Companies Say Skills Matter, but Hiring Skews to Degree Holders

 

Companies Say Skills Matter, but Hiring Skews to Degree Holders

Employers across the U.S. are eliminating diplomas as a job requirement, with smaller businesses leading that shift amid tight labor markets. But candidates with degrees still have an edge.

Photo: Getty Images

A growing number of companies across the U.S. have committed to reversing degree inflation. That trend first emerged in the first decade of the century, when more and more job listings were being reserved for candidates with college diplomas. Today, the focus on skills-based recruitment by many businesses is intended to reduce the importance of candidates’ educational backgrounds, compared with their actual work experience–though that shift is still more about rhetoric than actual hiring practices.

While a college degree has long been a fundamental asset for applicants hoping to land more skilled and higher-paying jobs, that emphasis got ramped up significantly after the 2008 financial crisis. With a badly shaken labor market inching toward recovery, the glut of well-credentialled applicants allowed businesses to demand more qualifications from candidates–including college degrees even for posts that didn’t necessarily require that level of education. After the pandemic, though, that mindset subsided, notes a report in Monday’s New York Times, with even companies like McKinsey famous for their Ivy League recruitment putting more importance on candidates’ skills than completed coursework.

“At McKinsey, we hire people, not degrees,” the consultancy’s job page now trumpets in its push to broaden and diversify its hiring. “There is no set definition for what exceptional looks like, and we know it can come from anywhere. We believe in your potential, regardless of your pedigree.”

That openness to all applicants is particularly dramatic given McKinsey’s established reputation for hiring well-connected people from top-tier schools. But the same shift has been embraced in less public declarations by countless businesses across the U.S. According to the Times, those include Accenture, Bank of America, Apple, JPMorgan Chase, and Deloitte, which all recently broadened their earlier diversity and inclusion efforts and are also emphasizing skills over diplomas.

Last year, Walmart went a step further by getting rid of degree requirements for all of its jobs–a significant development by the nation’s largest private employer.

What’s behind that change of heart–and human resources policy? For starters, labor markets remain tighter than before the pandemic, causing many businesses still struggling to fill openings to rethink the utility of insisting on a college degree.

Meanwhile, even college grads don’t necessarily bring the kind of proven, ready-to-use insights and experience that some non-degree holders have acquired through work experience–which businesses badly need. Indeed, the Brookings Institute said a significant employee “skills gap may leave an estimated 2.4 million positions unfilled between 2018 and 2028, with a potential economic impact of $2.5 trillion” to companies. That will be only worsened by corporations’ strict focus on diplomas.

According to consultancy BCG, meanwhile, refusing to consider qualified candidates simply because they don’t have a college degree cuts businesses off from over half of the labor pool–and myriad capable, valuable prospective employees.

“We found that [applicants] hired on the basis of skills get promoted at a rate comparable to that of traditional hires,” BCG wrote in an article titled “Competence over Credentials: The Rise of Skills-Based Hiring?” in December. “Also, skills-based hires … have a 9 [percent] lengthier tenure at their organizations than traditional hires.”

A 2023 poll of 2,000 companies by job listing company Ziprecruiter found 45 percent of respondents said they’d eliminated degree requirements for many positions during the previous year, with 72 percent saying they had made skill-based hiring a priority. Smaller employers did that even more frequently than larger companies, the survey showed, reflecting in part their stiff challenges to finding candidates in a tight labor market.

The change in attitude and recruitment policies in favor of skilled applicants is real, but it appears it’s taking longer to realize in actual hiring practices.

Recent Harvard Business School research found that over the past decade, the “number of job postings that once required college degrees but no longer do has jumped fourfold.” Still, it added, “for every 100 of these postings, however, fewer than four additional candidates without degrees were actually hired.” That works out to about a 3.5 percent rate, which falls somewhat short of revolutionary.

The authors say that disappointing result doesn’t reflect a skills-version of disingenuous corporate greenwashing, though. Instead, they call it the result of companies knowing the changes they want to achieve, but being unclear about how to bring those about. To wean themselves from diploma dependency and toward hiring the most capable candidates regardless of education, the writers offer a few suggestions.

First, they advise, carefully define the experience and abilities needed for someone filling a particular function to succeed, and then use those as the metrics to evaluate applicants for those positions. As part of that, make a sober assessment about which jobs will require a college degree, and then seek out candidates who also have matching skills.

When a skills-based-only policy is applicable to filling a post, first try promoting lower-level workers to higher-tier job vacancies within the company before turning to outside recruitment. That in-house process will be useful in developing effective adapting and onboarding procedures for new arrivals, whose experiences can in turn be used as models to help future hires succeed as well.

People interaction skills

In customer facing positions one of the most important skills is the ability to communicate and connect with customers. That is not an easy still to train, it’s typically related to personality traits. We have helped several of our clients uncover these valuable skills through targeted mystery shops on potential new hires. Want to know more? We’re here as partners in your success. Reach out, we’re here to help.

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BRUCE CRUMLEY AND CARL PHILLIPS

 
 

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