How to Make Talent-Based Hiring and Promotion a Reality

For the past few years, the concept of skills-based hiring has been widely embraced by business leaders, policymakers, and workforce reformers. Spurred by the efforts of groups like Opportunity@Work, which partnered with the Ad Council on a national Tear the Paper Ceiling advocacy campaign, governors and CEOS have dropped degree requirements for many corporate and state jobs. At first glance, the United States might seem to be entering a new era in which college degrees simply don’t have the relevance they used to as a gateway to career success.

But despite all the buzz around skills-based hiring, the reality is much more complicated. Research by organizations like the Burning Glass Institute has shown that whatever official degree requirements may be, very few employers are actually hiring based on skills. When it comes to getting hired, degrees still matter, and they matter a lot. Yet there remains strong interest in identifying the specific skills needed for today’s jobs and the jobs of the future, then mapping a variety of degree or non-degree pathways learners can take to acquire the competencies they need to get ahead. Meanwhile, technology has added a recent wrinkle: growing uncertainty around the exact impact of artificial intelligence on the jobs and industries of today. How can companies adapt their talent-management policies to this new era?

A key framing concept is to be less preoccupied with the false choice of degrees versus skills. A rigid policy of hiring for skills would be no different than a rigid policy of hiring for degrees - or, for that matter, hiring for years of experience or for prior job title. Degrees include skills, of course. And individual skills have a shorter and shorter shelf life in a time of rapid change, as today’s workplace is reshaped by forces ranging from artificial intelligence to remote work practices. Employers should be hiring for intellectual curiosity, self-motivated learning and the ability to convert knowledge into profitable business growth. That means being agnostic about whether candidates hold college degrees or short-term credentials, or have completed workplace training programs. What matters is the skill-building results that a particular pathway can demonstrate.

Still, there are significant obstacles to making hiring for talent a reality. Every employer is trying to figure out exactly what abilities are required for in-demand jobs today and what the most important skills employees are going to need in the coming years – particularly as the advent of AI is already transforming not only specific roles but entire sectors. Business leaders are eager to understand where gaps exist, where potential talent to fill those gaps can be found, and which talent-development pathways will help produce the employees they need. Unfortunately, employers lack effective tools to assess skills, which leads to low adoption of skills-based hiring and training.

Additionally, when organizational cultures don’t offer strong support for skills development, it’s no wonder that workers don’t follow through. According to research from Statista, in 2023 the average employee spent less than 60 hours taking classes or participating in training for the year. Willis Towers Watson, a risk management and advisory company, reports that while about 90% of midsize and large employers offer some kind of tuition reimbursement, less than 10% of workers at companies that offer the initiatives use them annually. Without strong learning outcomes metrics for many education programs, too little is known about the return on investment (ROI) of upskilling efforts. That gives employers and workers alike little incentive to embrace those programs.

A new approach

Much as new power sources fueled the Industrial Revolution and new technology fueled the age of the Internet, artificial intelligence is poised to transform today’s economy. This means companies urgently need to take a new approach to hiring for talent and empowering employees to develop the skills they need. This will involve several key steps, beginning with a systematic examination of job descriptions. There’s little question that specific skills need to be integrated into job descriptions as a matter of course. This will take time and authentic self-scrutiny by HR leaders: It can’t just be a quick, pro forma exercise that involves minor tweaks to existing job descriptions. Managers need to include skills needed today and do their best to project future requirements.

For example, HR leaders at a manufacturing company may realize they need to shift from traditional manual labor roles to more tech-savvy positions due to industry automation trends. If the future state is a workforce skilled in operating and programming automated machinery, they may want to update job descriptions to include requirements for knowledge in automation software and robotics, and invest in training programs to help current employees acquire these skills.

The next step will be to develop a better evidence base on demonstrated outcomes of different education and training solutions. Employers and employees alike need a clearer view beyond easily measured data points - such as number of applications and percentage of participants who complete. Instead, they need to gauge effectiveness. Were participants in a given class or program more likely to be promoted? Was retention higher for those who completed skills training? Did workforce diversity improve? How can full degrees like MBAs, which reflect a bundle of skills and differ by university, be fairly evaluated in an outcomes-focused education and training environment?

With better ROI information in hand - and we recognize this is a work in progress and will take time - employers can guide employees to relevant programs that will help them build their skills. Again, it’s crucial to focus on results and to be agnostic about the exact pathway workers take to develop skills. Many jobs require a balance of skills - both durable, general skills like problem-solving, communicating, and critical thinking, as well as targeted skills like cybersecurity, marketing, or data analysis. So managers should help employees develop skills with this big picture in mind. This approach is the best way to build an organization with employees who hold a wide range of the skills needed to support your business strategies.

Our bottom line is that hiring for talent is possible, but it will take several key steps. First, organizations that want to follow this path require a complete culture change, led by senior management. That must include a compensation structure that reinforces the need for skills and continuous learning. And the new culture has to include real focus, with thoughtful guidance, on helping employees help themselves. We’ve all heard the jokes about classes in basket-weaving - a classic example of a course without much relevance to the actual demands of the workforce (unless, of course, you are in the basket weaving profession!) To give employees the best guidance, and to meet their own business needs, HR leaders and employers need to steer workers toward a range of skill development pathways that have a track record of getting real results.