Why are UK employers making the move to skills-based hiring?
You’ve heard of “Peak Oil,” but maybe not “Peak Degrees.” But with employers rapidly losing confidence in the value of college degrees, we may soon hit it. While over half of college graduates believe they’re ready to apply their skills in the workforce, only a small fraction of employers agree — which explains why an estimated 6 million American jobs remain unfilled.
Meanwhile, in an attempt to pull more oil from a declining patch, 27% of employers are now demanding master’s degree for jobs that used to only require a bachelor’s, and 37% now demand a bachelor’s degree for jobs that once required a high school diploma.
Some companies across the pond have already decided to stop drilling. Two years ago, Ernst & Young (EY), which ranks among the largest university recruiters in the UK, removed degree classification from its hiring criteria — citing a lack of evidence that university success correlated with job performance.
Instead, EY applicants are now offered a battery of assessments to ascertain whether candidates are a good match, regardless of whether they have degrees. Last month, The Times of London reported that EY increased the diversity of its new hires by 10%. Penguin Random House has already announced it is doing the same. Although a recent LinkedIn Learning survey suggests that U.S. firms are considering this shift to skills-based hiring, no major U.S. employer has announced they’ve done it.
Here’s why UK employers are beating us to the punch on skills-based hiring:
Beyond the “Class Ceiling”
In 2011, the UK Government launched a Social Mobility Business Compact designed to engage employers in widening access to opportunity by, among other things, dropping the names of schools attended from job applications.
The Compact puts social mobility squarely on the business agenda through measurement and accountability, using the carrots of recognition and appreciation — rather than the sticks of intervention and quotas. More than 150 employers have signed on and momentum is building.
Major employers will benchmark outcomes through a new Social Mobility Employer Index designed to track economic performance against, among other things, educational attainment. Results, scheduled to be published later this year, are expected to highlight firms that take non-traditional approaches to identifying talent.
New metric: Distance traveled
Savvy British employers aren’t just making the move to skills-based hiring in response to the political imperative of social mobility. They also want to ensure their workforce is diverse, representative of and responsive to their customer base. And they know that moving beyond legacy proxies to grow a more diverse pipeline will also result in better talent.
Research suggests that jobseekers who come from deeply challenging social and economic backgrounds but complete a credential have demonstrated drive, resilience and work ethic. As it turns out, “distance traveled,” more so than academic pedigree, is predictive of career success.
A recent Capp survey of over 700 working adults in the UK found that the four strengths most strongly associated with upward social mobility were Catalyst (being able to motivate and inspire others), Change Agent (advocating for and implementing change), Drive (the motivation to push oneself to succeed), and Resilience (recovering quickly from setbacks). This paints a clear picture of people who have grit, tenacity and resolve — just the characteristics many organizations are looking to recruit.
Today’s degree- and pedigree-based hiring practices not only hide “distance traveled” from employers, they may very well discriminate against it.
A budding market
UK enthusiasm for skills-based hiring is fueling the emergence of solutions providers to navigate the multi-faceted challenge of reinventing hiring. Four years ago, Nestlé became the first major employer to make the shift. Nestlé replaced its existing hiring screens with three distinct online assessments: a mindset assessment (to evaluate the attitude of candidates); a situational strengths test (to provide candidates with a realistic job preview — and assess strengths relative to the role); and a numerical reasoning test (which shows no adverse impact across gender, ethnicity or socioeconomic status).
Nestlé’s early results were sweet and well documented. Over 20% of new hires would have been immediately screened out under their prior hiring model. 94% of applicants indicated that the company's approach sent a positive social message. 82% found it motivating that, if they weren’t the right match for Nestlé, the assessments they completed could lead them to opportunities with other employers. Outcomes like these have drawn attention from other UK employers, including EY and Barclays.
The shift to skills-based hiring is beginning to unlock opportunity for many Brits who, like their American counterparts believe the system is "rigged" against them. Within a decade, terms like competency- skills- and strengths-based hiring will be anachronisms because it will seem incredible that employers ever hired differently. With leadership from pioneering employers and solutions providers, expect to see similar trends here in the U.S.
Editor's note: This is a guest contribution from Ryan Craig, author of “College Disrupted, The Great Unbundling of Higher Education,” and Managing Director at University Ventures ; and Alex Linley, founder and CEO of Capp, a UK-based recruitment technology company.