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Skills-Based Hiring

When it comes to hiring employees, skill-based hiring refers to the practice of employers setting specific skill or competency requirements or targets rather than guiding the hiring process on degree requirements. Although studying for a specific domain is required in order to gain proper knowledge about it, skills are far more important. In the end, the person who can do the work efficiently should be preferred over the person who only has a degree in the field and has no experience working on it. As a result, in this HBR article, it is discussed why skills-based hiring is on the rise.

The article begins by defining “degree inflation” as a sudden change implemented by employers early in the 2000s requiring potential joiners to have a certain “degree requirement” to jobs that had previously not required any degree, despite no change in the work. However, following the Great Recession of 2008-2009, many large corporations quickly announced that they would no longer require a degree for much of their hiring. The article then examines whether degree inflation has been addressed, and what role Covid-19 has played in promoting skills-based hiring. The article continues by stating that employers are indeed resetting degree requirements in a wide range of roles, primarily in middle-level positions. The article, on the other hand, believes that the shift to skills-based hiring occurred in two waves: the structural reset and the cyclical reset. Employers de-emphasize degrees when demand for talent far outstrips supply. That became increasingly clear during the late-2010s tight labor market, which was regarded as the structural reset. Jobs in information technology and management were particularly hard hit, as both were in short supply at the time. The essence of the structural reset is that employers are abandoning the use of degree completion as a proxy in evaluating job applicants and instead prefer hiring on the basis of demonstrated skills and competencies. This shift to skills-based hiring will provide opportunities to a large population of potential employees who have previously been overlooked due to degree inflation. This structural reorganization is an encouraging development. However, there is still a long way to go. The cyclical reset that occurred during Covid-19 was a significant advancement. Many employers have been willing, at least temporarily, to waive degree requirements for many jobs in order to find skilled workers during the pandemic, which has been the worst health crisis in modern history. The shift may only reflect a temporary accommodation in the face of an emergency, which is why we consider it a cyclical rather than a structural reset, but given its magnitude, it’s likely to teach us a lot about whether workers with degrees actually perform better than newly hired workers without degrees. The hiring reset that is taking place right now is critical. If we want to increase labor-market equity, one important way to do so is to remove barriers to well-paying jobs, and there’s no doubt that one of those barriers has been inflated degree requirements in recent years.

Degree inflation took away many opportunities from potential candidates who were qualified to do the job but were unable to be hired because they did not meet the degree requirements. Of course, every company has different needs, but as they write job descriptions and evaluate candidates, they should carefully consider the value of the blunt and outdated instruments they have been using, as well as the assumptions they have been making. Regardless of how important the study of the domain is, developing skills for it is of the utmost importance; thus, skills-based hiring is far more feasible, as discussed in this HBR article.

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