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Whether you call it a skills gap, a hiring crunch, or a good ol’ fashioned talent shortage, executives from virtually every industry are having a hard time finding talent and the employees they need to fill critical roles on their teams.
Most organizations blame the market.
Ultra-low unemployment levels mean there’s a smaller pool of available talent, and today’s job-seekers are much more discerning, so attributing these gaps to external factors seems like a logical conclusion.
Yet despite your best efforts to attract new talent (supersizing salaries, offering sign-on bonuses, adding new perks, etc.), those roles remain open. Often for a long, long time.
So what’s a hiring manager to do?
The answer is deceptively simple: hire based on skills, not qualifications.
This practice is rapidly gaining traction among some of the world’s leading employers. In fact, during the past year alone, LinkedIn reports a 21% increase in job postings that advertise skills vs. qualifications.
Skills-based hiring may be on the rise because it offers immediate relief from today’s labor market challenges, but it’s also a response to a much larger economic trend that can permanently change the way companies find, acquire, and retain talent.
According to a March 2023 Wall Street Journal poll, the perceived value of a traditional four-year degree is now lower than ever. For the first time, the majority of respondents—some 56%—indicate that a traditional degree simply isn’t worth the cost.
A decade ago, only 40% held the same opinion.
Although the motivating factors behind these responses are varied, there are a few dynamics that are likely contributing to the drop in confidence:
- Educational debt is skyrocketing
In the past four decades, the average “all-in” cost to secure an undergraduate degree in the United States increased by an astonishing 169%. This forced more than half of all college graduates to carry some level of educational debt, with the average debt load coming in at roughly $28,400. Students who went on to pursue advanced degrees fared even worse. When paired with higher prices on everything from fuel and food to housing and transportation, large monthly student loan bills can overwhelm budgets that are already stretched thin. - Net worth gaps are closing
Research by the Federal Reserve Bank of St. Louis shows that the gap in net worth between college grads and non-grads is narrowing at an accelerated rate. Workers who are unburdened by student loan debt can save and invest more of their income into wealth-building vehicles such as home ownership, stocks, and other similar assets, making the collegiate return on investment calculation even harder. - Skills acquired in college can become rapidly outdated
In previous years, attending a four-year college would ensure graduates could enter the workforce armed with a set of skills that serve as a launchpad for growing a successful career. Given the pace of change and technological evolution, however, that is no longer the case for many vocations. The needs required to effectively fill roles that rely on data analysis or other forms of technical prowess can rapidly outpace the skills gained during college. Most individuals who graduated as recently as 2021, for example, likely didn’t have an opportunity to utilize OpenAI or ChatGPT, two tools that are poised to disrupt virtually every role within an enterprise.
As volatility continues to weigh on the economy and as interest rates remain high, it’s likely that this trend will continue. Recent reports show a drop in enrollment numbers in 2022, and barring any major shifts in economic policy or softness in labor markets, the downward trend will likely continue into the 2023/2024 academic year.
As these conditions signal potential challenges for colleges and universities, employers could see some relief in the form of eager and willing individuals ready to join the workforce directly from high school or fresh from a career change… and the timing couldn’t be better.
Here are some steps you can take to tap into this burgeoning market:
- Eliminate degree requirements where possible
For some roles, a four-year or advanced degree is a necessity. For others, a degree requirement is a “we’ve always done it that way” artifact from a bygone era. Given the wealth of training and certificate programs available today, clinging to a four-year degree requirement could create an unnecessary barrier that prevents highly skilled workers from joining the team. This requirement could also dissuade existing employees from other parts of the business from applying for open roles on your team, even if they took the initiative to acquire the skills necessary to do the job. Career pathing and internal mobility play an increasingly large role in retention, so removing the degree barrier can benefit your business on both the recruiting and retention fronts. - Invest in upskilling/reskilling workers
Keeping pace with changes in technology and market demands requires adopting an attitude that embraces continuous learning. Investing in programs that help your teams level up their skills—no matter what level they’re operating on today—is another surefire way to boost retention. Similarly, as business needs evolve, in-demand roles of today might be less necessary in the future. Rather than conducting mass layoffs, extend reskilling programs instead. This is a powerful way to help employees find new (and often, more lucrative) career paths while minimizing the disruption that layoffs can bring. - Deliver college-like education at work
Training programs have been a part of the corporate landscape for decades, but a new breed of platforms called “capability academies” combine human-led instruction with online coursework to ensure skills mastery in a way that ‘traditional’ corporate learning methodologies can’t touch. These Academies also offer both personalized coaching and mentorship, often led by noteworthy subject matter experts in their respective fields. Add portfolio work that’s rooted in addressing real-world challenges you’re facing in the workplace today, and you’re delivering a college-like experience to team members while they’re actively supporting the business. This approach also ensures their new skills are immediately applicable, making it a win/win for both parties.
No matter what economic report, market study, or analyst treatise you read, all signs point to the inescapable conclusion that the “same old, same old” simply isn’t going to cut it anymore. The pace of change had been accelerating in the years prior to the pandemic, but the sudden and dramatic changes brought about by the workplace’s response to COVID just poured rocket fuel on the digital transformation process.
The only reasonable response is to lean in to the market dynamics that are unfolding and make disruption work to your advantage. Hiring, retaining, and building an elite team isn’t impossible in this economy… it just requires shaking off a few dated practices that no longer meet the needs of your business.
Teams that make these changes will enjoy higher morale, improved competitiveness, and greater agility and resilience. Teams that are stubbornly waiting for things to “get back to normal,” however, will be left behind.
Which path will you choose?
Since you’re here…
Springboard for Business grows businesses by empowering leaders and their teams with the critical thinking, data, and technology skills central to the future of work. Companies like Amazon, Walmart, HP, JPMorgan Chase, and Visa have partnered with Springboard for Business to upskill and reskill employees around the world. Click here to learn more.
