US employers look beyond college credentials

Chanelle Washington-Bacon reproached herself for years because she had not finished college. Long after she entered corporate life, she was haunted by her lack of a four-year degree.

But her feeling of inadequacy began to shift after the Atlanta project manager connected with OneTen, a coalition of top employers focused on developing the careers of black professionals and others without a college education.

Washington-Bacon moved to Cisco Systems, the Silicon Valley maker of routers and networking equipment, where she is now a business analyst enabling the US commercial sales team.

“Tech is not easy to get into, and usually you need to have the degree,” she says. But “it’s time for a change. Just because you don’t have that four-year degree doesn’t mean you don’t have the skills to do the job.”

Washington-Bacon belongs to the “new collar” workforce, people hired and promoted for their skill set, regardless of whether or not they graduated from college. Also known as skills-based hiring, the practice has gained momentum as a tighter labour market has pressured employers to put less emphasis on degrees.

Just because you don’t have that four-year degree doesn’t mean you don’t have the skills to do the job

New collar jobs can range from construction management to website development, from sales to event planning — the term is less about the role than how an employer fills it. Proponents say skills-based hiring has the potential to increase employment opportunities and raise wages for the nearly two-thirds of the US workforce that lacks a degree — a percentage that is higher among Black, Latino and indigenous workers. It can also reward employers with a wider talent pool and higher retention rates.

Companies adopting this approach include IBM, Aon, General Motors, Walmart and ExxonMobil. But critics warn that efforts to steer away from traditional degree-based hiring can be superficial — and that a greater effort is needed to make sure this shift does not become a fad.

Bridget Gainer, global head of public affairs and policy at professional services company Aon, is one executive championing new collar working, in part through apprenticeship programmes. She says for years employers have focused on improving the supply of workers, like “they had to go to better schools”. Instead they should “do a better job of articulating what they need”, by assessing what skills roles require and thinking more creatively about which workers might fill them.

Aon’s two-year apprenticeship programme, in partnership with City Colleges of Chicago, has apprentices in class one day a week and at work the other four. The company says it has hired more than 200 apprentices since the programme started in 2017, initially in analyst roles then in sectors including health, cyber and reinsurance. The scheme has since expanded to employers including Accenture, McDonald’s and Walgreens.

“What we’re trying to do is change demand,” Gainer says. “We’re so focused on the supply side of the equation. We focus on the demand side of the equation, and it augurs to our benefit.”

The term “new collar” was coined in 2016 by then-IBM chief executive Ginni Rometty, joining the familiar “blue” and “white” collar distinctions, as well as recent appellations such as “green collar” for jobs in sectors tied to clean energy.

Then, Rometty said, up to a third of workers at some IBM locations did not hold a four-year degree. She argued in an op-ed for USA Today that the federal government should focus on “relevant career and technical education” to “build a national corps of hundreds of thousands of skilled workers ready for the new collar jobs employers have open today”.

Nearly a decade later, experts are making the same case. Matt Sigelman, president of think-tank the Burning Glass Institute, says degrees are an “inefficient” signalling device for candidate capability. Relying on them, he says, can shrink labour pools and restrict professional growth of talented workers. “We’re tripping on our shoelaces . . . by creating talent shortages where there don’t need to be.”

According to Colleen Ammerman, director of the Race, Gender & Equity Initiative at Harvard Business School, employer preference for degrees peaked during the Great Recession. With so many candidates competing for open roles, companies used a bachelors degree to filter applicants, she says; job postings requiring a four-year degree increased by 10 per cent between 2007 and 2010.

But despite calls for more diversity, the requirement for four-year degrees has proved resilient. In many companies, promises of new-collar recruitment and promotion have failed to have a big effect beyond pilot programmes or public statements.

In February, Sigelman co-authored a report that found 45 per cent of companies — including Amazon, Oracle, Lockheed Martin and Kroger — that dropped degree requirements from a sample of 11,300 job ads did not make a change in who they hired.

About 18 per cent of companies, including Nike, Uber and HSBC, made initial progress in hiring more workers without degrees, then backslid. This cohort was well-intentioned, Sigelman says, but they never managed to put systems in place to make the decision less risky for hiring managers.

This is an awakening that needs to continue. I just really hope that people get it, and see that the way things were happening was not right

Lockheed Martin says it aims “to build a workplace that drives innovation and embraces diverse perspectives”. Amazon says it is committed to hiring people based on their skills. HSBC declined to comment. Kroger, Nike, Uber and Oracle did not reply to a request for comment.

The Burning Glass Institute estimates that the focus on hiring workers for their skills has created new opportunity for only about 97,000 workers annually, out of 77mn hires. “Put differently, for all its fanfare, the increased opportunity promised by skills-based hiring has borne out in not even one in 700 hires last year”, it says.

One obstacle is that skills-based hiring demands more effort than hiring based on a degree. Michelle Hodges, United’s vice-president for global human resources, says that last December the airline began documenting the skills needed for its managerial positions. It expects to finish the process next year.

The airline must train hiring managers to look for a candidate’s relevant skills during a job interview. It also needs to convince existing workers — many of whom have invested in degrees, and taken on student loans — to see “how we’re opening up to a much broader applicant pool”.

The fight for companies to hire new collar workers is really a fight to win over senior executives and HR teams, Gainer says, because it is easier to recruit from colleges.

“College is a really convenient place for HR,” she says. “It diminishes risk. You can hire finance, IT, marketing — everyone’s in the same spot . . . It also is an independent credential that says to HR, ‘Well, it’s not my fault if they didn’t work out. They had a pedigree.’”

But tackling these challenges may be worth it. The Burning Glass Institute found the retention rate for workers hired in a skills-based process was 10 percentage points higher than those with a bachelors degree, and the workers hired into new collar roles averaged a 25 per cent increase in salary.

The trend has been meaningful to Sandra Dubose, who moved from being a programme co-ordinator in higher education to a marketing specialist at Cisco. Dubose started her career a time when soft skills, work experience and grit were more important than a degree. But as employers’ demands changed, she was ruled out for roles even when “I’m looking at the job, and I can do all of these things with my eyes closed”.

It would be painful, Dubose says, if people returned to excluding workers without four-year degrees from opportunities to advance.

“This is an awakening that needs to continue,” she says. “I just really hope that people get it, and see that the way things were happening was not right, and [employers] were cutting off their nose to spite their face. We’re ready to work, and we deserve an opportunity to have a level of success like anyone else.”