The cost of college has increased 25% over the past decade, causing student debt to skyrocket. As a result, career paths that require a four-year credential remain inaccessible and unaffordable for millions of Americans.
But by prioritizing skills and competencies over academic credentials or pedigree throughout the talent acquisition and advancement processes, companies can recruit and hire people with different backgrounds, experiences, and perspectives. While skills-based hiring alone does not guarantee diversity, it is a necessary first step in breaking down potential barriers and creating a more inclusive organization.
Hiring for skills is not only a vehicle for championing inclusion and expanding economic opportunity, it’s also a smart business decision: Employers pay up to 30% more for college graduates, despite observing no difference in job performance between graduates and nongraduates.
Executives acknowledge the hiring imperative—they’ve historically focused their diversity efforts on getting people in the door. Yet few have taken the leaps necessary to make lasting change within their organizations. We recommend several well-documented ways to comprehensively mitigate bias in the hiring process through a skills-based approach:
- Recredential job descriptions and remove four-year degree requirements: Leaders can reassess which jobs truly require a bachelor’s degree, eliminate educational barriers where possible, and rewrite job descriptions with a focus on the competencies and skills required. Additionally, they can review job descriptions for biased language that may discourage diverse and underrepresented talent from applying.
- Use blind résumé reviews: Companies can redact identifying information from application materials and initial screenings—such as name, gender, and address—that can inform an impression about a candidate’s race or gender and introduce unconscious bias.
- Conduct standardized and skills-based interviews: Organizations can create consistent questions and a rubric for evaluating every candidate’s skills and competencies.
Why it works
Traditional talent acquisition practices can be exclusionary by nature. According to one recent analysis of a coalition of large companies, more than 80% of postings for family-sustaining jobs currently include a four-year degree requirement—automatically excluding 76% of Black Americans and 83% of Latinx workers. This reality makes it difficult for millions of qualified Black and Latinx job seekers to gain access to meaningful careers. It also significantly reduces an employer’s ability to build a diverse pool of candidates.
Adopting a skills-first approach is a clear way to start mitigating this issue. Employers report that nongraduates with experience perform nearly or equally as well as college graduates on critical dimensions such as level of productivity, time to reach full productivity, time to promotion, or amount of oversight required.
In order for skills-based hiring to effectively deliver DEI outcomes, employers need to ensure that underrepresented candidates aren’t screened out early in the process because of bias. Removing names from résumés can help: A landmark 2003 experiment and multiple subsequent studies have found that, when applying for a job with the same qualifications, applicants with “white-sounding” names received 50% more callbacks for interviews than those with “Black-sounding” names. In addition, leaders can guarantee that each candidate slate includes at least two applicants from underrepresented groups, significantly increasing the likelihood of hiring a diverse candidate.
The adoption curve
Employers have become increasingly interested in skills-based hiring over the past several years. We’ve seen the emergence of several action-oriented business coalitions focused on skills-based approaches, including OneTen and Business Roundtable’s Multiple Pathways Initiative.
However, these practices are still new to corporate America. According to one survey, only 37% of employers say they “forecast skill and competency needs to determine which roles can be filled using diverse candidate pipelines.” And while employers have a strong appetite to implement a skills-based approach, they remain uncertain about which job types to recredential within their industries.
Additionally, we believe significant cultural biases toward pedigree persist throughout corporate America. Combating these biases will take more than tactical execution—it will require investments in changing mindsets.
For more information about how to implement skills-based hiring, we recommend the Markle Foundation’s “Skills-Based Sourcing and Hiring Playbook.”
How IBM took action
Faced with a shortage of technology talent more than a decade ago, IBM made the groundbreaking decision to remove four-year degree requirements, instead focusing on candidates’ competencies and potential for upskilling. Today, across employee levels and businesses, 50% of the firm’s US jobs do not require a four-year degree. As a result, IBM has seen consistent increases in diverse and underrepresented talent, both across the company and in managerial roles.
“When you break down what people actually do every day, whether it’s software development, or digital design testing, or security, or even artificial intelligence, you have to ask if that role needs a four-year degree or it’s a set of skills that’s needed,” noted Nickle LaMoreaux, chief human resources officer.
The firm’s high school apprenticeship program, which supplies a pipeline of diverse talent, as well as strong executive support from former CEO Ginni Rometty, have been critical success factors. Going forward, the company plans to expand its approach by certifying all hiring managers in skills-based practices and building an AI-powered platform for skills-based professional development.