In this article, Rick Inatome explores why demonstrable skills are superseding degrees in the hiring process, and why organizations should go beyond focusing upon technical competencies.
The business world in recent times has experienced significant disruptions that require adaptation to new realities. Rapid advances in technology, the aftermath of a global pandemic, generational divides, and emergence of artificial intelligence are catalyzing, among other things, a rethinking of traditional employment practices and rationales including those pertaining to hiring.
As Baby Boomers began to enter the job market in the latter part of the 20th Century, college degree requirements became a norm in candidate selection processes. A Harvard report in 2017 indicated that this prerequisite resulted in the rejection of 60% of otherwise qualified candidates. Consequences of this model proved unfortunate not only for job applicants but for employers, who ended up with an unduly shallow and less diverse talent pool. Its social disutility, moreover, was evidenced by a 2018 study showing a four-year degree requirement automatically shut out 76% of African Americans and 83% of Hispanics.
Against this backdrop, and the need for employees who can contribute immediately and effectively to an organization’s goals, more and more employers are prioritizing demonstrable skills over degrees. A 2022 TestGorilla survey indicates that 76% of companies are using skills-based hiring. In so doing, 89.8% of them are experiencing a decrease in cost-to-hire, 91.4% are seeing a decrease in time-to-hire, and 92.5% of them are witnessing a reduction in bad hires.
The ultimate promise of skills-based hiring is the ability to optimize workforce quality) and minimize the risks and costs of regrettable decisions. Like any other selection process, however, its utility depends upon successful alignment with organizational values and objectives.
Toward this end, it is important to develop criteria grounded in an understanding that technical competence is merely a starting point in skills assessment. Knowing that companies average a 35% performance loss due to cultural dysfunction, as reported by a Harvard study, it is imperative to build teams with values and behaviors that contribute to a performance optimizing environment. By prioritizing factors such as interpersonal skills, communication abilities, and cultural fit, organizations can create teams that not only excel on individual levels but also collaborate effectively, maintain a positive and inclusive environment, and achieve high levels of engagement and productivity.
Studies show that the strongest predictor of performance in an organization is emotional intelligence, a factor that accounts for nearly 58% of success across all job classifications. This research also demonstrates that 90% of top performers possess high levels of emotional intelligence. It is a quality that most persons overestimate in themselves, as 95% think they are self-aware but only 10-15% actually.
Emotional intelligence is constructed from a variety of factors. One of the most important of these in a team environment hinges upon an individual’s locus of control.
Persons with an internal locus of control are those who take responsibility and accountability for their actions and thus attribute success or failure to factors over which they have control. Those with an external locus of control attribute outside forces such as luck or happenstance for their outcomes. This orientation, among other things, leads toward blaming others when things go wrong rather than assuming accountability. It goes without saying that persons with an external locus of control have a deficit of authenticity and present a high risk of toxifying teams and organizations.
How to Implement Hiring for the Skills That Count
Transitioning to a skills and values-based hiring model requires a recalibration of criteria and process away from a credential-centered process. Toward this end, the following steps can be helpful.
- Define the technical skills, values, and behaviors that are relevant to organizational success;
- Update job descriptions and requirements, reserving the need for degrees for positions in which they are manifestly essential (e.g., law, accounting);
- Develop assessment methods that include skills-based tests, behavioral interviews, and reference checks that tease out desired competencies and values;
- Compose interview questions that target relevant skills and values;
- Evaluate cultural fit via testing and focused interviews; and
- Continuously improve the process by obtaining feedback from teams and candidates.
The trend from credential-based to skills, behavioral, and values-based hiring represents a significant change in the employment landscape. It reflects a growing understanding that a candidate’s skills and alignment with organizational values transcend the utility of formal credentials as a predictor of success. Done properly, execution of these new wave hiring practices herald the outcome of a more inclusive, aligned, adaptable, and high-performing workforce.
About Rick Inatome
Rick Inatome is a transformative business leader and mentor, entrepreneur, and investor whose legacy includes being one of the architects of the digital age. Working with the founders of companies such as Apple and Microsoft in the computer industry’s early days, he established a disruptive technology distribution channel that introduced the personal computer first to the general public and then to corporate America. It grew into a NYSE Fortune 500 company.