads job data by updating the standards employers use in job descriptions. Since real-time labor market information (LMI) data relies on job descriptions, improving those descriptions will yield significant insights about in-demand skills in real time.
The T3 Innovation Network's Skills-Based Hiring and Advancement Use Case includes the T3 Network Skills-Based Hiring and Advancement Overview Video (August 2022). Other links: (1) Use Case Report: https://www.uschamberfoundation.org/workforce-development ; (2) Use Case Brief: https://www.t3networkhub.org/resources/skills-based-hiring-and-advancement-brief; (3) Use Case Data Standards: https://www.t3networkhub.org/resources/skills-based-hiring-and-advancement-lers-resumes-and-related-data-standards
Fuller, J.; Langer, C; and Sigelman, M. (2022, February 11). Skills-Based Hiring Is on the Rise. Harvard Business Review.
Gallagher, S. (2018, December). Educational Credentials Come of Age, A Survey on the Use and Value of Educational Credentials in Hiring.
OPM guidance on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates. (2022)
SSA Academy. (2022, October 26). Skills-Based Hiring: Focusing on Abilities not Degrees.
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