he COVID-19 pandemic upended the 128-month post-Great Recession recovery—the longest U.S. economic expansion on record—with job losses and an economic contraction on a scale not seen since the Great Depression. That recovery, however, did not treat all jobs and workers equally nor did it address longer-term trends, including underinvestment in workers’ skills, growing wage inequality, or availability of middle-wage jobs.
If we are to avoid further bifurcating the U.S. economy, the post-pandemic recovery must increase investment in workers’ skills, address wage inequality, and rethink occupational and economic mobility, including a more effective approach to skills-based hiring. However, recent employer surveys, interviews, and focus groups conducted by the Business-Higher Education Forum (BHEF) found that disconnects among employers, workers, and postsecondary education may inhibit this transition. This essay presents these findings and suggests that workforce data, tools, and strategies can enhance the likelihood of a durable and more equitable recovery.
Lessons from the Great Recovery
During the recovery following the Great Recession, the emergence of the digital economy increased the demand for digital skills and rewarded college credentials. Nearly all newly created jobs required some postsecondary education, with two-thirds requiring a bachelor’s degree. These requirements created an over-reliance on bachelor’s degrees, even for middle-skill jobs, further disadvantaging African American and LatinX workers.
In order to create a durable and equitable post-pandemic recovery, we must increase investment in workers’ skills and move to a hiring model that recognizes these skills. An overreliance on college credentials limits job opportunities and hinders rapid reemployment during the recovery.
Skills-based Hiring as a Tool for Diversity and Inclusion
As businesses recover from COVID-19 and respond to the economic impact of systemic racism raised by the Black Lives Matter movement, skills-based hiring can broaden the talent pool. This method of hiring leads to a more diverse workforce by not automatically eliminating populations without a college degree, who are disproportionately African American and Latinx. Doing so will increase opportunities for individuals who possess the skills to successfully perform jobs but do not possess a particular credential. Skills-based hiring can also enable businesses to better respond to growth challenges in the post-COVID economy. And the value of a diverse workplace should not be understated: research has revealed that heterogenous teams are simply smarter and more innovative. This is exactly what we need now.
Impediments to Skills-based Hiring
Widespread adoption of skills-based hiring has proven painfully slow, highlighting the complexity and challenges of this evolution. Not surprisingly, human resources systems are not configured for this level of skills-based evaluation and changing human resources policies, processes, and systems is neither simple nor without risk. Interviews and focus groups that BHEF conducted with CEOs and human resources executives on this topic provide more context. Conceptually, many leaders agree that skills-based hiring is beneficial to the company and the right thing to do. For example, PwC has challenged its 250,000 employees to engage in digital upskilling and began hiring for digital skills.
For the majority of companies that have not yet shifted their practices, they have shared four leading challenges:
1) Shifting to a skills-based talent model requires a top-to-bottom retooling of organizational-leadership models and culture, as well as talent acquisition and development models. This presents complex change management issues and require continuous improvement.
2) In a rapidly evolving economy, even before COVID-19, businesses have difficulty anticipating skill needs. Many business leaders admit they lack the tools and insights to effectively anticipate trending skills in their company and their sector.
3) Businesses do not know what skills their employees possess. Many companies do not routinely assess their employees’ skills and voluntary reporting from employees has proven ineffective.
4) Businesses are unsure how to implement skills-based hiring and fear that poor implementation will exacerbate hiring challenges.
Opportunities for Moving Forward
None of these issues are insurmountable. As organizations seek qualified candidates, they should use data to inform and strengthen decision-making about the hiring process. A recent survey of 500 U.S. human resources decision-makers reports that organizations are already using data in their hiring practices and future workforce planning, such as state workforce projections, real-time labor market information (LMI) data (e.g. Burning Glass and EMSI), and government resources (e.g. O*NET). This use of data should be enhanced and integrated into workforce planning processes.
The number of nonprofits focused on providing skills-based solutions for jobseekers, particularly those without college degrees, is also growing. Skillful, an initiative of the Markle Foundation, is developing skills-based training and employment practices in collaboration with state governments, local employers, educators, and workforce development organizations to help Americans get good jobs based on the skills they have or the skills they can learn. The U.S. Chamber of Commerce Foundation’s Job Data Exchange (JDX) is designed to help employers move towards competency-based hiring in a scalable and sustainable way. JDX is modernizing how the internet reads job data by updating the standards employers use in job descriptions. As real-time LMI data relies on job descriptions, improving those will carry tremendous insights about in-demand skills in real time.
