New report from Bain & Company, OneTen and Grads of Life illustrates business case for skills-first hiring.
Source: Bain & Company
Obtaining a job with family sustaining wages is critical to reducing the income and family wealth gap that exists between Black and white Americans. Too often these jobs have college degree requirements locking out qualified candidates that could be considered based on skills and work experience. Today, Bain & Company, OneTen and Grads of Life launched a new report “Eliminate a Degree of Difficulty: Hire for Skills, Not School,” that outlines the business case for skills-first hiring and how companies can successfully make the transition. A four-year degree can be a valuable credential in hiring, but it is not the only way to assess talent and is not necessary for all roles. A skills-first hiring approach can mitigate this credentials barrier, allowing employers to evaluate underlying skills and making the process fairer for all job applicants.
“Skills-first hiring does not only widen job opportunities for qualified candidates to be considered, but has a strong business case for success,” said Maurice Jones, CEO of OneTen. “Skills-first hiring criteria are five times more predictive of future job performance than educational background and two and a half times more predictive than work experience.”
Bain research indicates that more than 60% of middle-skilled positions in America today are “soft bachelor’s” jobs. This means that they are positions for which a four-year college degree is required by the employer even though it is not a good evaluation for the skills needed to perform the job. OneTen’s research shows that these roles go across industry and most often in areas such as information technology, customer service, maintenance/ manufacturing, healthcare, sales and business management and operations. By recredentialing these jobs, companies can remove the degree requirements and focus the job description on technical, industry-specific, and/ or soft skills that are needed for the position.
“While the business case is clear for skills-first hiring, the shift in company culture and mindset are challenging,” said Maria Gordian, partner at Bain. “There are proven steps that can be integrated into pre-hiring, interviewing and post-hiring process to ensure success for both the candidate and the company.”
- Pre-hiring process: Companies that have made this shift ensure that in the pre-hiring process, in addition to restructuring the job requirements and description, they are also ensuring a broader set of qualified candidates see the opportunities. For example, sharing job postings with targeted channels such as diversity, equity, and inclusion (DEI)-focused recruiters and Black professional network associations in addition to the standard channels.
- Hiring process: In the hiring stage it’s critical to shift to an inclusive hiring panel. A good rule of thumb is that at least 30% of panel members should represent diverse groups across dimensions. Additionally, the hiring panel needs to be educated on both how to mitigate bias and the shift to a skills-first interview guide.
- Post-hiring: Lastly, when skills-first candidates are hired, the post-hiring process is critical to ensure success at the company. Bain research and experience shows an onboarding process focused on key skills helps to provide initial grounding for these new hires. This should also be part of an ongoing effort to build an inclusive workplace that values all employees, regardless of background, for their unique contributions.
The shift to skills-first hiring is not only a business imperative that helps open job opportunities to Black talent, but it also helps employers hire a more diverse workforce. In December 2020, Bain and Grads of Life helped establish OneTen, with the goal of getting 1 million Black individuals without 4-year degrees hired or promoted into family-sustaining jobs in 10 years. Bain has adopted skills-first hiring internally in certain areas as well. This shift has enabled Bain to see firsthand the methods used by organizations that are making the switch successfully can be implemented by any organization. OneTen’s launch companies belonging to the coalition have already scaled up their total hirings and promotions of Black talent dramatically. In one year since OneTen was founded, there have been 17,000 new hires, 4,000 promotions and a retention rate of 89%.
Despite early success, there are still several challenges to reaching OneTen’s goal. There is no one-size-fits-all approach to this shift, and each company will need to find its own path to determine where and how skills-first hiring and promoting can be beneficial.