ACI Voices: Skills-based hiring is here to stay

Is skills-based hiring a dead end? Hardly! A new study by The Burning Glass Institute and Harvard Business School finds hardly a third of organizations surveyed are realizing the benefits of dropping degree requirements. That’s shocking! Organizations doing a bad job at this non-traditional staffing approach are leaving a huge competitive advantage on the table.

For a decade, the strategy has steadily gained buy-in at companies of all sizes. Between 2014 and 2023, the number of roles opening annually to non-degreed candidates, including computer programmers and other techies, jumped nearly four-fold. It looked like a win-win: employers facing tight markets could draw from the two-thirds of Americans without undergrad diplomas, while diversifying their workforces and enjoying much higher retention rates (see figure below). Workers could break “the paper ceiling,” get a foot in the door, and expect better pay and greater mobility. Sounds great, right?

So what happened? Researchers say 45% of firms studied made the change in name only. Another 20% were “backsliders” that reverted to old ways.

Now consider the one-third of organizations that stuck with it. Among them: smaller firms and giants including Apple, Target, Cigna, Yelp, Walmart, General Motors, Tyson Foods, ExxonMobil and government employers like the State of Minnesota and City of Denver. These leaders increased the share of workers hired without BAs by nearly 20%, according to the report, and are reaping the expected benefits.

Source: The Burning Glass Institute, Harvard Business School

Chief Human Resource Officers (CHROs) have a pivotal role here. Key steps for building effective skills-based programs include understanding and communicating value, implementing skills assessments, promoting alternative credentialing, developing upskilling training and apprenticeship programs, and more.

Today’s challenges in L&D, IT, cybersecurity and auditing are already hard enough. Smart leaders will seize this obvious opportunity.

ACI Voices is an occasional series where our leaders share what’s on their minds.