A Skills Approach For The Rest Of Us

Welcome to On The Job

Published on Jun 13, 2024

Written by Tim Hatton

Since the workforce at top-flight consulting companies tends to be young—fresh-faced twentysomethings not long out of college—they rarely have the professional experience that would convince a potential client that they’re in good hands. So how can these firms signal their talent is the most talented? Traditionally, there’s been a simple answer: hire from the very best colleges and universities around. It’s a clear example of a candidate’s degree being worth more than their skills.

But if even the most elite institutions in the labor market are changing their focus to a skills-based approach, what does that mean for the rest of us?

It’s an inflection point: if skills-based hiring has reached the top flight of employers, then it’s here to stay everywhere else, too. The New York Times reported this week on a pattern spreading through the upper rung of consulting firms that emphasize (in their words) “pivoting from pedigree to potential,” and that “We hire people, not degrees.” This reflects a change that has been developing throughout the labor market—the article cites research Lightcast published with (consulting firm) BCG, “Competence Over Credentials: The Rise of Skills-Based Hiring,” which analyzed of over 22 million global job postings to understand how skills-based hiring has developed. 

So how did we get here—and why are skills the way forward in a future-focused labor market?

Three Skills Advantages

For decades, hiring decisions were primarily based on factors like education level, previous job titles, and years of experience. While these proxies provided a useful shorthand in the past, they fail to capture the true essence of what enables success in a role: skills. 

By focusing on the specific abilities required for a role, rather than just checking boxes for degrees or previous titles, employers can expand their talent pools and identify qualified candidates who may have been overlooked using traditional methods.

  1. Agility in a Changing Market: As job requirements evolve rapidly, a skills-based approach allows organizations to adapt more quickly by focusing on the specific capabilities needed, rather than being constrained by outdated job titles or credentials.

  2. Increased Diversity: Degree and experience requirements can unintentionally exclude talented individuals from non-traditional backgrounds. A skills-based model helps remove these barriers, promoting a more diverse and inclusive workforce.

  3. Improved Retention: When employees are hired based on their actual abilities to perform the job, they are more likely to feel engaged and successful, reducing costly turnover. Our research with BCG showed that skills-based hires had an average tenure 9% longer than traditional hires.

But the advantages also last beyond the hiring process. Breaking down a job into its requisite skills creates opportunities to upskill employees, helping them prepare for other responsibilities or roles within the organization. 

A Universal Language

Overall, Lightcast stands for skills because of their clarity. When you can understand the component parts of a job, or a worker’s abilities, you can see exactly what’s available and ask for exactly what you need. Jobseekers benefit from this clarity because it lets them see precisely what they need to know in order to succeed at a specific job. That can help workers find their best fits right away, or also show them what they need to learn in order to succeed in their chosen field. The first step in that process is to be able to identify and lay out all the skills required for a role, and then use the same terminology so that their names are consistent across different roles, or even different organizations (our Skills Extractor and Open Skills Taxonomy can help with that).

The US leads the way in skills-based hiring; with degree requests down 3.9% overall

By identifying and clearly stating what skills students are being taught in their classes, education institutions can promote their own value to students—and, by helping students see what career opportunities their skills enable, this also helps create a cascading benefit of better alumni outcomes benefitting future recruitment. 

When community leaders want to see how their region compares and how it can help develop in the future, skills also provide a lens we can use to identify progress and opportunities. Skills show regions how they compare to others, and how to play to the strengths of their existing workforce, in both the present and the future.

At every level of the labor market, clarity is crucial. Too often, jobseekers, employers, educators, and community leaders talk past each other, using unclear terminology that limits how much each side can understand the others.

Skills create a shared language that everyone in the labor market can understand, minimizing miscommunication and creating a job market that works for everyone.

Thanks for reading On The Job. Be sure to catch up on our past issues (“What Happens When AI Job Postings Go Down?” and “The Future Of The Future Of Work”), and you can also subscribe here. We’ll see you next time.