In the early 2000s, many employers began adding degree requirements to job descriptions that hadn’t previously required them resulting in “degree inflation.” The degree inflation trend was partly due to the quick rise of technology and automation in almost every industry. Employees needed fine-tuned social skills to problem solve, converse with customers and collaborate with co-workers. Many jobs suddenly required the use of computers and software. Rather than seek candidates with those specific people and technological skills, companies took the easier route of using the four-year college degree as a proxy. Employers assumed employees with four-year degrees could use computers, were proficient in software like Microsoft Office Suite and had good interpersonal skills.
While this hiring strategy worked for some candidates, it left many other well-qualified individuals without college degrees without jobs as well. Many skilled and qualified candidates weren’t even considered for jobs because they lacked the degree credential. Degree inflation has had a particularly negative impact for middle-skill positions, those requiring more than a high school diploma, but less than a college degree.
When the labor market gets tight, as has been the case during and post pandemic, employers must find better ways to recruit and hire employees, one being to drop the degree requirements for open positions if it really isn’t needed to perform the job. Instead of relying on degree-based hiring, employers can confirm technical or “hard” skills through pre-employment testing and employment history and “soft” skills by adding more details to job descriptions about the skills they actually seek such as the ability to collaborate, lead and think critically. Instead of making assumptions about an applicant with a college degree, why not take a hard look at the skills and capabilities a job actually requires and write a job description accurately and explicitly reflecting those skills?
STARs (Skilled Through Alternative Routes), a term first used by the National Bureau of Economic Research in 2020, are individuals without bachelor’s degrees with work experience and skills that position them for higher-wage jobs. STARs have skills acquired through community college, workforce training, bootcamps, certificate programs, military service or on-the-job learning, but are often overlooked by employers and are blocked by arbitrary degree requirements.
Opportunity@Work, whose stated mission is, “to rewire the U.S. labor market so that all individuals Skilled Through Alternative Routes (STARs) can work, learn, and earn to their full potential,” reports there are currently more than 70 million STARs in the U.S. STARs are represented in all races, ethnicities, genders, regions and generations across the U.S. Opportunity@Work found that the majority of Black, Hispanic, rural, and veteran workers are STARs. Byron Auguste, Opportunity@Work founder, says, “Companies are missing out on skilled, diverse talent when they arbitrarily ‘require’ a four-year degree. It’s bad for workers and it’s bad for business. It doesn’t have to be this way. Instead of ‘screening out’ by pedigree, smart employers are increasingly ‘screening-in’ talent for performance and potential.”
Opportunity@Work has conducted extensive research showing the detrimental impact to STARs and the workforce in general of the decades old practice of employers overlooking STARS. The exclusionary practice substantially diminishes companies’ supply of talent and limits economic mobility for half the workforce. Their findings show it takes a STAR 30 years to make the wage a college graduate earns on day one of their career.
Benefits of Skills-Based Hiring
Wider Talent Pool
As mentioned, skills-based hiring greatly broadens the talent pool for businesses. A four-year degree is rarely needed for entry-level positions. By requiring a degree for these positions, companies are severely restricting their access to qualified candidates and hindering recruiting efforts. According to the Bureau of Labor Statistics, more than 60% of working adults over age 25 do not have a four-year college degree.
Attracting and retaining top talent is challenging, and anything a company can do to keep good talent should be a priority. Interestingly, research has shown employees without a four-year degree tend to stay with their companies for the long haul. According to LinkedIn research, candidates without four-year college degrees stay with companies 34% longer than their peers with degrees. A Harvard Business School study found employees with college degrees have shorter retention times than those without degrees. Higher engagement and readiness to give back to the company are among the factors contributing to the higher retention rate among non-degree holders.
