The U.S labor market continues to recalibrate in 2022. A survey of more than 2,300 senior managers found that 65% hope to add new permanent positions in the first half of the year. Another 33% are vying to fill vacancies, with over 10.8 million job openings across the U.S. currently. As a consultancy working at the forefront of inclusive employment, one thing is clear to us from our client engagements: Traditional hiring practices are not a viable means of meeting workforce demands. Companies must modernize their approach to stay competitive. That means embracing skills-based hiring.
Skills-based hiring emphasizes candidates’ technical skills and core competencies over degrees or credentials as the most determinant factors of job success. The practice calls on hiring teams to define the required and preferred skills for a role, and to objectively evaluate those skills as a way to minimize bias in the hiring process.
Leading companies are increasingly making the shift to skills-based hiring, including many involved with One Ten, the Business Roundtable’s Multiple Pathways Initiatives, Markle Foundation’s Rework America Alliance and more.
But the movement is not without misinformation. Below we discuss some of the biggest myths around adopting a skills-based approach and how you can address them to drive a culture shift at your company and beyond.
1. Skills-based hiring is unfair to college graduates.
Skills-based hiring is not about eliminating college graduates from consideration or lowering the bar for entry. It’s about articulating the specific skills the degree is intended to serve as a proxy for. In this way, degree-holders and candidates skilled through alternative means can both be considered for the role. This helps democratize economic opportunity for all and expands the talent pool companies can access.
Degree inflation the demand for four-year degrees in positions that previously did not require such credentials – has fueled a prestige economy that is costing employers. Under this paradigm, many jobs that were once upwardly mobile have become inaccessible to all but those who can afford the mounting cost of higher education. This has disproportionately excluded talent from lower-income communities, especially people of color. Skills-based hiring offers a practical means of addressing this inequity and restoring candidacy to the 66% of American who do not have bachelor’s degree, including more than 75% of Black people and more than 80% of Latinos.
2. Skills-based hiring leads to bad hires and hurts business.
Taking a skills-based approach can lead to more effective candidate screening and hiring. Hiring based on skills is five times more predictive of future performance than hiring for education and 2.5 times more predictive than hiring for work experience. Moreover, many employers report that employees without degrees are equally as productive or, in some cases, more productive than college graduates.
Additional advantages of skilled based hiring include decreased time to hire, increased employee engagement, and lower levels of attrition.
3. Skills-based hiring isn’t a realistic talent acquisition strategy for our geography.
Perhaps it wasn’t in the past. Historically, hiring teams have taken a hyper-local lens to recruitment efforts. With the rise of remote work, employers can launch wider candidate searches and find people that match the skills demands of their market.
On a grand scale, this might look like building partnerships with workforce development organizations in under-resourced areas to established pipeline of skilled diverse candidates to fill remote roles. Through these partnerships, companies can simultaneously drive business outcomes and economic equity.
While designing and launching skills-based hiring takes time and requires intentional learning and unlearning, your company, employees and community will ultimately benefit. Investing in skills-based hiring now will prepare businesses for the skills-driven future of work, and create an economy where all Americans can meaningfully participate in that future.