Companies that ditch degree requirements in favor of skills-based hiring could see an explosion of talent with 19x the workers

April 19, 2023, 5:05 PM UTC
Organizations may need to get creative to fill the gaps in their employment rosters.
AndreyPopov/Getty Images

Few Americans actually do the exact job they went to school for. Or even utilize the same skills as their last gig. 

Instead, many learn on the job or pick up abilities they may need through continuing education. Yet that gap between workers’ ability to do the work and their eligibility on paper means that many traditional recruiting methods are ineffective and often exclude large swaths of the population. 

About 88% of employers admitted in a 2022 survey they were likely filtering out highly skilled candidates because they lacked credentials such as a degree or specific title. But employers that look beyond specific requirements—like a degree or positions held at blue-chip companies—may be able to significantly expand their reach. 

A new analysis from LinkedIn finds that wide adoption of a skills-based hiring approach could help get significantly more U.S. workers into a wider range of roles—up to 19 times more. And much of that expansion may bring more diverse workers, with women and young adults benefiting the most from this hiring strategy. 

“Employers have long relied on proxies like education or years of experience in a given role to signal that a candidate was capable of performing a job. Now we are seeing more weight being put on having the right skills,” says Rand Ghayad, head of economics and global labor markets at LinkedIn

A skills-based hiring approach could also help industries that are still struggling to fill open roles. In fact, LinkedIn recently noted that sectors such as accommodation, oil and gas, and manufacturing, as well as hospitals and health care, are still facing staffing shortfalls in comparison to pre-pandemic levels. 

The viability of this type of hiring approach does vary by industry. Among the sectors that could benefit the most are education, consumer services, retail, and administrative and support services.

It’s helpful considering that it isn’t likely that the U.S. will experience a sudden influx of workers. Labor force participation rates are within normal levels following the pandemic fallout, while birth rates have been on a steady decline and U.S. immigration policies are fairly prohibitive—without much sign of significant change ahead.

Some companies are already prioritizing skills over degrees

At some places, the degrees-to-skills shift is already underway. Within the past year, a little less than half (45%) of employers using LinkedIn for recruiting explicitly used skills data to fill open roles, up 12% from a year prior. Additionally, 19% of U.S. job postings no longer have degree requirements, up from 15% in 2021, according to LinkedIn. Looking ahead, 75% of recruiters surveyed by LinkedIn reported they expected skills-first hiring would be a priority for their company within the next 18 months.

In recent years, even Fortune 500 companies like Accenture, Apple, EY, Google, and Microsoft have tested skills-based approaches for various roles. Only 26% of Accenture’s software QA engineer postings, for example, specify a degree requirement, according to 2022 research by The Burning Glass Institute and Harvard Business School.

This approach will continue to pay dividends even as slack returns to the labor market, Ghayad tells Fortune. “Skills will count more and more when there is slack in the labor market,” he says, adding the data is already showing an uptick in job seekers returning to the labor market, as well as a rise in the intensity of their search. 

“When this happens, employers usually look for more signals when making hiring decisions,” Ghayad explains, noting preliminary research shows that now that employers are seeing more people applying to jobs, they are prioritizing those who have more skills. 

“The bottom line is that the value of skills isn’t going away anytime soon. If anything, we are seeing that employers are putting more weight on it when faced with larger pools of applicants,” he says.

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