Mindset shift from Degree-based to Skill-based hiring

The changes wrought by the Covid-19 pandemic have necessitated a mindset shift in how organisations view their employees, both in terms of hiring practices and their continued skilling. This evaluation has shifted from a degree-based perspective to a focus on the skills of prospective employees. While we are now seeing a broader application of the skill-based approach, in truth, this perspective has been changing steadily over the last few years, particularly in the face of emerging technologies.

This shift in organisational hiring practices has occurred due to various factors, including the realisation that a skill-based approach helps to widen the applicant pool and improve the chances of hiring a more suitable candidate. Consequently, we have to consider an altered approach when training graduating students or working professionals in employable or more career-oriented skills.

Degree-based hiring vs Skill-based hiring

Degree-based hiring is the traditional approach where HR managers focus on educational qualifications to determine whether someone is suitable for a particular position. It allocates higher weightage to graduate and post-graduate qualifications. A skill-based approach, on the other hand, resets the focus on the skills of the candidate. Corporate giants like Apple, Tesla, Google, and Bank of America have already made this transition, giving priority to skillsets over college degrees .

Does it mean that college education is no longer required? Not quite. College education is vital for ensuring in-depth knowledge and is considered critical in areas that require a certain level of academic expertise like healthcare, technology, or business management. However, what we may see is an increasing demand for specialisations or the fortification of a college degree with professional training.

Skill-based hiring to address talent deficit

A recent article in Harvard Business Review reveals that while unemployment has shot up in the United States, there is also, contradictorily, a labour shortage . Another global study predicted a talent shortage of more than 85 million people by the year 2030, amounting to $8.5 trillion in unrealised annual revenues . These figures are equally crucial in the Indian scenario where the pandemic has resulted in surging unemployment rates .

What these figures indicate is a growing talent gap. They suggest that we simply do not have enough talent to fill vacancies even as the number of unemployed people seems to grow worldwide. Many businesses have already realised this deficit and have changed their recruitment strategy to spot the right talent. There are two main tactics through which this can be achieved:

♦ By moving to skill-based hiring instead of degree-based hiring

♦ Continuously upskilling or reskilling existing employees

There are numerous tangible benefits of adopting a skill-based approach. Reducing the minimum education requirement opens up opportunities for those who may not have had access to higher education, or do not have the most elite degree but who possess a more relevant skillset. Not only does that open up the talent pool, it also ensures that companies are able to find the right person for the job.

It can also support lateral moves within organisations to fill up any vacancy. Businesses are facilitating employee skilling or upskilling programmes to meet any emerging requirements. During the Covid-19 crisis, many organisations responded to the sudden requirement for tech-based expertise in communication or collaboration tools by training their employees. In a similar manner, executive training programmes can further upskill employees with high growth potential.

Skilling, upskilling, and reskilling

We have already witnessed the necessity of tech-based upskilling across every industry, where companies have run extensive programmes to train their employees in the relevant skills. However, upskilling goes far beyond a token programme in adapting to a digital structure. Today, we are seeing the emergence of specialisations across every industry and sector, making it imperative for career aspirants to attain industry-centric expertise and not opt for a generic degree. For instance, instead of a basic management degree one can choose to specialise in a particular industry such as banking management, insurance management, wealth management, or logistics management.