Most companies have turned to skills-based hiring, but there’s a big problem: Workers are missing 3 key skills they're looking for

The war for talent has already become a war for skills, and a ritzy college diploma isn’t the differentiator it once was.

A great mismatch between skills employers want and skills workers are able to provide has led to an increased focus on skills-based hiring, rendering old credentials like college degrees or years of experience less significant. Everyone from former Secretary of State Condoleezza Rice and former IBM CEO Ginni Rometty to Microsoft CEO Satya Nadella and LinkedIn CEO Ryan Roslansky have stressed the importance of skills-based hiring and skill development among workers. That’s probably great news to those who would prefer not to attend college at all, given the insurmountable state of the student debt crisis.

Over the past few years, companies of all kinds in both the private and public sectors have been gradually shedding their degree requirements for new hires. Nearly half (45%) of respondents told ZipRecruiter in a new 2,000-person survey they’ve nixed degree requirements for certain roles this year, and 72% said they now practice skills-based hiring by definitively prioritizing skills over certificates—a sign that skills-first attitudes are catching fire. 

The exact reasons underpinning the move is unclear, per ZipRecruiter. But the report suggests it could be a response to dropping college enrollment, winnowed interest in certain fields (like finance and accounting), the increased simplicity of offshoring roles, and “rising skepticism about the value of a degree amid grade inflation and generative AI.”

Employers are “kind of pulling out all the stops and doing as much as they can” to narrow the skills gap, Julia Pollak, ZipRecruiter’s chief economist, tells Fortune. They’re “increasingly shifting to [strategies] that can have permanent effects, not just temporary bandaids of the past.”

That’s with good reason: According to the U.S. Chamber of Commerce, 95% of executives and HR heads say non-traditional candidates perform just as well, if not better than, degree-holders. Competency, ability to learn, and versatility is more practical than pedigree, leaders have found.

“With 1.5 job openings for every unemployed job seeker, it’s clear that narrowing the talent gap continues to be a challenge,” Richard Wahlquist, CEO of the American Staffing Association, tells Fortune. “Skills-based hiring can be a more fair and equitable way to hire people, and it can lead to more qualified and engaged workforces.”

Indeed, over half of ZipRecruiter respondents said that compulsory degree requirements are a major barrier to diversity, equity, and inclusion goals. The problem is compounded for smaller firms with less capital to invest in their recruitment and retention efforts to begin with. Businesses who were more likely to struggle with hiring (mainly small and medium-size firms) were more likely than larger and more established businesses to drop degree requirements and center skills. 

This surprised Pollak, she says. “State government after state government is adopting skill-based hiring, and major companies like Walmart are making announcements to that effect. But I didn’t think it was a trend among small businesses.”

Clearly, they’re being as creative as they can, she adds. “Maybe because they’re the most constrained.” 

The three skills bosses want most

ZipRecruiter’s new findings align neatly with their previous research on skills—and statements from executives over the years. The share of job listings on ZipRecruiter calling for an undergraduate degree dropped 10% between this year and last year. 

But recruiters are still having a hard time finding the right people with the right skills to fill those roles. Nearly a quarter of employers told ZipRecruiter they’ve struggled to fill a vacancy due to a skills gap. The big problem is a fundamental mismatch between priorities. The top three skills employers say candidates most lack during interviews are time management, professionalism, and critical thinking. 

Many employers “have been stuck not filling positions because they couldn’t find people with the right skills or training,” Pollak says. “But that constraint may be loosened when they can consider people without [a typical] background or necessary skills, and bring them up to speed more quickly.”

For the harder and more specific skills, employers are ready to pony up for training; 30% said they added new employee training and development programs in the past year. Doing so is a win-win; most employers say those kinds of programs improve recruitment and retention efforts—as do student loan assistance programs, naturally. 

“The issue is that there is tremendous demand for jobs among college-educated people,” she adds. “More demand than supply, in most cases.”

That’s because many U.S. employers are currently working with agencies to recruit workers from abroad, as well as seeing which roles can be feasibly eliminated and replaced with AI. Nearly half of employers are already replacing some human workers with artificial intelligence applications, ZipRecruiter finds. But more likely than that is the move to search for humans with AI know-how to do ever-more complicated and technical jobs. Within five years, the same job will require a 25% change in digital skills—and it’ll be on workers to shore up that difference, LinkedIn chief economist Karin Kimbrough said last week. Tony college degrees will surely be of less importance as AI continues rapidly expanding and innovating—even the Ivy League can see that. 

“Do I think white-collar work will inevitably require a college degree? Absolutely not,” Harvard management professor Joseph Fuller told Fortune earlier this year. “It will require certain types of technical or hard skills not necessarily indicated by college.”

Unlike Kimbrough’s prediction, this future isn’t five or ten years away. Per ZipRecruiter’s findings, it’s already here.

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