Skills-based Hiring vs. Degree-based Hiring: Which Is Best For Your Company?

Which matters more: a degree or a candidate’s skills? A growing number of companies are using skills-based hiring instead of focusing on candidates’ degrees.

Read this article to learn the benefits of skills-based hiring, when to check a candidate’s educational claims, and how to make informed hiring decisions.

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When screening candidates for job positions, there’s a lot that goes into finding qualified candidates. Learning about relevant work experience; conducting personal and professional references; and running criminal background checks all provide crucial information to make the best hiring decisions for your company.

But when it comes to education specifically—and the importance of candidates holding a degree—more employers and hiring managers are asking:

• Should a degree be required for the positions we’re hiring for?
• Should candidates be disqualified for not having a degree?
• Which matters more: degrees or skills?

All of which comes down to the ultimate question: Should you align your hiring practices and process to skills-based hiring or degree-based hiring? GoodHire is sharing what you need to know about each so you can make the most informed decisions about who to hire.

Skills-based Hiring vs. Degree-based Hiring: What Do They Mean?

The most straightforward breakdown of skills-based hiring and degree-based hiring is in the names: It’s a matter of employers screening candidates and hiring people based on their skills versus the degrees they hold.

Degrees were once seen as one of the only qualifying pieces of information to determine whether someone is qualified for a job and has the relevant skills to be a productive and valuable worker. But over the past several years, that mindset has shifted, with more and more employers gravitating toward skills-based hiring practices.

Increased trends in skills-based hiring

Skills-based hiring is becoming more and more prominent in the workforce. In June 2020, President Trump signed an executive order addressing degree-based hiring practices. In it, the executive order required the government to reduce the number of minimum education requirements for federal jobs—in other words: prioritizing skills over degrees. Exceptions to this include positions where minimum education requirements are legally mandated. 

But why the executive order in the first place? A couple of key reasons:

• Degree-based hiring leads to employers excluding otherwise qualified candidates—especially concerning jobs that are related to emerging technologies
• Reducing minimum education requirements also removes unnecessary obstacles for candidates who are disproportionately burdened by these requirements, like low-income Americans and minorities

More and more companies are following skills-based hiring trends, too. Several years ago, Google announced it doesn’t care about candidates’ GPAs—and no longer requires employees to have a degree to work there. Other companies that have followed suit include Apple, Tesla, Bank of America, and Hilton—their leaders saying that a college degree doesn’t always equate to a strong work ethic, skills, and talent.

In addition, companies (pre-pandemic) were investing record-amounts of money into training programs for employees, showcasing their willingness to train workers and develop their skills over time.

Higher demand for ‘middle-skilled’ jobs

The need for middle-skilled jobs has skyrocketed recently and are in demand 300% more than low-skilled jobs and 175% more than high-skilled jobs. And in light of the COVID-19 pandemic, experts warn that employers can no longer afford to disqualify candidates based on whether they’ve earned a degree. Why? 

Unemployment rates soared during 2020, hitting a record-high 14.7% in April. And while April 2021’s unemployment rate was drastically lower—6.1%—and the economy attempts to rebuild and strengthen, degree-based hiring still creates struggles for employers trying to hire (and candidates trying to find a job).

More benefits to skill-based hiring

Finally, companies are recognizing all the proven benefits to skill-based hiring, including:

• Diversity: Skills-based hiring allows employers to recruit more people from different demographics who may be less likely to have a college degree.
• Stronger economic outlook and lower unemployment numbers: Millions of candidates would benefit from skills-based hiring practices, because at least 36 million Americans have some college experience but no degree. And millions more have a high school degree only. In other words: Fewer educational requirements for jobs can help employers fill positions more quickly and help grow the job market over time.
• Expanding the talent pool: By ruling out the millions of people without a college degree, employers may be limiting themselves and missing out on quality prospects. With skills-based hiring, they can expand the talent pool to candidates who may be just as qualified as those with degrees. 
• Higher employee retention: Companies that recruit talent from ‘nontraditional’ pools see higher rates of employee retention. How? They typically invest in more quality training to help employees develop the right skills for the position and close any potential gaps in learning they may have from not having a related degree.

When Employers Should Verify Degrees

Whether you’re screening degree-holding candidates or ones with a high school diploma, employers should always take the extra step to verify their education. Doing so confirms that a candidate’s claims are true and identifies potential discrepancies before you hire. After all, an estimated one-third to 78% of candidates lie on their resumes. And, the increasing popularity of diploma mills means that candidates may list degrees or certificates from institutions that are not recognized or accredited.

For example, if an employer uses degree-based hiring practices and hires a candidate based on a fake or faulty degree they didn’t earn, they may not possess the knowledge and skills needed to perform their job. Depending on the position or industry, that employee could also put the company at risk of liability claims because of their unaccredited background. By conducting an education verification, you can pinpoint the misinformation upfront and avoid hiring unqualified workers.

Bottom line: Whether your company engages in skills-based hiring, degree-based hiring, or both—all educational backgrounds should be confirmed with Education Verification through GoodHire. With this screening, employers can quickly and accurately verify information provided by the candidate, including:

• School attended (including high schools, colleges, universities, and vocational schools)
• Dates attended
• Completion status
• Degrees or certificates earned
• Graduation date

It’s a good idea to verify your candidate’s educational claims. GoodHire offers Education Verification checks and hundreds of employment screening services.

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