Talk of digital credentials and skills in hiring is everywhere—but the tech isn’t there yet

Most HR tech still isn’t designed to accept digital credentials or gather robust skills data, according a new in-depth analysis. We dug into the findings and talked to the authors about the implications for skills-based hiring.

Everybody is talking about skills-based hiring—with five states, large swaths of the federal government, and some of the country’s biggest corporate names now saying they’re doing it. The proof, however, isn’t in press releases but in actual hiring systems.

And many of those hiring systems lag substantially behind the rhetoric, according to a new analysis by Northeastern University’s Center for the Future of Higher Education and Talent Strategy. A team at the center and 1EdTech did a deep dive with a sample of HR talent vendors—representing about 40% of the U.S. applicant tracking system market—and found that most of their systems don’t yet accept digital credentials or collect skills data in a structured way.

Rather, they still primarily record basic educational information, like high school diplomas and college degrees, and “unstructured data” like PDF attachments of resumes. Those software limitations raise important questions about just how far most companies have gone in using digital credentials and richer skills data for hiring.

“Pursuing skills-based hiring is not just de-emphasizing degree requirements, but needs mechanisms to implement the approach,” says Sean Gallagher, executive director of Northeastern’s center and lead author of the report.

And the No. 1 reason HR tech providers say they aren’t doing more to capture digital credentials or structured skills data is that most of their customers aren’t saying that capability is a top priority.

Slow, but growing interest

Signs of change: Companies are going to have to start asking for it, the researchers say, if there’s going to be real movement on benefiting from the potential of digital credentials in hiring. There are some signs that shift may be getting underway: many HR tech providers mentioned that some “large and progressive” customers are requesting support for processing digital credentials and richer skills data.

Right now, HR tech companies are responding with custom solutions for those big customers—but they expect that they’ll reach a critical mass of companies asking for that kind of support, which will make it attractive to incorporate digital credentials and skills into their standard offerings.

Jobvite, for example, is creating a solution for one large customer in such a way that it could eventually be adopted more broadly.  “That will help to seed the market and begin a very slow adoption,” Andrew Cunsolo, senior director of product management at Jobvite, told the researchers.

“But at some point, maybe 5 or 10 years,” he said, “enough of the vendors, employers, and institutions will be producing and consuming digital credentials, and enough people with a wallet will have their digital credentials—it’ll be a hockey stick adoption curve: but we’re on the bottom of the stick right now.

The details: The research dug deep on vendors, dissecting the capabilities of the applicant tracking systems and other tech currently on the market. For anyone interested in where the rubber hits the road on skills-based hiring, it’s worth a close read. Some of the other key findings:

  • Job candidates’ applications often pass through multiple software systems and intermediaries, which can lead to inconsistencies and data loss.
  • In addition to not routinely supporting digital credentials, most systems don’t automatically authenticate traditional educational credentials either. They capture degrees and diplomas, but don’t verify.
  • HR tech firms are eager to leverage AI.

So now what? We talked with the researchers from Northeastern’s center and 1EdTech about the findings and the big picture of what the state of HR tech means for the adoption of digital credentials and the skills-based hiring movement. Here’s what they had to say:

First, can you step back and share why HR tech is important for skills-based hiring and the impact of digital credentials? 

Gallagher: Pursuing skills-based hiring is not just de-emphasizing degree requirements, but needs mechanisms to implement the approach. Digital credentials are one key avenue, particularly because of the value of the additional data that can be included within the credential. And in general, we’re also talking about how microcredentials and all educational information is treated independent of true “digital” functionality.

More broadly, fulfilling the promise of digital credentials and their features and functionality hinges on the HR system and employers being able to use them.

Chris Houston, learning software analyst at 1EdTech: It is important for HR tech vendors to support skills-based hiring and digital credentials as it would likely be too large of a lift for small and medium-sized businesses to attempt on their own.  Some well-respected analysts, Josh Bersin in particular, feel that skillstech will be the future of re-skilling, up-skilling internally as well as external hiring of talent.  As the HR tech industry goes through its larger digital transformation, the use of proxies such as degrees is becoming less relevant as more robust information becomes available on what skills a candidate may possess at a more granular level and what is actually needed to successfully perform a job role.  

You found that some large and progressive customers are starting to push for ways to capture digital credentials and richer skills data. Did the people you talked to expect to see that accelerate in the next few years?

Gallagher: Yes, many of the technology companies we interviewed referenced that their larger and more advanced corporate customers were beginning to demand greater functionality related to skills and credentials, whether implemented through customization or otherwise. These employers are among the early adopters and their potential influence is important. 

The HR tech companies and we expect this to accelerate, but it is a multi-year process based on product roadmaps and the fact that many corporate customers aren’t prioritizing this yet.

What role can colleges and the edtech community play in furthering adoption—and should they?

Gallagher: It occurs to me that digital credentialing is still a bit of a supply-side phenomenon—the education community can do more to build awareness of these new options. Even though edtech innovators are well-aware of digital credentials, it is still early in terms of the employer demand, beyond a general awareness.  

Houston: We need more partnerships between colleges and employers (or industry) in an attempt to create a virtuous cycle where curriculum and learning outcomes are influenced by employer and industry needs. Colleges can also do more to bolster learner agency and learner control over their education and learning records.  

If we’re at the bottom of the hockey stick of the adoption curve, what needs to happen now to ensure that the solutions that get designed are efficient and actually expand equity?

Emilee Trieckel, research associate in Northeastern’s Center for the Future of Higher Education and Talent Strategy: Ultimately the most important thing is collaboration and communication within the ecosystem. I think the reason why we haven’t seen that hockey stick curve is because for too long key players have been working in their respective silos. Employers, technology providers, education institutions, and policymakers will need to collaborate in a concerted effort in order to drive progress.

Houston: There is a concern about creating a new class system based on those with documented skills and credentials versus those without, and so these solutions do need to be thought out with equity being a major principle. Inefficient solutions and mundane incremental improvements will likely not move the needle and certainly won’t be innovative, so it is important to understand and describe the problems which the solution may solve and not go into it blindly expecting a silver bullet or easy button.   

Mark Leuba, vice president of product management at 1EdTech: An opportunity to ensure equity is emphasizing learner-worker control over their credentials and an ecosystem that can incorporate low bias practices like anonymity to focus the recruiter’s attention, filters, and algorithms on demonstrated skills over other factors.

Are concerns about bias and inequity heightened by the increased interest in AI in the HR vendor space?

Houston: Good question. Likely the answer is yes. As seemingly everyone is excited and impressed by Chat GPT and other AI tools, everyone is also a bit skeptical of black boxes and where this may be headed in the future. The heart of this concern, at this point, is around the data that is used to train the AI and the lack of transparency here. Chat GPT doesn’t release information about the underlying training data, and this means that some form of bias is likely present, though we, as the general public, have no way to make this determination.   

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