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Skills-Based Hiring vs Degree-Based Hiring

Just shy of 120 people apply to every job posting. That’s a lot of resumes and interviews to sift through if a hiring manager has yet to have a type of employee in mind. There are two broad ways to go about the hiring process: skill-based hiring and degree-based hiring. But the question remains, which type is better for your company regarding retention, production, and ease of management? We’ve got the answer.

Here are the facts about skill-based hiring vs degree based.

What is Skills-Based Hiring?

Skills-based hiring is the practice of prioritizing actual job experience and skills over other factors. Companies may require a candidate to have on-the-job experience, apprenticeships, and industry-relevant licenses. Also worth noting, skills-based hiring typically relies on reference checks to ensure the person has the knowledge they need to succeed.

What is Degree-Based Hiring?

Degree-based hiring refers to employers that prefer college education over just experience. Background checks easily validate degree-based hiring, but candidates may lack on-the-job knowledge. However, an employer can rest assured that a candidate with a degree possesses at least the basic knowledge to start working.

When is Skill-Based Hiring the Best Approach?

Skill-based hiring is ideal in industries where results outweigh technical experience—for example, sales. A person doesn’t need a degree in economics, sales, or business to be a successful salesperson. The same can be said for creative jobs like graphic design, musician, writer, etc. 

Certain skills can’t necessarily be taught. For example, hiring a salesperson who understands a customer’s needs but has a hard time with paperwork is arguably a better hire than someone who excels in paperwork but doesn’t know how to close a deal. 

Additionally, specific jobs require apprenticeships due to the sheer number of factors and situations that are impossible to cover in a strictly academic setting, such as electrician, mechanic, and other high-paying “blue-collar” jobs. Much like degree-based hiring, skill-based is an industry-specific practice.

When is Degree-Based Hiring the Best Approach?

Degree-based hiring is essential for high-level medical, law, law enforcement, academic, and high-responsibility industries. It’s also ideal for roles that require a base understanding of the field, like human resources, CFO, CEO, etc. Typically, degree-based jobs require more technical know-how to be successful, whereas on-the-job skills are secondary. There was a time when degrees held the keys to high-paying jobs. Those keys unlocked positions garnering $80-100k a year.

 However, factors like the gig economy, side hustles, etc., that allow a person to gain highly technical skills in low-stakes environments have caused a societal shift from degree-based hiring. Additionally, inflation has caused the pay gap between degree-based jobs and skills-based hiring to be closer than in the past. 

Hybrid Hiring: Should Your Company Consider Both Skill-Based and Degree-Based Recruitment?

A savvy hiring manager understands that limiting their talent pool to skills-based hiring or degree-based hiring is doing a disservice to their company, employees, and overall production. Leveraging both practices lets you get a pick of top candidates and make decisions based on which candidate would be more effective instead of just how they present on paper or even in an interview. 

Downsides of Skill-Based & Degree-Based Hiring

Here are the top 3 downsides to skills-based and degree-based hiring.

Skills Based Hiring

Interview Questions: If you prefer skills-based hiring, you must build in-depth questions centered around industry knowledge. Granted, similar questions may arise for degree-based hiring, but you can reasonably assume a degree gives a person a basic understanding of their role.

 In comparison, a skills-based candidate’s experience relies on having a good teacher. If the person or company they learned from didn’t train them adequately, they might have severe blindspots in their job. To relate to the earlier example of sales, a skills-based salesperson may have worked in a place with less than ethical practices and, in turn, may unknowingly bring those practices over, which can open a company up to legal ramifications for false advertising, bait-and-switch tactics, etc. Even without the legal ramifications, you have a business reputation to consider. 

Higher Education Requirements: There are specific industries, such as the medical field, where a person can hold entry-level jobs like resident assistance, home health aide, etc., without a degree. However, they’ll need a traditional education to advance in their field. As such, assuming they don’t pursue said education, they may become stagnant as they see no way to move up. This, in turn, can cause them to bounce between companies based on pay or leave an industry altogether to pursue upward mobility. And that can hurt your retention rates and overall productivity. 

More Emphasis on Training: Skills-based employees may lack “soft skills.” Soft skills are the nuanced skills that every job requires. For example, a skill-based mechanic may know how to service a specific type of vehicle or complete a particular repair. However, because they’ve never needed the skill in the past, they may need to learn how to do smaller, more niche tasks that they’ve never been trained for. To close the gap between soft and hard skills, the employer must prioritize continuous training. 

Degree Based Hiring

Lacks on the Job Knowledge: Traditional education often prepares a person to succeed in an ideal situation. For example, a programmer may know precisely how to build a website until a coding bug occurs that they’ve never dealt with. In comparison, a skills-based programmer who’s made their living off fixing that bug knows the solution like the back of their hand. There’s a layer of tribal knowledge required in any field, such as learning specific industry-wide systems, vernacular, and solutions that aren’t always covered in a classroom.

Not Cost Effective: Undoubtedly, quality candidates exist in both skill and degree-based hiring. However, hiring a candidate with a degree but ineffective in their actual role is more costly than hiring a skill-based candidate. Many employers pay a candidate more for their degree but still have to train them as much as a skills-based employee. This can cut into your bottom line. 

Work Ethic: Skills-based employees who have actively worked in their field understand their role intimately. They also know that they enjoy their job or at the least understand what to expect. However, a person with a degree may have little experience, which is to say they may quickly discover they aren’t cut out for the role, despite getting a degree. An easy example of this is office jobs. People may soon realize they don’t prefer regimented workdays, stagnant environments, and office politics, and that displeasure will reflect in their quality of work. 

Bottom Line

The bottom line is not to limit your talent pool by only using skills-based hiring or degree-based. But ensure you do your due diligence by asking layered questions requiring industry-specific knowledge to find your ideal candidate. For degree-based hiring, utilize KarmaCheck’s Education Verification service to ensure your candidate is exactly who they say they are. Remember, a good employee comes in many shapes and forms, and it’s up to you to know what to look for. But, KarmaCheck can help. Reach out to us to learn how we can streamline your hiring.


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