The Pitfalls of Overreliance on Credentialism in an Evolving Hiring Landscape

Introduction

In today's rapidly evolving job market, the hiring landscape is witnessing significant shifts. One enduring practice, however, remains the reliance on credentials as a primary measure of a candidate's suitability for a role. Credentialism—the overemphasis on formal qualifications and degrees—has long been a cornerstone of hiring processes. While credentials can indicate a certain level of knowledge or skill, an overreliance on them can be detrimental. As industries transform and the nature of work changes, it is crucial to reassess the weight we place on formal qualifications and consider a more holistic approach to evaluating talent.

Accounting and Finance has always been a natural breeding ground for credentialism. That is not a bad thing. It is important to have a CPA review your books or sign off before one makes an investment. The CFA is a critical certification for investment management and analysis. Other important certifications in the Accounting and Finance space are the CMA, CIA, and FRM.

However, in an evolving hiring landscape we need to adjust our sights. We can no longer rely on the pool of talent with the appropriate credentials.

The Evolution of the Job Market

The job market today is vastly different from what it was even a decade ago. Technological advancements, the rise of the gig economy, and an increasing focus on soft skills and adaptability have redefined what employers seek in candidates. Traditional roles are being reimagined, and new positions are emerging that did not exist before. In such a dynamic environment, the rigid reliance on credentials can be limiting and counterproductive.

Accounting and Finance have been drastically impacted. This is partially due to the fact that 300,000 Accountants exited the market during Covid (and they are not coming back as far as we can see). Accounting classes at the University level are seeing a vast decline. Accounting is polling at a historical low. These factors have led to an unprecedented shortage of talent.

The Limitations of Credentialism

1. Exclusion of Diverse Talent Pools: Overreliance on formal qualifications can inadvertently exclude talented individuals who may not have had the opportunity to pursue higher education. Many capable candidates acquire skills through non-traditional routes such as self-study, vocational training, or on-the-job experience. By focusing too narrowly on credentials, employers risk missing out on diverse perspectives and innovative solutions that these individuals bring.
2. Inflated Value of Degrees: The assumption that a degree automatically equates to competence is flawed. While a degree can indicate a certain level of knowledge, it does not guarantee practical skills, critical thinking, or the ability to adapt to new challenges. The proliferation of degree programs has also led to varying standards of education, further diluting the value of credentials.
3. Neglect of Soft Skills and Adaptability: In an era where change is constant, soft skills such as communication, problem-solving, and adaptability are increasingly important. Credentialism often overlooks these qualities, which are crucial for navigating the complexities of modern workplaces. A candidate with strong soft skills and a willingness to learn may be more valuable in the long run than one with a stellar academic record but limited interpersonal abilities.
4. Stifling Innovation: Overemphasis on formal qualifications can create a homogenized workforce, where everyone has similar educational backgrounds and ways of thinking. This lack of diversity can stifle innovation and creativity, as teams with varied experiences and perspectives are more likely to generate novel ideas and solutions.

Towards a More Holistic Approach

To address the pitfalls of credentialism, employers can adopt a more holistic approach to hiring. Here are some strategies to consider:

1. Emphasize Skills and Experience: Shift the focus from formal qualifications to practical skills and relevant experience. Implement skills-based assessments, real-world problem-solving tasks, and job simulations to evaluate candidates' abilities.
2. Value Non-Traditional Learning: Recognize and value alternative forms of education and learning. Certifications from reputable online courses, bootcamps, and hands-on project experience can be just as indicative of a candidate's capability as traditional degrees.
3. Assess Soft Skills: Incorporate methods to evaluate soft skills during the hiring process. Behavioral interviews, role-playing scenarios, and team-based activities can provide insights into a candidate's interpersonal abilities and cultural fit.
4. Foster Continuous Learning: Encourage a culture of continuous learning and professional development within the organization. Provide opportunities for employees to upskill and reskill, ensuring they remain adaptable in a rapidly changing job market.
5. Diversify Hiring Criteria: Broaden the criteria for evaluating candidates to include diverse experiences and backgrounds. This approach not only enhances innovation but also promotes inclusivity and equity within the workplace.

Solutions for managing the demands of Credentialism in the world of Accounting and Finance

Certainly, Artificial Intelligence (AI) will provide some value to organizations needing to balance the need for credentials with the dearth of talent in the Accounting and Finance talent market. However, there are three other areas that we are seeing our clients rely on in this evolving market.

1.????? Training: EY has created a program called the Career Path Accelerator. This is a program designed to provide accredited business and elective courses toward the required 150 hours of education.? This is not a master’s program, but an alternative option to help students obtain the 150 hours of education required for CPA licensure.

EY is leading the way with programs of this type – allowing new professionals to explore Public Accounting without the initial credentials necessary in the past.

2.????? Remote Work: Covid forced our hands in remote work technology and also proved that business could be done effectively from a remote location. We are seeing companies utilize talent from around the country, and even around the world more effectively than ever before.

?3.????? Fractional Work: Our data shows that the average salary of an Accounting or Financial Professional is up 35% over the past five years. This is almost entirely due to the need for talent versus the availability of talent (supply and demand). If things keep moving this way, then the average small business may not be able to afford the traditional 40 hour per week Accounting / Finance Leader.

?We are already seeing many companies augment their teams with a Fractional Controller – this is a person to come in two or three days per week to ensure that the company’s financial processes and reporting is being managed effectively.

?If the past few years is any indication of the future, then we are going to see a lot of companies with fractional teams. After all, having a credentialed Accounting / Finance Professional only two days a week is a way to ensure that accounting standards are being achieved in a talented depleted market.

Conclusion

While credentials have their place in the hiring process, an overreliance on them can hinder an organization's ability to adapt and thrive in an evolving job market. By recognizing the limitations of credentialism and embracing a more comprehensive approach to evaluating talent, employers can build a more dynamic, innovative, and resilient workforce. As the nature of work continues to change, so too must our methods for identifying and nurturing the best talent.