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Why Companies Are Using Digital Credentialing to Implement Skills-Based Hiring Strategies

During the past decade, digital credentialing tools such as skills and employment assessments have become increasingly popular in hiring, employee education, and workforce development. Industry experts report that over 75% of organizations use skills testing or employment assessments to evaluate applicants, create and manage job descriptions, and assess training and development needs.

The COVID-19 pandemic accelerated this trend and expedited the adoption of online technology by more organizations. It also prompted many colleges and universities to develop credentialing programs in response to market demand. As a result, many colleges and universities, and even some employers, now issue credentials. Traditional, paper-based credentials such as college diplomas and transcripts have also become more digital, shareable, and verifiable. 

A May 2021 report funded by the 1EdTech Foundation1 (1EdTech) and the IMS Global Learning Consortium2 (IMS), summarizes the impact digital credentialing has had on education and employment. To compile the report, 1EdTech and IMS partnered with Northeastern University and Dynata, the world’s largest first-party data company, to survey 750 HR leaders.

How Research Was Conducted

As shown in the matrix below, all respondents were qualified as HR managers in diverse organizations of varying sizes and had primary responsibility or final decision-making authority for hiring, employee development, and talent strategy.

Ad Hoc Blog Digital Credentialing LIST V1

    Source: Digital Credentials and Competency Framework: Exploring Employer Readiness and Use in Talent Management

    November 2021

What HR Managers Say About Skills-Based Hiring

The key takeaways cited in the report were as follows:

  • 34% of the HR leaders said their organizations have implemented a skills-based hiring strategy that focuses on proven competency as opposed to relying on college degrees.
  • Over 36% of the HR leaders are relaxing or eliminating college degree requirements in favor of skills-based hiring.
  • 33% said the main reason they are placing more emphasis on skills-based hiring is due to frustration with the quality of graduates coming out of colleges and universities.
  • Only 44% of HR leaders consider traditional college transcripts to be a valuable tool in the hiring process.
  • The primary reasons respondents cited for adding digital credentialing to their hiring and training processes were to improve hiring outcomes (66%) and ensure diversity, equity, and inclusion (62%).
  • Over 42% of the respondents said their organizations were considering placing more weight on digital credentialing instead of resumes and college degrees.

These results show the popularity of skills-based hiring practices that emphasize competencies over degrees has increased. This has attracted a lot of attention from business leaders, government, and the media, but is of particular interest to colleges and universities because it could decrease the importance of a degree as a hiring requirement.

Northeastern University’s prior research in late 2018 showed that 23% of organizations surveyed said they had implemented a skills-based hiring solution or were planning to, and that 39% were exploring the feasibility of doing so.

The adoption of skills-based hiring practices has grown since then. As shown in the graph below, 34% of HR leaders reported that they have already implemented skills-based hiring practices and another 42% are considering doing so. Only 6% of respondents said they are unlikely to adopt them.

Ad Hoc Blog Digital Credentialing Graph V1

Source: Digital Credentials and Competency Framework: Exploring Employer Readiness and Use in Talent Management

November 2021

Respondents cited training and upskilling (86%), compliance (83%), and recruiting and hiring new employees (81%) as their top priorities followed by workforce planning (77%), increasing workforce diversity, equity, and inclusion (75%), and automating talent strategy processes and practices (64%).

In a “check-all-that-apply” question, 39% of the respondents said their systems are integrated, and 32% use “cloud-based” systems. Only 33% said their systems give them a strategic market advantage and 17% said they actually hinder employees to do their jobs effectively.

Conclusions

HR leaders are impressed with the potential benefits digital credentialing offers. Further research, education, and discussion will help educational institutions adapt to industry trends so they can develop digital credentialing offerings that match employers’ hiring needs.

Request a demo to learn how eSkill can help you apply digital credentialing best practices to implement a skills-based hiring strategy in your organization.

11EdTech Foundation is a non-profit 501c3 organization that explores ways to accelerate technology adoption to improve the effectiveness of educational systems.

2IMS Global Learning Consortium (IMS), a dynamic, educational technology collaborative that consists of over 675 organizations worldwide and other implementation partners.     

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