One of the major drawbacks of degree requirements is that they limit workplace diversity and widen the inequity gag. The number of Americans with bachelor’s degrees has increased over the years among all races and ethnicities. However, the percentage of those holding bachelor’s degrees varies significantly by group. In 2021, the percentage of Americans holding a bachelor’s degree, broken down by racial identity was:
- 61% of Asian Americans
- 42% of White Americans
- 28% of Black Americans
- 21% of Hispanic Americans
Skills-based hiring is paramount to building a diverse workforce because it eliminates the pre-conceived idea of the “perfect candidate.” All candidates are considered equally if they can perform the duties of the job.
Best Practices Skills-Based Recruiting
Identify Necessary Skills
Employers must define the required skills and competencies for each job in the company. In 2021, KC Rising, a regional economic development initiative in Kansas City, partnered with the DeBruce Foundation in a study designed to determine the six competencies most important to enter and succeed in the working world. As part of the study, a research team from the Urban Education Research Center convened young professionals who had entered the working world in the previous one to five years to provide feedback from their work experience on the skills needed to be successful in their jobs. The resulting six essential skills are:
- Communication – The ability to connect effectively within different channels with co-workers, clients and supervisors.
- Collaboration – The ability to facilitate cohesive teamwork that recognizes and leverages the skills and knowledge of all team members.
- Critical Thinking – The ability to problem solve and anticipate new challenges and opportunities.
- Interpersonal Skills – The ability to treat others with respect and dignity and build trusting relationships.
- Proactivity – The ability to take the initiative and add value to an organization.
- Executive Function – The ability to work independently, be accountable, manage tasks and meet deadlines.
These essential skills, or some variation of them, are likely necessary for most jobs and should be considered when evaluating the skill set necessary for a position. Once these skills are locked in, hiring managers need to know how to spot them in an interview by asking behavioral questions that allow the candidates to speak to their abilities and skills.
Create Talent Management Pipelines
Once the skills required for jobs are determined, talent management pipelines can be created. Effective talent pipeline management is about having a pool of prospective candidates in place prior to the opening of a new position. In other words, it’s constant sourcing and recruiting. Among the ways to create a talent management pipeline include using modern sourcing tools like Reddit and Meetup, attending recruiting events with a refined recruiting pitch focused on the future (rather than trying to fill current positions) and considering rejected candidates for other position for which there may be a better fit.
Partner with Community-Based Organizations
Instead of relying on a college degree to access skills, companies can partner with local community-based organizations with access to STARs. Many communities have organizations that assist “opportunity youth” who are young people between the ages of 16 and 24 years old who are disconnected from school and work. Hiring our Heroes provides career services for the military community connecting service members, military spouses and veterans with businesses to create economic opportunity for both.
Upskilling and Reskilling
Upskilling and reskilling are getting a lot of traction lately. McKinsey found that nearly 70% of businesses are doing more skill building now than they did pre-COVID-19. What exactly does that mean, and what’s the difference between upskilling and reskilling? While both upskilling and reskilling are about learning new skills, there’s a significant difference between the two. Upskilling helps employees become more knowledgeable and develop new skills and competencies that relate to their current job. Reskilling focuses on providing employees with new skills to use in a different job within the company. Both upskilling and reskilling are strategies that can help employers use internal talent to fill positions and employees succeed in the workplace.
Employees and employers often don’t realize that the skills employees have for one job can easily transfer to a completely different job. For example, during the pandemic 5.9 million restaurant workers lost their jobs, a big percentage of them being food servers. More than 70% of those servers have the skills needed to succeed in customer service, currently one of the most in-demand jobs on LinkedIn. Had servers and hiring managers for customer service specialists realized this, there may have been far fewer unemployed former food servers.
For the 87% of companies that have a skills gap, or expect to have one within a few years, among current employees, upskilling and reskilling could be the solution. Data shows the majority of today’s employees view opportunities to learn and grow as the number one driver of a positive company culture. When given a chance to move up or around a company, employees are more engaged and likely to stay.
Get Smart HR
The workplace is constantly changing and evolving. Trends come and go. It can be unsettling for today’s HR and corporate leadership when trying to keep a steady ship. However, Smart HR’s dedication to its clients is unchanging, unwavering and unparalleled. It’s time to plan your 2023 HR recruiting and retention strategy. Call today.