The recently launched SkillUp Coalition brings together a network of education and training providers, employers, technology companies, nonprofits, and philanthropies to provide career navigation, training programs, and job opportunities to workers impacted by COVID-19. They seek to unlock new, marketable skills for impacted workers and provide them with connections to in-demand jobs and opportunities for longer-term growth. And SkillUp Coalition partner, Opportunity @Work, is launching an online Opportunity Marketplace in 2020 to connect employers with entry-level technology training providers. Its platform utilizes a matching algorithm and other employers’ feedback to identify trusted providers, hire candidates, and signal hiring needs.
BHEF has been working with industry, data, nonprofit, and higher education partners to develop an Upskilling Solutions Marketplace, which will provide information on regional skill demand and job trends, tools to capture employee skills and identify opportunities for upskilling, and micro-credentials developed by higher education institutions. The Marketplace will address employers’ key barriers to upskilling, enable an increase in rapid upskilling connections between individuals, employers, and educational institutions, and provide additional solutions for the post-COVID-19 employment landscape.
There is movement on the policy front as well. On June 26, 2020, President Donald Trump issued the Executive Order on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates. The federal government’s civilian workforce exceeds 2.1 million and the goal of the order is to ensure that the individuals most capable of performing the roles and responsibilities required of a specific position are those hired for that position. Currently, for most federal jobs, traditional education—high school, college, or graduate-level—is either an absolute requirement or the only path to consideration. The order recognizes that an overreliance on college degrees excludes capable candidates, particularly in jobs related to emerging technologies, and disproportionately burdens low-income Americans. In response, the order directs reforms around government job postings, candidate assessment, and hiring, and it encourages the same practices in the private sector.
What’s Next?
The increasing number of major organizations promoting the importance of skills and credentials in the future of hiring gives cautious optimism for change. More than three-quarters of employers reported that they will reevaluate their hiring requirements to find candidates and fill vacant positions. And as skills become a focal point in the hiring process, hiring decision-makers expect skills assessments to become more important when evaluating candidates.
So, businesses realize the value of skills, but they unwittingly limit their candidate pool by making their initial cut by degree. Not only will that impact the speed with which they recover from COVID-19, it will hamper their ability to secure diverse talent. It will also decrease workforce participation and exacerbate inequality in job opportunities, as we saw after the Great Recession. It is time to look at skills first.
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Skills-based Hiring: Opportunity or Illusion?
By Christina Wocin via Unsplash.
August 6, 2020
The recovery following the Great Recession did not treat all jobs and workers equally nor did it address longer-term problems. Now, our post-pandemic recovery must increase investment in workers’ skills, address wage inequality, and rethink occupational and economic mobility.
T
he COVID-19 pandemic upended the 128-month post-Great Recession recovery—the longest U.S. economic expansion on record—with job losses and an economic contraction on a scale not seen since the Great Depression. That recovery, however, did not treat all jobs and workers equally nor did it address longer-term trends, including underinvestment in workers’ skills, growing wage inequality, or availability of middle-wage jobs.
If we are to avoid further bifurcating the U.S. economy, the post-pandemic recovery must increase investment in workers’ skills, address wage inequality, and rethink occupational and economic mobility, including a more effective approach to skills-based hiring. However, recent employer surveys, interviews, and focus groups conducted by the Business-Higher Education Forum (BHEF) found that disconnects among employers, workers, and postsecondary education may inhibit this transition. This essay presents these findings and suggests that workforce data, tools, and strategies can enhance the likelihood of a durable and more equitable recovery.
Lessons from the Great Recovery
During the recovery following the Great Recession, the emergence of the digital economy increased the demand for digital skills and rewarded college credentials. Nearly all newly created jobs required some postsecondary education, with two-thirds requiring a bachelor’s degree. These requirements created an over-reliance on bachelor’s degrees, even for middle-skill jobs, further disadvantaging African American and LatinX workers.
In order to create a durable and equitable post-pandemic recovery, we must increase investment in workers’ skills and move to a hiring model that recognizes these skills. An overreliance on college credentials limits job opportunities and hinders rapid reemployment during the recovery.
Skills-based Hiring as a Tool for Diversity and Inclusion
As businesses recover from COVID-19 and respond to the economic impact of systemic racism raised by the Black Lives Matter movement, skills-based hiring can broaden the talent pool. This method of hiring leads to a more diverse workforce by not automatically eliminating populations without a college degree, who are disproportionately African American and Latinx. Doing so will increase opportunities for individuals who possess the skills to successfully perform jobs but do not possess a particular credential. Skills-based hiring can also enable businesses to better respond to growth challenges in the post-COVID economy. And the value of a diverse workplace should not be understated: research has revealed that heterogenous teams are simply smarter and more innovative. This is exactly what we need now.
