What Skills-Based Hiring Means for Higher Ed

For decades, earning a bachelor’s degree has been seen as the pathway to higher-earning careers and greater job prospects, but recent trends among employers indicate that hiring managers are looking beyond the degree and more at a student’s learning and skills. 

Policymakers, industry professionals and higher education leaders continue to push that the future of career development is skills-based education, but stakeholders can be in misalignment of what that means and how it applies to college students.  

Experts weigh in on what skills-based hiring means, how it applies to the current job market and how higher education can respond to the trend.  

The background: As going to college has become more accessible for the average person, the value of a college degree has shifted. The latter half of the 20th century and the beginning of the 21st saw a surge in Americans who completed a bachelor’s degree, from 8 percent in 1960 to 38 percent in 2022, which has brought around a rise in “degree inflation,” according to a February report from the Burning Glass Institute and Harvard Business School as part of HBS’s Managing the Future of Work project.  

This degree inflation meant employers were adding degree requirements to jobs that didn’t need one and “began demanding degree holders simply because they could,” according to the report. 

Skills-based hiring, on the other hand, is a departure from the emphasis on degrees, recognizing that practical experience and skills can be just as valuable in preparing a candidate for a role. 

By the numbers: Currently, companies still place value on college degree programs as a hiring credential; an October 2023 report from the National Association of Colleges and Employers finds 70 percent of entry-level jobs require a bachelor’s degree.  

But some organizations can see a near future in which these degree requirements fade away; a November 2023 survey of 800 companies by Intelligent.com found almost half (45 percent) intend to get rid of bachelor’s degree requirements for some positions in the next year. 

Slowly but surely, more companies are reducing formal education requirements from their job postings—a January analysis of Indeed job postings finds half (52 percent) haven no educational requirements and only 17 percent require a four-year degree or higher. 

“Companies are taking a hard look at what it takes to be successful in their companies. And one of the ingredients to identifying what it takes to be successful is looking at the job descriptions,” says Dane Linn, senior vice president of corporate initiatives at Business Roundtable, a nonprofit lobbyist association of chief executive officers. “The question companies are asking themselves is whether or not they are [overspecifying] the qualifications for some positions in the company.” 

One example of this work is BRT’s pilot with Alamo Colleges and Ernst & Young, Linn says, in which the accounting company reimagined a set of entry-level accounting jobs to apply to associate degree holders. Business leaders thoughtfully dissected the skills and technical knowledge needed to be successful in the role and then committed to providing students with any additional education needed.  

Gauging change: While employers are saying the four-year degree doesn’t always provide employees with the training they need to be successful, Shawn VanDerziel, chief executive officer of NACE, finds it’s more of a both-and than an either-or. 

More employers are screening by skills—particularly skills gained in experiential learning settings like internships—than by a student’s grades. The companies that are dropping degree requirements are doing so more often for roles that didn’t require a degree to start, VanDerziel shared in a podcast interview with Inside Higher Ed. 

When working with new professionals, employers see skills as an important predictive factor of career potential. Business leaders, when asked to rank which factors are best indicators of the future potential of an entry-level candidate with no prior work experience, point to evidence of durable skills (22 percent) and understanding of the company’s field (20 percent), according to a spring 2023 survey. 

Nevertheless, hiring managers may continue to prioritize candidates with a degree as a proxy for skills or experience needed.  

The Burning Glass Institute and Harvard Business School found just a 3.5-percentage-point change in the share of nondegreed workers hired into roles that no longer require a degree. The report says, “For every 100 job opportunities that for which the B.A. requirement was removed, we would expect roughly four more nondegreed workers to be hired than would have been before degree requirements were removed.”

Forty-five percent of the companies analyzed only adopted skills-based hiring in name only, changing little in the actual hiring process. An additional 18 percent reversed course, removing requirements and hiring nondegreed workers, but then reversed their trend and preferred candidates with a degree. 

Creating skills-based policies has to extend beyond removing degree requirements in job descriptions and instead be applied in recruiting, retaining and advancing individuals on skills, Linn of Business Roundtable says. “It’s about the entire talent pipeline, the HR ecosystem.” 

A degree for skills: One way higher education has helped bridge the skills-based hiring gap is through helping students articulate their learning in the classroom as career skills, namely NACE’s eight career competencies. Microcredentials have been a powerful tool in demonstrating a student’s learning throughout coursework and empowering students to talk about this skill development. 

Another strategy institutions are implementing is helping students get credentialed for the skills they already have. Purdue Global built a degree in organizational management, for which half of the credits could be attained through practical work experience, Jennifer Lasater, vice president of student and career advancement, told Inside Higher Ed earlier this year. Students in the program held work experience in hospitality and food service roles as well as the military, manufacturing or transfer credits from multiple institutions but needed a credential to take the next step in their career.  

“I’m hearing more and more from employers how they’re looking at skills-based hiring, which is really interesting,” Lasater says.  

Purdue Global also has a task force looking at skills-based hiring, which Lasater co-leads, specifically how employers are considering student learning and how the institution can teach skills in programs of study.  

Ultimately, the move toward skills-based hiring, NACE’s VanDerziel emphasized, is not about removing the college degree, but implementing strategic meaning-making into experiential learning.  

“There is this language barrier that happens, this communication barrier and a practicality that sometimes is missing,” VanDerziel said. “And that’s what we really have to bridge for those employers, but no, they’re not giving up on the college degree. Our research has clearly shown that.”  

How does your college or university empower students to talk about skills-based learning? Tell us here.