The tech industry has been plagued by chronic talent shortages for years. Some estimates show that there are now more than 450,000 open cybersecurity jobs alone.
That has been further exacerbated as the gap between available positions and those seeking new jobs has grown even wider. There were 11.27 million job openings in February, compared to the 6.27 million counted as unemployed, leaving a record 5 million more openings than available workers, according to the Job Openings and Labor Turnover Survey.
Solutions for erasing this supply-demand imbalance have included upskilling and reskilling existing employees, doing quicker background checks (especially onerous for public sector jobs), and recruiting workers from other industries.
Now many companies are trying something new: eliminating degree requirements for jobs.
A growing number of companies, including many in tech, are dropping the requirement for a bachelor’s degree for many middle-skill and even higher-skill roles, according to a recent study from Harvard Business Review and Emsi Burning Glass, a leading labor market data company. More than 51 million jobs posted between 2017 and 2020 were analyzed for the study.
This reverses the so-called “degree inflation” trend that picked up steam after the Great Recession where many employers began adding degree requirements to job descriptions that hadn’t previously needed them — even though the actual jobs hadn’t changed.
In place of four-year-degree requirements, many companies are instead focusing on skills-based hiring to widen the talent pool.
For example, the study looked at job postings across a number of different companies for the position of software quality-assurance engineer. It found that only 26% of Accenture’s postings for the job contained a degree requirement. At IBM, just 29% did.
In fact, 50% of IBM’s U.S. job openings do not require a four-year degree, according to Nickle LaMoreaux, the company’s chief human resources officer.
Even the U.S. government is rethinking its approach. In January 2021, the White House announced limits on the use of educational requirements when hiring for IT positions. Looking predominately at college degrees “excludes capable candidates and undermines labor market efficiencies,” the executive order states.
Skills and experience count
If a four-year-degree is less likely to be the first hurdle for people to get in the door, what are companies looking for? It turns out many are leaning more heavily on demonstrated skills and competencies.
Accenture launched an apprenticeship program in 2016 and has since hired 1,200 people, 80% of whom joined the company without a four-year-degree. Earlier this year it expanded the program with the goal of filling 20% of its U.S. entry-level roles — everything from application development and cybersecurity to cloud and platform engineering — from apprenticeships.
“A person’s educational credentials are not the only indicators of success, so we advanced our approach to hiring to focus on skills, experiences and potential,” says Jimmy Etheredge, CEO of Accenture North America. The program, started in Chicago, has since expanded to more than 35 U.S. cities.
Okta, a company that provides tools to allow secure access to business applications, did away with a college degree requirement for a number of its sales positions last year to get access to a wider talent pool. The company’s focus is now on “motivation, skills, and experience,” says Rachele Zamani, who runs Okta’s business development associates program.
To get the talent it needs, Dell Technologies last year expanded its definition of university recruitment and developed a program focused on hiring from community colleges. Jennifer Newbill, director of emerging talent at Dell, says the company’s goal is to redefine what it considers to be recent graduate talent to include associate degrees, apprenticeships, and certificate programs.
“We’re always looking for ways to bring broad and diverse perspectives into our workforce,” she says. So far, the graduates hired through this expanded program are working in cybersecurity, engineering, tech support, tech sales, and marketing.
Christie Gragnani-Woods, senior vice president for external community partnerships at Bank of America, says the company no longer requires college degrees for the majority of its entry-level jobs. To expand its talent pool even further, the company launched its pathway program in 2018. It works with nonprofits and community colleges with the goal of hiring 10,000 people from low- and moderate-income neighborhoods by 2023. The bank exceeded that number two years ahead of schedule and committed to hiring an additional 10,000 individuals by 2025.
The program allows the bank “to go out into the community and highlight that you don’t need a degree to earn a sustainable wage and have long-term career potential,” she says. Hiring managers focus instead on specific skills needed to succeed in a job, which don’t necessarily coincide with a four-year degree. The people hired through the program, Gragnani-Woods says, are working across the bank in sales, operations and software development.
Companies have longed used a college degree as a proxy for job competency and career readiness. The Covid-19 pandemic labor shortage — and the sheer magnitude of technology’s reach into every aspect of life — is forcing companies to rethink the prerequisites for a successful hire and the kinds of employees they really need to help them succeed in the years ahead.