What is Skills-based Hiring?

In the technology industry, there has been a trend towards skills-based hiring, which focuses on identifying and hiring individuals with the specific skills and expertise needed to perform a particular role or task. This approach is often preferred over traditional hiring methods that focus on factors such as education and work experience.

One trend in skills-based hiring in the technology industry is the increasing importance of practical skills and hands-on experience. Employers are looking for candidates who have demonstrated their ability to apply their knowledge and skills in real-world settings. This is often demonstrated through projects and side projects, hackathons, and other experiential learning opportunities.

Shifting Perception of Degree Requirements

In the 2000s, companies began adding degree requirements to job descriptions that had not previously required degrees, even though the skills and requirements of the jobs themselves had stayed the same.

This trend, also known as “degree inflation” became even more pronounced after the 2008/2009 recession, according to the Harvard Business Review. Afterwards, government leaders and businesses recognized that it was time to eliminate degree requirements in across several industries.

The question is, have companies actually done so?

The Harvard Business Review partnered with Emsi Burning Glass, a labour-market data company, to analyze over 50 million jobs that were posted between 2017 and 2022. They identified that employers have in fact reset degree requirements for a variety of positions, mainly those in middle-skill areas (those requiring some post-secondary education or training, but less than a four-year degree).

In evaluating job applicants today, employers are often hiring on the basis of “demonstrated skills and competencies”. Particularly amidst the backdrop of the COVID-19 pandemic, many organizations have been hard-pressed to find skilled workers, and therefore were willing to forgo degree requirements for many jobs.

However, this shift may be only temporary, and only a “cyclical rather than a structural reset”. Regardless, it has shown that, in many cases, workers without degrees are actually able to perform better than those with.

Degree Requirements vs Skills-based Hiring in Tech

The tech sector as a whole tends to demand college degrees more frequently than other industries, however, there is considerable variance between tech companies. According to the aforementioned report, while companies like Apple and Oracle require degrees in over 90% of their job postings, similarly reputable companies like IBM and Accenture require degrees less than 30% of the time.

What does this mean?

The research indicates that human resources leaders in the tech industry are still trying to understand what signals are most important when assessing candidates for technical positions. As a result, some companies emphasize skills-based hiring over formal post-secondary education, and vice versa.

The Importance of “Soft Skills” in Tech

There is also a trend towards the valuing of “soft skills” in the technology industry. These are personal qualities that enable individuals to effectively communicate, collaborate, and work in teams. Employers are increasingly looking for candidates who possess strong problem-solving skills, communication skills, and the ability to adapt to new technologies and environments.

It has been suggested that those who have college or university degrees naturally possess more refined soft skills. However, these skills are much harder to assess, and it is often not enough to measure them by using a degree as a proxy.

Skills-based Hiring is a Win for Diversity and Inclusion

Reducing degree requirements will also inherently increase equity and diversity across the labour market. Those who are able to obtain a college degree frequently come from affluent and advantaged backgrounds, and not from minority and underrepresented communities.

Without inflated degree requirements, “previously overlooked workers will be able to pursue attractive career pathways,” write Joseph Fuller et al. at Harvard Business Review.

By focusing on skills-based requirements, companies will be more successful in tracking down talent for their job openings in competitive fields.

Skills-based Hiring is the Future

Overall, there is a trend towards skills-based hiring in the technology industry, with a focus on practical skills, soft skills, and continuous learning and development.

As technology evolves rapidly, it is important for employees to stay up to date with new developments and be able to learn new skills as needed. Many companies are now offering training and development programs to help employees stay current and maintain their competitive edge.