Skill-based Hiring vs Degree-based Hiring: AscentHR Answers

Getting the right candidate for a role has always been a challenge. The choices are limited if the recruitment process is narrowed to only degree-based hiring. Skilled-based hiring opens the door for more applicants, providing a wider talent pool.

Up until recently, the unwritten rules of the job market dictated that a degree in the specified field is the key to landing a high-paying job in a reputed organisation. It makes sense as getting a formal education helps in understanding the sector at the grass-root level and also highlights the job seekers’ commitment to the field. With time, however, there is a gradual shift in the perspective of recruiters in hiring new talent. Instead of only academic qualifications, the attention is now shifting to skill-based hiring and the trend is being witnessed across all sectors. 

The trend of degree-based hiring picked up pace in the early 2000s when companies started adding degree requirements for job roles. Also referred to as “degree inflation”, the movement caught on after the Great Recession of 2008-2009. According to an article published in the Harvard Business Review, the reset from academic qualification to skill-based hiring happened in two waves. The first one began in 2017 and the second one in 2020 when a pandemic shook the entire world. The degree requirement for middle-skill roles — defined as those requiring some post-secondary education or training but less than a four-year degree – slipped by 46% in 2017 & 2019, and by 31% for high-skill positions. Similarly, with the onset of the pandemic, the requirement for a bachelor’s degree declined by 12% and went from 35% to 23%, the HBR article pointed out. The change in requirements was majorly witnessed in IT and managerial positions.

Also read: Ways to Improve and Update Sales Skills for Unexpected Lockdowns

Skill-based Hiring vs Degree-based Hiring

The concept of degree-based hiring is quite simple. The focus is on hiring candidates with a relevant field degree. It is the only factor considered vital for screening candidates. On the other hand, a skill-based hiring approach emphasises the candidate’s practical skills and knowledge, rather than academic qualifications, work history, and track records. These skills vary from industry to industry; for example, software knowledge and problem-solving skills are far more eminent in the IT sector than only a computer science degree. 

However, the shift in the trend does not imply that getting a formal education or degree is irrelevant. It indicates that it is not the only factor that can help pick out the right candidate for the job profile. That’s because a candidate’s true potential cannot be assessed based on the degree.

Candidates with a degree expect a higher remuneration and job roles similar to their colleagues without college degrees. Based on this trend, it becomes pragmatic to open doors to skilled candidates for a wider talent pool. 

Here are some top reasons why recruiters are looking for more skilled employees, rather than just focusing on their degree: 

More Trained Professionals

Getting the right candidate for a role has always been a challenge. The choices are limited if the recruitment process is narrowed to only degree-based hiring. Skilled-based hiring opens the door for more applicants, providing a wider talent pool. According to a 2017 survey by Indeed, 41% of surveyed HR managers agreed that entry-level positions are the most challenging ones to fill. Candidates with a degree expect a higher remuneration and job roles similar to their colleagues without college degrees. Based on this trend, it becomes pragmatic to open doors to skilled candidates for a wider talent pool. 

Also read: How Skills Inventory Created Through Assessment Tools Can Help Win the ‘Build vs Buy Talent’ Argument

Easier to Fill a Position

The position could sometimes remain vacant for months when a company only focuses on a degree and years of experience in the specified field. Changing the job description and focusing on skills instead of degrees provides access to a wider pool of talent, making the recruitment process relatively effortless and cost-effective. The practice also could help fill the position faster, prevent loss of work, and increase diversity in the workplace.

Hiring the Right Talent

A degree in a respective field does not guarantee that the hired professional has the desired skills to succeed in the role. That’s because there is a vast difference between academic and practical knowledge. A better approach would be to evaluate a candidate’s skills to ensure that they can perform the task, which cannot be guaranteed when hiring someone based on their degree. 

High Retention Rates

According to recent LinkedIn research, it is easier to retain candidates without any degree than those with a bachelor’s or master’s degree in the relevant field. LinkedIn data suggests that candidates without a specialised degree stay in the company 34% longer than their peers. Skills-based hiring also helps get a diverse workforce on board.

The skill-based approach is perfect for hiring new and diverse talent for entry and middle-level jobs. Not having a formal degree should not be a hurdle for those who want to switch fields even though they have the potential and the right set of skills. Getting a degree is a better option for those who have time, and resources, and are clear about their end goals. While a skill-based approach is relevant, a combination of skills and an academic degree has its own merits.

Author: Indira Ramachandra is a Human Resources professional with over 25 years of experience in HR and business roles in the information technology and services industries.