Why Skills Matter More Than Degrees Do

When it comes to finding the right employees, skills matter more than degrees do. At least, that’s the new perspective for many CEOs and hiring managers. But where did this perspective come from—and should more companies be thinking in the same terms?

Let’s talk about it.

The Rules of Recruitment Have Changed

Choosing who to hire may be the most important decision you make as a business leader. It’s essential to know which factors should guide you.

In the past, companies have largely focused on the candidate’s pedigree. This means the sum total of their education, work experience, and industry connections. In most cases, their degree will be the most important factor of all.

However, some business leaders are starting to question how helpful those guides really are. In an interview with Harvard Business Review, LinkedIn CEO Ryan Roslansky had this to say:

“For far too long, we’ve used degrees. ‘Oh, this person went to this great school, so they must be good.’ … We didn’t have anything better to do to assess talent. But when the labor market is moving much quicker, we really need to figure out something [else] to focus on.”

This mindset has grown over the last few years. In the wake of the COVID-19 pandemic, companies around the world have been forced to adapt to a changing labor market. Finding qualified employees is harder than ever—and retaining them can be an even bigger challenge. This has sparked numerous innovations in how employers hire and retain staff.

One of the most promising solutions is a skills-based hiring strategy. While degrees and connections used to guide hiring decisions, some employers are shifting their focus to the actual skills a candidate brings to the table. Forget about the diploma on their wall—what can they do?

The Strengths of a Skills-First Mentality

Ryan Roslansky calls this approach the skills-first mentality. A vocal proponent of this strategy, Roslansky has said:

“I think companies that focus on skills as the currency, that shift away from more antiquated signals like only a degree or pedigree…will help ensure that the right people can be in the right roles, with the right skills, doing the best work. I think it’s going to create a much more efficient and equitable labor market, which then creates better opportunities for all.”

As one example of how the skills-first mentality could help in a tight labor market, Roslansky cited the thousands of food service workers who were laid off during the COVID-19 pandemic. He states that these workers generally possessed 70% of the skills that are needed to be entry-level customer service agents—the most in-demand role at the time.

Roslansky contends that if more business leaders had asked themselves, “what skills [are] necessary, who has those skills, and how can we help them acquire a couple of skills to help them become employed?” they would have established a “much more efficient labor market.”

But because hiring managers did not have a skills-first mentality, “a lot of those food service workers went unemployed and stayed unemployed. And a lot of these customer service jobs went unfilled because there wasn’t enough talent to fill them.”

Roslansky goes on to say that, “if you take a big step back, that dynamic is happening across every industry…where there’s this labor imbalance. If you were to focus more on skills, it would be much more productive and efficient.”

A skills-first mentality helps employers recruit the talent they need without having to compete for the most educated job seekers. In today’s labor market, that would provide a much-needed solution to the staffing challenges many companies face.

In fact, this perspective could even save companies from having to hire new employees at all. Typically, employers will fill jobs by looking for candidates who already have the right education for that role. But when hiring managers focus on skills rather than degrees, they can spot opportunities for upskilling their current staff.

Roslansky puts it like this: “Internal mobility is the really big topic for us right now. I truly believe that your next best employee is most likely your current employee in many situations. And again, this is a reason why…you focus on skills and understand the skills of your existing workforce and where you need to go as a company. There’s just a lot of great work that can be done to help existing employees find different roles inside of your company.”

By recognizing the potential of existing employees, companies can avoid unnecessary recruitment costs. This will free up more resources to invest in long-term growth.

Revolutionizing How Employers Find the Right Staff

Roslansky is far from the only advocate for a skills-first approach. University of Virginia Darden School of Business professor Sean Martin told Fortune that he thinks a skills-first hiring approach could eventually replace other long-held job requirements.

Martin says that because they focus on the wrong factors in hiring, companies often “miss out on people that research suggests might be less entitled, more culturally savvy, and more desirous of being there.” According to Martin, motivation and an eagerness to learn and adapt should be the prime attributes of a top candidate, not a degree.

The skills-first message is catching on in practice too, not just in theory. Many of America’s largest companies have started prioritizing skills over degrees, including Google, Microsoft, EY, and Apple. General Motors has removed degree requirements from all job listings where they’re not deemed fully necessary. At IBM, the percentage of job listings that require a four-year degree dropped from 95% in 2011 to less than half by 2021.

Ginni Rometty, former CEO of IBM, told Fortune that while IBM used to prioritize the most educated candidates for every role, they’ve since found that employees without degrees often perform their jobs just as well as Ph.D. holders—provided they come equipped with the right skills and a willingness to learn.

“They were more loyal, higher retention, and many went on to get college degrees,” Rometty said. During Rometty’s time at IBM, she coined the term “new-collar jobs” to refer to roles where skills are more important than education.

In 2016, professional services giant Accenture launched an apprenticeship program to help undereducated job seekers join the company and get the training they need. Since then, Accenture has hired more than 1,200 employees through the program, 80% of whom had no four-year degree.

In the words of Accenture North America CEO Jimmy Etheredge, “A person’s educational credentials are not the only indicators of success, so we advanced our approach to hiring to focus on skills, experiences, and potential.”

Accenture hopes to fill at least 20% of its entry-level roles through apprenticeships. This includes employees responsible for application development, cybersecurity, and cloud engineering.

In the eyes of many business leaders, the future of hiring won’t revolve around education, industry connections, or even prior work experience. Instead, more and more companies will look for talented, motivated candidates with the potential to grow into their new position.

That’s good news for everyone—because skills matter more than degrees do.

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