Is skill-based hiring just a marketing ploy?

Skill-based hiring has been a major trend for the last number of years across numerous workplaces as a way to battle the notion of higher education predicting your career performance.

We constantly hear this story growing up, especially from our parents:

“If you go to university you can get a better job and get paid a lot more than you would if you just started working now!”

But when it comes to skill-based hiring the question remains very prevalent, is it working? Are hiring managers using this strategy or is it just a major marketing ploy? Is it a valid method for hiring and can you really have the same access to job opportunities without a degree?

It also begs the consideration of whether this is an inclusive hiring method or does it favor certain candidates over others.

In the ideal world, skill-based hiring would provide more opportunities for hiring equity and a decrease of issues that arise from unconscious bias during the interview process.

So let’s explore further and discuss what skill-based hiring is and what are some of the challenges it could face.

First, we must consider the more traditional type of hiring and what it focuses on. If you were to follow this type of methodology you would probably first look at an applicants education after which you would dive into any credentials and their overall experience.

On the other hand, skill-based hiring focuses on specific competencies required by the role for which the candidate is interviewing. For example you may be hiring a data analyst who is self-taught and has the necessary skills for the role but does not have a university degree.

Skill-based hiring could be a great tool and has a vast amount of potential for a new way of hiring in which diversity and equity have more of an opportunity to be showcased. It uses a lot of objective data and overall it has been shown to significantly reduce bias.

This also could be a huge game changer for younger talent looking to pursue their passions sooner. If I look back on my degree in psychology I can be completely honest that my specialism would be completely different if I were to go back now and choose what to study again. I got the chance to work in the recruitment industry and try a range of responsibilities. I figured out more of what I like and what I am passionate about. Studying now would just enhance my focus and sharpen my skills for my line of passion.

Many of my friends also share this story as we are thrown into the education blender with one goal to “achieve”. But what are we achieving and do we really know what we are spending thousands on?

For some, their true passion in what they want to work on comes early in life but often that little spark is extinguished purely by job requirements. Skill-based hiring would open the doors to experimentation and it may help companies who have the right training tools to develop extremely specialised and more importantly passionate talent!

So what about the potential limitations of this type of method?

Too many entry-level positions require college and degree qualifications.

You have to have some work experience to build your skill set? Right?

Consider one of the most common requirements for majority of entry roles (a place where you can begin developing skills) across any industry - a university degree.

Many business leaders tend to focus on hiring graduates - this becomes an immediate barrier for those not able to access higher education.

There is an unwillingness to shift away from this traditional graduate hiring mindset so when paired with the incompetency of hiring managers to spot “rising” or “promising” talent it becomes a serious problem.

We are creating an access barrier as only those with the right financial standing can achieve the opportunity of an entry-level position but then on top of that let’s not forget that your success in your degree will also be judged. For those who cannot commit 100% of their time to studying due to topics such as caring responsibilities, financial standing or mental health related problems they would already be at a disadvantage due to potentially having a lower overall performance in their studies.

There is also a lack of internships - again, a potential opportunity for anyone without a degree to develop their knowledge and skill set.

So if hiring managers truly believed in skill-based surely their entry-level roles would have minimal requirements - if any.

This brings us to the second problem.

A lot of false promises.

Whilst there is a handful of companies taking the initiative to introduce skill-based hiring programs the vast majority of the world is yet to make any shift.

As someone working in talent acquisition, many of our clients’ first question is what and where did the candidate study? Do they have further education or a master’s degree? Do they have any extra courses or achievements they completed?

Speaking to other recruiters and talent specialists in the field I struggle to find examples of hiring managers who actually use or enforce skill-based hiring.

Major corporations are using simple and underdeveloped ATS systems which screen candidates on their resume info and particularly education & company info before even presenting it to the relevant hiring manager. Whilst there is serious issues with this process itself it also drastically reduces the number of people who could be considered as potential applicants purely down to their background.

So whilst a lot of people are talking about how they hire for the skills we are yet to see this put into action - more on this further in the article.

Having the skills does not guarantee good performance.

I really wanted to include this problem as a potential reason for why fewer hiring managers are committing to this type of hiring which is potentially down to the fact that having the required skills for a role does not guarantee your success in it. Yes, it increases the chances of you being more likely to perform well and come to grips with the role sooner but having the skill does not mean that you have the knowledge and the ability to execute it well.

This great interview with Ginny Clarke summarises her thoughts well and gives a nice overview:

“I’ve borrowed this definition, namely skills, plus knowledge, plus ability equals competence. I like that a lot as you can have a skill — you know how to organize a spreadsheet or you know build an algorithm —?but do you have sufficient knowledge of the system that it’s part of? And then follows the ability, which has to do with mental, physical, and emotional attributes”

She also goes on to talk about how recruiters are not trained in interviewing and understanding competencies in depth which is a major challenge of moving to a skill-based hiring approach. I also love how she raises the point that all these efforts including hiring diversity officers and creating office initiatives do not solve the bigger problem - a broken system.

The Burning Glass Report

I want to draw attention to the report by The Burning Glass Institute and 美国哈佛商学院 on skill-based hiring and the current status of this methodology in the market. Whilst the main research focuses on the US it largely reflects the wider economy.

Post Covid the world experienced significant hiring changes and it has becomes much harder to use the education filter on candidates which in the US alone disqualifies 62% of potential workers who do not have a degree.

"Employers began demanding degree holders simply because they could. Just as many non-degreed workers now find themselves shut out of the kinds of jobs that were long the steppingstones to upward mobility, many graduates now wind up in jobs their parents could have gotten without incurring the cost in time and treasure of completing a college education."

The sad reality is that one of the findings of this report is that "even when a degree is no longer required, it is still a heuristic many hiring managers are likely to use to weigh a candidate’s strengths"

Another disappointing finding was that the majority of the companies in their research (or 45% of the sample) implemented skills-based hiring in name only. Although these companies stopped requiring a degree in their job postings, there was little evidence of an actual shift in hiring practices. They kept filling posts with no prerequisites by hiring the same percentage of individuals with degrees...

Who were some of these companies? Bank of America, Amazon, Oracle, Lockheed Martin, Kroger...

I hope this article showcases what I believe is the current status of skill-based hiring methodology. An underdeveloped and underutilised concept. So why miss out on benefits of improved retention which has already been shown by the The Burning Glass Report? Imagine the costs saved by lower rates of attrition!

We have to look at how to improve this method itself and how to improve the number of hiring managers who are using skill-based hiring over traditional methods but this will take a lot of research and effort from employers and educators.

Thank you for reading! As always, Equity Echoes!