Impediments to Skills-based Hiring
Widespread adoption of skills-based hiring has proven painfully slow, highlighting the complexity and challenges of this evolution. Not surprisingly, human resources systems are not configured for this level of skills-based evaluation and changing human resources policies, processes, and systems is neither simple nor without risk. Interviews and focus groups that BHEF conducted with CEOs and human resources executives on this topic provide more context. Conceptually, many leaders agree that skills-based hiring is beneficial to the company and the right thing to do. For example, PwC has challenged its 250,000 employees to engage in digital upskilling and began hiring for digital skills.
For the majority of companies that have not yet shifted their practices, they have shared four leading challenges:
1) Shifting to a skills-based talent model requires a top-to-bottom retooling of organizational-leadership models and culture, as well as talent acquisition and development models. This presents complex change management issues and require continuous improvement.
2) In a rapidly evolving economy, even before COVID-19, businesses have difficulty anticipating skill needs. Many business leaders admit they lack the tools and insights to effectively anticipate trending skills in their company and their sector.
3) Businesses do not know what skills their employees possess. Many companies do not routinely assess their employees’ skills and voluntary reporting from employees has proven ineffective.
4) Businesses are unsure how to implement skills-based hiring and fear that poor implementation will exacerbate hiring challenges.
Opportunities for Moving Forward
None of these issues are insurmountable. As organizations seek qualified candidates, they should use data to inform and strengthen decision-making about the hiring process. A recent survey of 500 U.S. human resources decision-makers reports that organizations are already using data in their hiring practices and future workforce planning, such as state workforce projections, real-time labor market information (LMI) data (e.g. Burning Glass and EMSI), and government resources (e.g. O*NET). This use of data should be enhanced and integrated into workforce planning processes.
The number of nonprofits focused on providing skills-based solutions for jobseekers, particularly those without college degrees, is also growing. Skillful, an initiative of the Markle Foundation, is developing skills-based training and employment practices in collaboration with state governments, local employers, educators, and workforce development organizations to help Americans get good jobs based on the skills they have or the skills they can learn. The U.S. Chamber of Commerce Foundation’s Job Data Exchange (JDX) is designed to help employers move towards competency-based hiring in a scalable and sustainable way. JDX is modernizing how the internet reads job data by updating the standards employers use in job descriptions. As real-time LMI data relies on job descriptions, improving those will carry tremendous insights about in-demand skills in real time.
The recently launched SkillUp Coalition brings together a network of education and training providers, employers, technology companies, nonprofits, and philanthropies to provide career navigation, training programs, and job opportunities to workers impacted by COVID-19. They seek to unlock new, marketable skills for impacted workers and provide them with connections to in-demand jobs and opportunities for longer-term growth. And SkillUp Coalition partner, Opportunity @Work, is launching an online Opportunity Marketplace in 2020 to connect employers with entry-level technology training providers. Its platform utilizes a matching algorithm and other employers’ feedback to identify trusted providers, hire candidates, and signal hiring needs.
BHEF has been working with industry, data, nonprofit, and higher education partners to develop an Upskilling Solutions Marketplace, which will provide information on regional skill demand and job trends, tools to capture employee skills and identify opportunities for upskilling, and micro-credentials developed by higher education institutions. The Marketplace will address employers’ key barriers to upskilling, enable an increase in rapid upskilling connections between individuals, employers, and educational institutions, and provide additional solutions for the post-COVID-19 employment landscape.
There is movement on the policy front as well. On June 26, 2020, President Donald Trump issued the Executive Order on Modernizing and Reforming the Assessment and Hiring of Federal Job Candidates. The federal government’s civilian workforce exceeds 2.1 million and the goal of the order is to ensure that the individuals most capable of performing the roles and responsibilities required of a specific position are those hired for that position. Currently, for most federal jobs, traditional education—high school, college, or graduate-level—is either an absolute requirement or the only path to consideration. The order recognizes that an overreliance on college degrees excludes capable candidates, particularly in jobs related to emerging technologies, and disproportionately burdens low-income Americans. In response, the order directs reforms around government job postings, candidate assessment, and hiring, and it encourages the same practices in the private sector.
What’s Next?
The increasing number of major organizations promoting the importance of skills and credentials in the future of hiring gives cautious optimism for change. More than three-quarters of employers reported that they will reevaluate their hiring requirements to find candidates and fill vacant positions. And as skills become a focal point in the hiring process, hiring decision-makers expect skills assessments to become more important when evaluating candidates.
So, businesses realize the value of skills, but they unwittingly limit their candidate pool by making their initial cut by degree. Not only will that impact the speed with which they recover from COVID-19, it will hamper their ability to secure diverse talent. It will also decrease workforce participation and exacerbate inequality in job opportunities, as we saw after the Great Recession. It is time to look at skills first.
