With the recent news that Minnesota is dropping the college degree requirement for state jobs, I was again reminded of the growing trend to favor skills over degrees.
The focus on skills over degrees continues to be one of the approaches to hiring and workforce development that I’m most excited about, particularly in the fast-growth finance & banking sector.
With total employment in the U.S. projected to grow 2.8% annually from 2023-2032, according to the Bureau of Labor Statistics (BLS), several roles in finance will grow faster than average, leading to a likely talent gap that can be filled with skills-based training & hiring. Some of the fastest-growing roles in finance include:
To fill these and other roles, a skills-based approach can help ensure efficient, effective talent acquisition and increased productivity and efficiency from new hires.
Skills-based hiring is a recruiting approach that evaluates candidates based on their demonstrated skills and abilities rather than their more traditional qualifications, such as degrees or work experience. This shifts the focus to a competence-centric hiring process and prioritizes the skills and abilities of candidates over their educational or professional pedigree.
It’s not that education, degrees, and professional pedigree don’t matter at all. It’s that they are de-emphasized in favor of demonstrated skills. This shifts the focus to actual capability over the halo effect that comes along with a candidate’s educational and professional background.
Traditionally, the recruitment process has been degree-focused. Job descriptions frequently list a bachelor’s or master’s degree as a prerequisite, which can immediately exclude a large pool of potentially competent candidates. However, the assumption that academic qualifications directly correlate with job performance is increasingly being questioned by leading employers.
Skills-based hiring emphasizes the core competencies necessary for a particular job. It includes a hiring process that attempts to evaluate candidates on their ability to perform tasks, solve problems, and adapt to new situations—critical factors that contribute to their potential success within a role.
Skills-based hiring has gained traction in recent years as employers seek to build more diverse and adaptable workforces and fill workforce gaps.
This benefits both employers and candidates.
Overall, skills-based hiring offers a more equitable, effective, and future-proof approach to recruitment and talent management. By focusing on skills and abilities, employers can build more diverse and adaptable workforces, while job seekers can find opportunities that match their strengths and interests.
“The essence of the structural reset is this: In evaluating job applicants, employers are suspending the use of degree completion as a proxy and instead now favor hiring on the basis of demonstrated skills and competencies.” – Skills-based hiring is on the rise, HBR
Given the benefits for both job seekers and employers, it’s no wonder that the skills-based hiring trends continue to accelerate. But what does it mean in practice, and how can employers make the shift?
While the advantages of skills-first hiring are clear, implementing it is not without challenges. I always recommend starting small by removing degree requirements from job postings, redesigning job descriptions to focus on competencies and skills needed to fulfill the responsibilities of the role, and updating the interview process to focus on situational questions and skill assessments.
Here are a few ways to get started with a skills-based hiring process in your organization:
Skills-based hiring is in focus for a reason: a growing number of businesses are realizing the value that non-traditional candidates—those who may lack a formal degree or have an unconventional career path but possess the necessary skills—can bring to their workforce. And in a world that places importance on equity, skills-based hiring is the answer.
By focusing on the skills and competencies that are required for a role, employers can identify the most qualified candidates, regardless of their educational background or work experience.
The emphasis on skills-first hiring underscores a crucial shift in recognizing that competence and potential often extend beyond formal education. By adopting this model, organizations can access a broader talent pool, address skills gaps, and foster a diverse and inclusive workforce.
The following resources may also be helpful:
Take your learning and productivity to the next level with our Premium Templates.
Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI's full course catalog and accredited Certification Programs.
Already have a Self-Study or Full-Immersion membership? Log in
Gain unlimited access to more than 250 productivity Templates, CFI's full course catalog and accredited Certification Programs, hundreds of resources, expert reviews and support, the chance to work with real-world finance and research tools, and more.
Already have a Full-Immersion membership? Log in