Beyond the Paper Ceiling: The Benefits of Skills-based Hiring
Can automated assessments truly realize scalable, skill-based hiring while ensuring an excellent candidate experience?
Ryan O’Leary, PDRI’s CCO, states that many US job seekers lack degrees, limiting their opportunities despite having relevant skills. He suggests embracing skills-based hiring, as relying on degrees excludes millions and disregards performance predictors.
One might think that with so many large layoffs at high-profile technology companies, the industry’s longstanding challenges recruiting people with the skills they need would be over. But they’re not. Deloitte reports that despite more than 150,000 tech workers losing their jobs in 2023, more than half of companies say recruiting talent is a major challenge and that almost 9 in 10 say it’s at least a moderate challenge.
Ironically, though employers are looking for specific skills, they often require a degree, which immediately eliminates more than 80 million Americans. According to US Census Bureau statistics, just over half of Americans lack an associate’s degree, and nearly two-thirds don’t have a bachelor’s. Even if they possess the skills a company needs, they are usually immediately excluded from the candidate pool.
In recent years, this problem has been named the “paper ceiling,” where the lack of a college credential prevents people with the right experience, competencies and training from securing well-paying jobs where they could excel.
Why Degree-based Hiring Misses the Mark?
Degree requirements make the already tough challenge of finding skilled candidates all the harder because it’s clear that a degree is not a requirement for success in technology. Famously, Bill Gates, Steve Jobs, and Mark Zuckerberg all dropped out of college to pursue their entrepreneurial tech dreams. And, sure, while the odds are low that a company will forgo the chance to hire the next Steve Jobs because the candidate lacks a bachelor’s degree, they will exclude candidates who could do the job well.
After all, especially in the tech industry, a college degree in computer science is far from sufficient for continued success. Technologies, programming languages, and architectures all change quickly, and ongoing training is an absolute necessity to remain current and competitive. There’s no reason an industrious young person couldn’t teach themselves or take any number of online courses to gain the skills they need to do a wide array of entry-level positions and even beyond.
For these highly focused self-starters with an eye on a career in the technology industry, the paper ceiling is especially unfair because their drive not only enables them to attain the hard technical skills their career goals require. However, many of the so-called soft skills are difficult to train and yet provide the key to long-term success, such as resilience and initiative. and curiosity. Arbitrary degree requirements shut these exceptional individuals out of higher-paying jobs that would enable them to use their hard-won skills.
College degrees, along with years of experience, have proven to be poor predictors of how well an individual will perform on the job. What’s more, because degrees and years of experience are usually the key points of a resume, resume screeners perform poorly when selecting qualified candidates, and the latest generation that is powered by AI does little better.
In The Algorithm, journalist Hilke Schnellman looks into how AI is being used in hiring and how effective it currently is. One of Schnellman’s most disturbing findings is that AI bias is a serious problem that causes substantial harm, both to employers and job candidates.
Skills-based Hiring: Scissors for the Paper Ceiling
Hiring for skills instead of credentials is an effective way of selecting candidates who will perform at a high level and is five times more effective than hiring for a level of education, according to McKinsey’s 2022 report: “Taking a skills-based approach to building the future workforce.” But it’s important to note that there are different categories of skills.
First, there are specific hard technical skills that people need to do a specific job, such as Linux administration, AWS cloud management or cybersecurity. Certainly, these skills are important, but they’re also ephemeral.
For example, Gartner analyzed how skills requirements on job postings changed from 2017 to 2021. Their findings showed that: “the total number of skills required for a single job has been increasing by 10% year-over-year since 2017. Furthermore, one in three skills in an average 2017 job posting in IT, finance or sales are already obsolete.”
Second, the so-called soft or, better, essential skills — such as interpersonal communication, adaptability, creativity and critical thinking— are harder to acquire but ultimately more fundamental to success and long-term performance. They form the foundation that enables an employee to identify what hard skills they may need to solve future problems and then use those skills effectively as part of a team to achieve a goal.
In addition to being a better predictor of performance, skills-based hiring can improve morale, retention and diversity. LinkedIn’s The Skills Advantage report shows that employees who feel their skills aren’t being tapped are ten times more likely to jump ship than those who feel their skills are being fully utilized.
According to the not-for-profit Opportunity@Work, workers who gained skills through alternate routes (STARs) other than college are more reflective of the diversity of the US population as a whole: 61% of African-Americans, 55% of Latino/Latina and 50% of whites.
See More: Bridging the Skills Gap with Skills-Based Hiring
Making Skills-based Hiring a Reality
The rarity of skills-based hiring isn’t due to a lack of desire. A recent study showed that 90% of the global companies surveyed want skills-based workforce planning, and in 2022, almost 50 large organizations — including Google, IBM, Accenture, and McKinsey — signed a collective statement endorsing the need for skills-based hiring.
The public sector is also getting into the act, with The Chance to Compete Act, which overwhelmingly passed the currently factious House and, if it passes the Senate, will require skills- and competency-based hiring. A number of states have passed similar laws.
Unfortunately, according to LinkedIn, only about one-quarter of companies are hiring based on skills and competencies, which shouldn’t shock anyone, given that skills-based hiring has historically not scaled well. Checking a box for a degree is easier than evaluating candidates for competencies. But modern automated and intelligent assessments can make skills-based hiring at scale a reality while providing candidates with a great user experience.
Identifying the skills required for success in a position and then selecting the right automated assessments to determine competencies requires effort and dedication. Still, the end result is better quality of hire, reduced bias, a large talent pool and better retention.
How do you leverage automated assessments to pinpoint the ideal candidate for your company? Let us know on Facebook, X, and LinkedIn. We’d love to hear from you!
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