Skills-based hiring: do we even need degrees for jobs now?

This shift towards skill-based hiring is reshaping how companies evaluate potential employees, emphasizing practical skills and real-world experience over formal education.

In 2024, 45% of companies are expected to eliminate bachelor’s degree requirements for some roles, continuing the trend from 2023 when 55% of employers had already done so – including WalMart.

As we delve into this transformation, we explore the implications for both employers and job seekers, and the balancing act between traditional and modern hiring practices.

Skill-based hiring takes the stage

While this trend is evolving in the private sector, the governor of Massachusetts signed an executive order promoting skills-based hiring practices, highlighting the influence of this new trend on the public sector. 

The order emphasizes applicants’ skills, knowledge, and abilities over educational credentials for most job postings. Degree requirements will only be included when necessary for the job. Hiring managers will also receive training and tools to implement this new strategy effectively. 

Skill-based hiring represents a fundamental change in recruitment philosophy. This approach prioritizes a candidate’s specific skills and practical abilities, rather than their educational background. 

According to the TestGorilla report “The State of Skills-Based Hiring 2023,” an impressive 73% of companies adopted this approach in 2023, up from 56% in 2022. 

This shift is not merely a trend but a response to the changing needs of the global economy, where the ability to adapt and apply skills dynamically is increasingly valued.

The advantages of skill-based hiring are manifold. 

It allows companies to tap into a broader talent pool, including self-taught experts, career changers, and those with unconventional career paths. 

This method is particularly beneficial in fast-evolving sectors like technology, where specific technical skills and the ability to learn quickly are more indicative of a candidate’s potential than a traditional degree. 

Furthermore, this approach aligns with the preferences of job seekers, with 86% of candidates believing that showcasing their relevant skills enhances their job prospects. 

It also addresses the issue of educational inequality, providing opportunities to talented individuals who may not have had access to higher education.

Is degree-based hiring gone forever?

While skill-based hiring is on the rise, degree-based hiring maintains its relevance, especially in fields that require a solid theoretical foundation or specialized training. 

Professions in medicine, law, and engineering, for instance, still heavily rely on formal educational qualifications as a baseline for competency.

This shift is driven by several factors, including the desire to diversify the workforce. A significant 70% of employers, in the TestGorilla survey, cite creating a more inclusive and diverse workforce as a primary reason for reducing degree requirements. 

By doing so, they open doors to a wider array of candidates, including those from underrepresented backgrounds or with non-traditional educational paths.

Under this prism, it’s worth saying that while the trend of skill-based hiring is gaining more and more ground, the new workplace will be a place of coexistence and collaboration rather than a win-or-lose process. 

Skill-based vs. degree-based hiring

The debate between skill-based and degree-based hiring is about understanding their respective strengths and how they can be strategically applied in different contexts. 

The U.S. Chamber of Commerce reports that 95% of executives and HR heads say nontraditional candidates perform just as well, if not better than, degree-holders. This statistic underscores the increasing value placed on competency and versatility over formal education.

Skill-based hiring shines in industries where rapid technological advancements and evolving job roles make specific, up-to-date skills more crucial than a broad academic background. 

For instance, in tech startups or digital marketing agencies, the ability to code in a new language or manage cutting-edge marketing tools is often more valuable than a degree.

On the other hand, degree-based hiring remains pivotal in professions where a comprehensive understanding of foundational theories and principles is essential. 

The hybrid mode

In fields like medicine, engineering, and academia, a degree not only signifies a certain level of knowledge but also a commitment to a field of study and the ability to undertake extensive research and learning.

Employers are increasingly recognizing the value of blending these approaches. 

For example, in industries like finance or business, companies might favor candidates with a relevant degree but also place significant emphasis on practical experience and skills, such as financial modeling or data analysis. 

This hybrid approach allows companies to harness the strengths of both methodologies, ensuring a well-rounded and competent workforce.

Education, skills, and experience

As we look towards the future, it’s clear that the landscape of hiring is set for continued evolution. The trend towards skill-based hiring is likely to gain further momentum, driven by the rapid pace of technological change and the growing need for adaptable, skilled professionals. 

This doesn’t mean that degrees will become obsolete, but rather that they will be one of many factors considered in the hiring process. The future of hiring is poised to be more holistic, taking into account a combination of education, skills, experience, and potential.

According to a report by the World Economic Forum, more than half of all workers will need reskilling by 2025 to keep up with technological advancements.

Technology will play a crucial role in shaping these future hiring practices. Advancements in AI and machine learning could lead to more sophisticated skill assessment tools, enabling employers to evaluate candidates more accurately and efficiently. 

Additionally, the rise of online learning platforms and micro-credentialing will provide more opportunities for candidates to acquire and demonstrate new skills, further blurring the lines between traditional and non-traditional education paths.