Are we ready for skills-based hiring?
People have traditionally been hired based primarily on the degree they earned, the job they had, or the people they knew. There is a noticeable shift in the last few years and Skills are now a big part of the conversation when hiring. Last year President Biden called for skills-first hiring in his ‘State of the Union’ address and a growing number of CEOs have highlighted the need for companies to shift how they hire. Is the job market prepared for skills-based hiring?
The shift towards skills-based hiring
Just recently a group of Harvard Business Review authors partnered with LightCast, a leading labor-market data company, and analyzed more than 51 million jobs posted between 2017 and 2020. What they have learned is that employers are indeed resetting degree requirements in a wide variety of roles.
They showed that when demand for talent far outreaches supply, employers de-emphasize degrees. And that became increasingly apparent during the tight employment market we had late 2010s. another example is that between 2017 and 2019, employers reduced degree requirements for 46% of middle-skill positions and 31% of high-skill positions. Among the jobs most affected were those in IT and managerial occupations, which were hard to fill during that period.
One level above all other mega-trends for the future of work is The Global Skills Gap. It is not going anywhere and if anything, it will only escalate. 3 of every 4 (75%) companies have reported talent shortages and difficulty hiring – a 16-year high says Manpower recent survey. Employers struggle to find talent with the right skills due to the Great Resignation, new immigration restrictions and limited labor mobility. Additionally, reskilling and upskilling efforts have not kept pace. Competition among employers for talent has increased bargaining power for employees, and churns in job markets further aggravate skills gaps in the labor market.
The talent shortage is here to stay. This means that in evaluating job applicants, employers are likely to be suspending the use of degree completion as a proxy and instead now favor hiring on the basis of demonstrated skills and competencies.
This shift to skills-based hiring opens opportunities for a large population of potential employees who traditionally have often been excluded from consideration. Equity, diversity, tapping into new talent pools. It’s obviously a great thing for both the workforce and the employers.
Does this mean education is no longer important?
Education is still important and even more relevant in these times of rapid change. We should not confuse the discussion on the role of academic degrees in the modern job market with a discussion on the importance of education in general.
Most high-skills jobs require a comprehensive conceptual basis before you are able to reach mastery. This requires structured ways of learning and knowledge acquisition using defined learning paths with objectives, structure, or formal hierarchy. It is just that now, in addition to acquiring this knowledge through a 4 year degree, we see a rising tide of new models in the education space that are leveling the playing field, making quality educational experiences available to all.
The best educators in the world are now available to everyone. Online platforms let you access some of the best instructors in the globe. Students can easily access personalized assessment and feedback to monitor their own progress towards learning goals. Knowledge and information are now available to all for free or at a low cost. Gone are the days when education was out of reach for the economically disadvantaged. Individuals have a powerful new tool in building and proving their skills – micro-credentials. These might be collected, completing an online course, or taking a workshop on coding. Other types of digital credentials are “nanodegrees” – which involve learning specific skills to get a job. The playing field has been leveled in a way that’s truly unprecedented in history.
Is the job market prepared for skills-based hiring?
The simple truth is that as much as we strive to move toward inclusive, equitable skills-based hiring, the job market is completely not prepared for true implementation at scale.
The fact that there is very little correlation between academic performance and job performance is well known to employers for decades now. There are studies that date back to the 80s of the previous century that clearly show that.
Why then, employers have continued to use this criterion to qualify candidates although it’s broadly considered ineffective?
The answer is that it’s simply easier than trying to assess the person’s skills.
Degrees are fairly standardized and transparent – its not a fully accurate statement but generally when people say they have a degree in Communication and Journalism you have a fairly good guess what their studies included.
Degrees are fairly easy to verify – the current ways of verifying a person’s degrees is full of friction and an administrative burden but there there is a structure way to it and a whole system that was built to support it.
Trying to qualify candidates based on their skills is a whole different ball game. It poses 3 main challenges:
Evidence – Unlike a diploma, certification or course completion that are used as potable assertions for something that the candidate achieved, we currently don’t have a way for candidates to prove they have specific skills, even if they have demonstrated these skills on their past jobs or life experiences. Asking candidates to undergo a comprehensive skills assessment for every application is simply not realistic at scale.
The second challenge is Standardization – even if we would be able to find a way for applicants to present evidence to their skills we would still have to deal with the lack of semantic standardization. when an employer defines ‘critical thinking’ as a critical skill required for the job, there is not even a standard definition to what this is. For different employers this can mean very different things. The meaning of skills also changes across time – computer literacy today and 10 years ago are not completely the same aren’t they. How about team leadership today versus team leadership 10 years ago? Leading a team of gen Zs in today’s organizational and social environment requires a very different set of skills that it used to 10 years ago.
The last challenge and definitely not the least complicated to mitigate is Verification – even if we solved the first two, how do we verify that the evidence presented by the applicant can be trusted. Recent studies showed that roughly 80% of applicants lie on their resumes. While universities have spent decades building systems and processes (as cumbersome and time consuming as they are) to help recruiters verify people’s education, the potential plethora of sources for evidence of people’s skills (like employers and volunteering organizations) are completely unequipped for this.
To really enable skill-based hiring we need to reinvent how the people represent their career related reputation across the labor market. What if we could turn education and career records into tamper-proof and cryptographically secured digital credentials the individual will curate from primary source authorities, own them, store them privately and hare them with relying parties across multiple use cases?
These tamper proof credentials include education, licenses, certifications, and work history of course but also accretions made by employers or schools regarding skills people have demonstrated with the criteria that was used as evidence, all in a machine-readable format so that recruiting systems can process it.
This rich verifiable self-sovereign digital career identity is the ‘Great Transformer’ of the global labor market we’ve been waiting for.
This is exactly the work we are doing at the Velocity Network Foundation,
50+ of the largest Workforce-Tech vendors in the world came together to run and deploy, a game-changing, blockchain-based, decentralized utility layer deployed, that aims to empower individuals to gain agency over their verifiable education and career information, replacing the outdated, fragmented way talent represents their career reputation across the labor market. We call it the Internet of Careers®.
The Internet of Careers® is the biggest labor market revolution you probably never heard about.
Reducing friction and the cost to transfer trusted career and education credentials will redefine the way people navigate their career and livelihoods and human capital development and deployment processes in general.
The Internet of Careers® is a free, open for all and publicly available utility, built on open-source tech and protocols governed by the Velocity Network Foundation. It makes it possible for people to claim and manage tamper-proof and cryptographically secured verifiable digital career and education credentials and choose with whom to share this information. At the same time, organizations can rely on verifiable applicant, candidate, student, and employee information, seamlessly and effectively achieving significant reductions in the time and costs associated with talent processes, while reducing risk through decisions based on reliable data and supporting compliance in today’s global labor market.
The Network is designed to allow people to gain full self-sovereignty over their personal data, which means that individuals will own and manage their academic and employment credentials, maintaining their privacy and security. At the core of the design stood two principles: Privacy by Design and Data Protection by Design and Default, supporting compliance with data protection regulations around the world.
Following 4 years of collaborative work the network was made public earlier this year.
Dozens of global leading world of work software vendors are engaged in building their layer 2 use cases on top of it, working together towards a future of interconnective and interoperability across the worlds of education and work.
Early adopter industries across the globe are launching real world ecosystems based on it.
The future of work is coming and fixing the broken data layer underpinning it is a lived reality for thousands of builders.
For the Internet of Careers® we are now where the internet was in 1997. You don’t have many opportunities to join early to something that will change the world – it’s a once-in-a generation revolution and the time to get involved is Now!