Employers across industries have loosened degree requirements in the past few years as they compete for workers and look to diversify their candidate pools. Big names in tech, like Accenture and IBM, have led the way. But dropping degree requirements and fully shifting to skills-based hiring aren’t one and the same.
We talked with Taylor McLemore, managing director of the Techstars Workforce Development Accelerator, about what’s going on behind the headlines and what he expects to see if and when the labor market cools.
What sort of openness are you seeing among employers to hiring tech workers without four-year degrees? And where is the most movement in terms of companies—big ones, small ones—and roles?
A: From my conversations with employers, and from what founders in our portfolio selling solutions to employers have shared, there is more and more consideration for skills-based hiring. It seems that there is an evolution occurring where skills-based hiring is evolving from an abstract concept that most employers would not disagree with in theory to actually removing degree requirements as the first actionable step in making this tangible.
While this evolution and alignment with skills-based hiring is occurring across many industries, it is pronounced with tech companies and other companies in need of significant technical talent. In my estimation, this started with pragmatism over philosophy—mostly a function of the significant dislocation between supply and demand in the labor market for these roles. Significant new technology venture creation, deployment of historic amounts of venture capital, and overall growth of the technology sector and technology-related service sectors has amplified this challenge for employers. It is hard to find qualified people with experience, so employers in this space are open to experimentation.
While it starts with pragmatism for most, it interestingly intersects with the DEI goals that many of these employers have embraced and expanded over the past few years. This has led to more companies expressing it as a higher level strategic initiative. At the end of the day whether there is strategic motivation or philosophical alignment, skills-based hiring and removing degree requirements for roles is a tactical concept for talent acquisition.
This is a critical point to double click on, because a mandate from senior management to remove degree requirements is not sufficient by itself to change the historical preference for a degree as a signaling device for skill, capability, and sometimes potential. It is easy to aggregate up hiring statistics in an effort to see trends, but hiring managers hire people one at a time. The opinion, buy-in, and understanding of division leaders, operational staff, and hiring managers are even more influential than an edict from above on the ultimate outcome.
For the employers that are dropping degree requirements, I have been asking follow up questions in three directions:
- How are you coordinating removing degree requirements with your hiring manager candidate selection processes?
- How are you collecting data to see the flow of degree versus non-degree candidates?
- How are you operationally implementing this beyond removing degree requirements.
Why do I ask these questions? On point one, without training, any new process or tool will be most likely discarded and at worst misused with negative outcomes. On point two, “what gets measured, gets managed” and this is no different. On point three, the talent acquisition process is almost always a dynamic collaboration between multiple parties interacting with complex policies procedures. Without a consideration for how a change at the top of the talent funnel—like removing degree requirements—impacts the rest of the process, change has little probability of influencing outcomes. Getting any leverage out of removing degree requirements requires intention across an employer.
And what do you hear from companies when you ask about how the shift to skills-based hiring is really playing out?
A: The responses to my questions thus far have been mixed with no clear pattern. I get “we are just getting started,” “this is a work in progress,” or “we are figuring it out” type answers. I deeply respect those answers as getting started is hard and takes significant organizational will to adjust hiring practices that have been in place for decades. Skills-based hiring will always be a work in progress, given that at its core it is an unbundling of the intermediation that education institutions have provided for hundreds of years with their degrees and certificates. That’s now deeply embedded in our culture and how we think about how education and training connect to work and personal identity.
Based on my conversations with employers there are a few concerns if hiring managers are not brought along, data is not captured, and processes are not evolved. It is easy to get two hiring pipelines flowing to a hiring manager. If you are using applicant tracking systems that continue to highlight education as a core data field for candidate profiles, those without a degree can seem like incomplete candidates even if the requirement was removed from the job description. How many companies are masking education completely? Few in my estimation.
One people leader described this as degrees are less important but we are now leaning heavier on directly-relatable past experience. This might be directionally correct in terms of not explicitly considering degrees for candidate eligibility, but in a world still ruled by degrees there is a high correlation between those with deep experience and the degrees that got them the access to gain that experience. This also continues to present major challenges for people early in their career, and those looking to pivot or transition job fields.
Does this look different at tech companies or in tech roles than it does in other industries?
A: Tech is interesting because it presents one of the largest labor market dislocations and one of the greatest mismatches of training and education with day one employer skill needs. Part of this is that tech skills are evolving at a rate faster than many other industries. Additionally, most successful technologists do not speak highly about the current state of four-year computer science curriculums for immediate career applicability. That criticism can be levied at many points of misalignment.
Some universities are adapting with training that is focused more on specific modern technology stacks than on theoretical computer science education. If you look at the middle-skill portion of the technology labor market, there are very interesting trends emerging at early stages. Institutions that are exploring models that put emphasis on certification, rather than graduation, are demonstrating they understand the challenge facing employers and job seekers—putting student employment outcomes before accreditation pressures. Bootcamps and other nontraditional training formats are prioritizing industry alignment, and that is positive at many levels.
There is a tradeoff with these options because you don’t get the oversight on education efficacy that you get through accreditation. That said, I am a skeptic that current accreditation systems are built to dynamically keep up with the speed of technology industry transformation. More importantly, those systems underemphasize student employment outcomes. We face a hard tradeoff—on the one hand, we have an exciting advance of tech employers dropping degree requirements in order to support new career pathways, increase the speed of training, and expand economic opportunity and on the other, concerns about consumer protection that come with nontraditional education offerings. One hope would be for market transparency to put the consumer looking for training in a position to make an informed decision, but the education market offers little of that.
One last consideration is that the macro economic and geopolitical environment is offering some very grim signals for what is to come. Employers are battening the hatches, transitioning from years of frenetic competition for talent to a focus on talent retention and productivity. Will this be the ebb tide for skill based hiring? This is a real concern in my opinion.
We recently spoke with Bitwise Industries, which you know well, and was surprised by the scale it has achieved—with diverse learners in tertiary markets around the country getting good entry-level gigs. Are you seeing education and training models with viable scaling possibilities?
A: Many of the new training offerings are compelling in the speed of career transition and student return on investment they offer. The training content is commonly hyper focused on the skills needed for day one on the job. Many of the best programs are layering training with internship or informal apprenticeship elements as the bridge between the academic acquisition of new skills to the productive application of those new skills. One consideration for the broader labor market is how much these programs are training job seekers for what is needed past day one. Best of breed programs are pairing soft skill and longer horizon professional development education with technical skill training. If programs are mostly focused on day one and entry-level training, the burden for long-term employee success is shifting even more to employers.
These models are inherently more scalable than most traditional education models. They are leaning on open source curriculums and they are comfortable with selecting from lower- and in some cases no-cost training materials in a manner that makes traditional institutions uncomfortable and or underminds the theoretical brand value based on exclusivity and paying for access to content. The question is how do these new training institutions scale the very custom and close relationships with local employers that usually get them started. I believe there are ways to solve that, but it will not be easy. What would be the downfall of these new institutions would be centralizing employer engagement to a separate department, similar to the modern day career services of universities, resulting in the distancing of what is the most powerful element of these training offerings—the close integration of the training with what is in demand in the labor market.