Skills-based hiring continues to rise as degree requirements fade

More employers are leaving behind college degree requirements and embracing a skills-based hiring approach that emphasizes strong work backgrounds, certifications, assessments, and endorsements. And soft skills are becoming a key focus of hiring managers, even over hard skills.

Large companies, including Boeing, Walmart, and IBM, have signed on to varying skills-based employment projects, such as Rework America Alliance, the Business Roundtable’s Multiple Pathways programs, and the campaign to Tear the Paper Ceiling, pledging to implement skills-based practices, according to McKinsey & Co.

“So far, they’ve removed degree requirements from certain job postings and have worked with other organizations to help workers progress from lower- to higher-wage jobs,” McKinsey said in a November report.

Skills-based hiring helps companies find and attract a broader pool of candidates who are better suited to fill positions the long term, and it opens up opportunities to non-traditional candidates, including women and minorities, according to McKinsey.

At Google, a four-year degree is not required for almost any role at the company — and a computer science degree isn't required for most software engineering or product manager positions. “Our focus is on demonstrated skills and experience, and this can come through degrees or it can come through relevant experience,” said Tom Dewaele, Google’s vice president of people experience.

Similarly, Bank of America has refocused its hiring to use a skills-based approach. “We recognize that prospective talent think they need a degree to work for us, but that is not the case,” said Christie Gragnani-Woods, a Bank of America global talent acquisition executive. “We are dedicated to recruiting from a diverse talent pool to provide an equal opportunity for all to find careers in financial services, including those that don’t require a degree.”

Hard skills, such as cybersecurity and software development, are still in peak demand, but organizations are finding soft skills can be just as important, according to Jamie Kohn, research director in the Gartner Research’s human resources practice.

Soft skills, which are often innate, include adaptability, leadership, communications, creativity, problem-solving or critical thinking, good interpersonal skills, and the ability to collaborate with others.

“Also, people don’t learn all their [hard] skills at college,” Kohn said. “They haven’t for some time, but there’s definitely a surge in self-taught skills or taking online courses. You may have a history major who’s a great programmer. That’s not at all unusual anymore. Companies that don’t consider that are missing out by requiring specific degrees.”

A lessening of 'degree discrimination'

From 2000 through 2020 “degree discrimination,” cost employees who were skilled through alternative routes 7.4 million jobs, according to Opportunity@Work, a Washington-based nonprofit promoting workers who are skilled through alternative routes. Alternative routes include skills learned on the job, in the military, through training programs, or at community colleges, for example.

“They are among our country’s greatest under-valued resources — the invisible casualties of America’s broken labor market — where low-wage work is often equated with low-skill work and the lack of a degree is presumed to be synonymous with a lack of skills,” Opportunity@Work explains on its site.

Over the past few years, however, job postings with a degree requirement have dropped from 51% of jobs in 2017 to 44% in 2021, according to the Burning Glass Institute.

Much of the recent shift to skills-based hiring is due to the dearth of tech talent created by the Great Resignation and a growing number of digital transformation projects. While the US unemployment rate hovers around 3.5%, in technology fields, it’s less than half that (1.5%).

While many IT occupations have also seen degree requirements vanish, there remain three where bachelor's degrees are still blocking the more than 70 million workers who have skills gained through alternatives to college, according to Opportunity@Work:

• Computer & Information Systems Managers: 698,000 workers hold such jobs today — and 19% of them are alternatively trained. Yet, 94% of those jobs require a bachelor's degree.
• Computer Programmers: 481,000 workers fill these jobs today, 21% of whom are alternatively trained. But 76% of those jobs require a bachelor's degree.
• Computer Support Specialists: 539,000 workers now have these jobs, with 45% of them alternatively trained. And still, 45% of those jobs require a bachelor's degree.

As many as 70% of organizations have rolled out some kind of workplace technology education in the past year, according to a survey of HR professionals and workers by digital consulting agency West Monroe.

“With this figure in mind, it will be imperative for these organizations to assess their workforce and invest in teaching their workers new skills instead of taking the time, effort and cost to fill a new position,” West Monroe said.

While the cost and time it takes to acquire skills in software development, Java, Python, big data, risk management, and algorithms is high, so is their longevity.

“The payoff for skills in this group is often as long as a person’s entire career,” the Burning Glass Institute stated in a report this month. “Historically, these are the skills that are ripe for reskilling and redeploying talent for the long term.”

Other skills such as risk management and project management also stand out as being particularly durable, yet costly to develop — but they’re not typically as expensive to hire for, according to Burning Glass Institute.

Skills that can be built on an as-needed basis — because the time to learn them is generally low but the return on investment is high — include salesforce, data structures, data analysis, visual design, SAS (software) and cost estimation, the report said.

Many organizations are already implementing internal programs to upskill new and existing employees.

According to research firm IDC, 60% of the Global 2000 corporations have or will have a citizen developer training ecosystem. A significant number of those developers will come not from IT, but from business units looking to digitize processes and using low-code or no-code software tools.

While citizen developers may have little coding knowledge, they’re generally tech-savvy; they’ve worked with spreadsheets and databases, or they’re intimately familiar with corporate technology because they're customer service representatives or business analysts.

“We have seen a surge in demand for particularly digital and tech-related skills,” Kohn said. "A lot of companies have accelerated their digital transformation. So, there’s a huge demand and not enough talent going around."

The change isn't just in private industry

Skills-based hiring practices aren't limited to the private sector. Last year, the White House announced new limits on the use of educational requirements. Over the past year, five governors removed most college degree requirements for entry-level state jobs.

In January, Pennsylvania Gov. Josh Shapiro announced that his first executive order would ensure 92% of state government jobs no longer require a four-year college degree. The move opened up 65,000 state jobs that previously required a college degree and meant candidates are free to compete for those positions based on skills, relevant experience, and merit. Shapiro’s move followed similar actions in other states, such as Colorado, Utah and Maryland. In Utah’s case, 98% of its civil servant jobs will no longer require a college degree.

“Degrees have become a blanketed barrier-to-entry in too many jobs,” Utah Gov. Spencer Cox said in a statement. “Instead of focusing on demonstrated competence, the focus too often has been on a piece of paper. We are changing that.”

And just this week, Alaska Gov. Mike Dunleavy ordered a review of which state jobs could have four-year college degree requirements eliminated as a way to tackle the public sector’s recruitment and retention crisis.

Relying too much on academic degrees is a significant factor in the “over-speccing” of job requirements for tech positions, according to CompTIA, a nonprofit association for the IT industry and its workers. CompTIA's research has found that a notable segment of HR professionals is unaware of the concept of overspending when creating job postings.

In 2022, 61% of all employer job postings for tech positions nationally listed a four-year degree or higher as a requirement. In Pennsylvania, a degree was required in 62% of postings for tech jobs, in Utah, 59%; and in Maryland, 69%.

“That’s not to say a degree doesn’t play some role later in the process,” Kohn said. “Hiring managers are still skeptical of candidates who don’t have a traditional technology background. The difference is they’re allowing people with different backgrounds to get a foot in the door.”

For example, a marketing professional with data analytics skills might not be able to land an IT role. “They may be a great fit for it," Kohn said, "but they just don’t have the background companies traditionally look for."

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