While a college degree was once seen as a guaranteed means of upward mobility, today young people are questioning its value, especially considering rising tuition costs and the long-term debt associated with it. Major corporations such as IBM and Accenture have taken notice and have eliminated bachelor’s degrees in favor of hiring based on an applicant’s skills. Where jobs were once categorized as being white collar, i.e., professional, or blue collar, i.e., trades, now there is another category, “new collar.”
This refers to professions that employees can learn through nontraditional educational paths. Employers focus on the skills of the potential candidate and not on formal degrees. It takes considerable commitment to change a long-established mindset of believing that a college diploma produces superior employees. Here are some lessons learned from the experiences of companies that have already embraced skills-based hiring practices:
- Revise job descriptions — Human resources departments need to audit job descriptions and eliminate requirements that limit the applicant pool. Additional efforts will be needed to gain buy-in across all departments. The focus needs to be on what technical skills are needed to perform the job and not on a college degree. Companies that hire new-collar employees have enjoyed a 9% lift in retention rates among skills-based workers.
- Greater job performance — Skills-based employees tend to be ready to hit the ground running. However, managers need to modify high expectations, as there is still a learning curve when it comes to applying existing skills to a specific job.
- Reduced hiring costs — By applying skills-based assessments during the hiring process, HR can identify the best match for a job. The potential candidate has already demonstrated they are competent, thus lowering the potential of going through the expense and time of hiring all over again. According to some estimates, skills-based hires save a company between $7,800 and $22,500 per role by reducing hiring misfires.
- Fill the widening skills gaps — As employees reach retirement age, it is imperative for organizations to fill the important gaps as quickly as possible. It is no longer practical to wait for the “perfect” candidates to appear. HR needs to have a process in place to quickly identify knowledgeable, trainable applicants with transferable skills.
- Improve profits — When profits are declining, companies will often look to external factors such as competition, pricing and market conditions. In fact, the problem may be that your existing team, though working very hard, no longer has the skill set necessary to meet current business challenges. Hiring skills-based employees is one way to breathe new life into an organization by hiring those with knowledge of new technologies.
Many organizations are reaping the benefits of skills-based hiring and see it as the future of work. Rather than having specific titles, employees will have the ability to move to various departments and collaborate on projects as needed. In this way, teams grow stronger by tapping into a diverse skills-based workforce.