2020 is under way, but unfortunately, 2019 problems still exist. For instance, unemployment remains low and candidates still have the upper hand in picking who they work for. On top of all this, the skills gap continues to grow and educational institutions are doing little to prepare students for the new world of work. As a result, the onus is now on employers and hiring managers to reevaluate which skills are necessary to get the job done.
According to the U.S. Chamber of Commerce Foundation’s new report, “Hiring in the Modern Talent Marketplace,” employers and hiring managers are preparing for a world where competencies—not degrees—are the most important factors when filling a job. The findings show that employers are working with higher education to align what is taught in the classroom with the needs of the economy.
Competencies Become a Major Factor in Hiring
The study surveyed 500 hiring managers, and respondents acknowledged the need to overhaul their hiring practices to focus on competencies over formal education credentials. Nearly three-quarters (74%) of respondents agreed that there has been a lack of skilled talent among the available workforce in recent years.
The top three goals for hiring managers in 2020 reflect this challenge: retain more talent (41%), recruit top talent (35%), and reduce the time to hire new talent (26%).
Though advances in technology are rapidly changing the skills needs of the business community, more than half (58%) of respondents believe automation is an opportunity and will likely create the same number of new roles in the workforce as those it eliminates.
“As a nation, we need to move toward a skills-based approach for educating and hiring where the skills taught in the classroom directly align to the skills required for a career,” says Cheryl Oldham, Senior Vice President of the U.S. Chamber of Commerce Foundation’s Center for Education and Workforce—in a press release.
Organizations Must Assess Their Hiring Processes
Decision makers expect to adjust their recruitment practices as competencies become a primary factor in hiring. More than three-quarters of respondents (78%) agree that they will need to reassess the way they hire, and nearly half (45%) report that changing hiring processes is a priority in their organization.
These findings show that competencies, defined as knowledge and skills that can be observed, measured, or otherwise assessed, are more important to organizations than formal education credentials. Three-quarters of respondents (74%) report that their company requires the submission of a credential in their hiring practices, but only one quarter (26%) claim the credential is used in assessing the candidate’s viability.
3 Ways to Fix the Skills Gap
The study found the top three potential solutions to fix the skills gap are:
- Increasing upskilling initiatives for current employees,
- Working with educational programs (i.e. partner programs with local schools, postsecondary partnerships, etc.) to strengthen talent pipelines, and
- Improving the alignment between educational program curricula and the skills needed in the workforce.
Respondents view partnerships with the education community as a way to provide talent with in-demand skills. Hiring managers are working with community educational institutions, such as community colleges (49%), technical or trade institutions (40%), and higher education institutions, such as college bachelor’s programs or master’s programs (37%).
Of respondents who indicated that their organization works with these educational institutions to source talent, two-thirds (65%) say those relationships are extremely or very effective at providing talent to their corporations, and maintaining or improving those relationships is a priority to a majority (61%) of their companies.
“As organizations look to find qualified candidates, they should use data to inform and strengthen decision making in the hiring process,” suggests the report. “In order to strengthen the workforce and connect qualified candidates to the skills that are most needed in organizations, educators and employers need to work together.”
This report is based on a survey conducted from November 20-27, 2019 and was commissioned by the U.S. Chamber of Commerce Foundation with respondents sourced from Cint. The objective was to better understand the current hiring landscape. The survey was of 500 U.S. HR hiring decision makers. The margin of error is +/- 4.4 percentage points. For more information on this report, click here.