Skill-Based Hiring vs Degree Based Hiring
Remote Recruitment & Outsourcing

Skills-Based Hiring vs. Degree-Based Hiring: A Comparative Analysis

Ihor Shcherbinin
VP of Recruiting at DistantJob - - - 3 min. to read

Hiring styles have recently changed how they approach job postings and selecting suitable candidates. The most notable change has been the uptick in hiring teams utilizing skills-based hiring practices. 

This style of hiring goes directly against industry standards, which are degree—or competency-based hiring practices. How does this new style of hiring measure up to its predecessor?

In this article, we compare both hiring styles to help you decide which approach best fulfills your recruitment objectives.

What Is The Difference Between Skilled-Based Hiring And Merit-Based Hiring?

Fundamentally, the approach for each style of hiring is as the name suggests. 

For skills-based hiring, teams seek out skills that an individual possesses during the screening process. On the other hand, degree-based hiring seeks out candidates based on their tertiary education qualifications and how they can be applied for the role they are looking to fill. 

Skills-based Hiring

In a recent survey, Test Gorilla noted that 81% of its participants have switched to skills-based hiring and have found success using this approach. They find that it allows for a wider selection of candidates due to a diverse talent pool applying for the available positions. 

In addition, it claims that these participants have also seen a decrease in the number of bad hires, which in turn improves employee retention rates. 

Skills-based hiring practices also directly address the lack of accessibility many people have when it comes to acquiring jobs due to a lack of a degree—despite having the necessary skills to fulfill a job’s requirements.

Degree Based Hiring

Considered the original means of hiring candidates, this is still a prevalent form of hiring employees. 

For this method, candidates are screened and selected based on their qualifications and their appropriateness for the role in question. 

Hiring teams place a lot of value on the degree the candidate possesses. If their qualifications are higher – such as a master’s or a doctorate – their value as an employee also increases. 

There also needs to be a distinction between a skills degree and a professional degree. The former focuses on the skills that an individual wishes to hone, while the latter aids the individual in obtaining skills for a specific career path.

How Did Skills-Based Hiring Emerge

This style of hiring emerged post-pandemic, around 2022, and has become increasingly popular since then. 

One reason for its popularity is the number of companies that were still operating remotely. These companies made an effort to diversify their talent pool, and due to differences in qualifications from different areas of the world, this style of hiring managed to even out the playing field, allowing candidates access to international opportunities from the comfort of their own homes.

Does Skills-Based Hiring Remove The Need For A Degree?

It does not remove the need for a degree. 

A degree improves your chances of getting the job – but it is not the primary concern. Studying towards a degree equips you with the necessary skills. Skills-based hiring does not discourage studying towards a tertiary education qualification. 

There are plenty of affordable master’s degrees that will aid in this, especially if you have undertaken a professional degree rather than a skills degree. 

Training And Courses

Despite the ‘need for degrees’ allegedly decreasing, education after high school is still a necessary requirement to develop skills and, as a result, get a job.

A recent study by Georgetown University’s Center on Education and the Workforce claims that by 2031, 72% of jobs will require tertiary education or training to develop workplace skills. Of this number, 42% will require a bachelor’s degree.

statistics on future job requirements by 2031

However, this can change due to external factors like the economy and emerging technologies, among other reasons. 

Measuring Up Against Each Other

While these two styles of hiring are fundamentally different, in certain instances, they will be able to fill in the gaps the other may struggle with

Skills-based

Across the board, TestGorilla noted that skills-based hiring provides satisfactory results with their hires. This style of seeking out persons with the direct skills required for the job is also applicable to people with adjacent skills as well. Naturally, with industry-respective updates, training needs to be facilitated to ensure that your team remains efficient. 

In addition, skills-based jobs require people who have practical knowledge of the industry, which speeds up the onboarding process and reduces the training period. 

Degree-based

This familiar style of hiring is better for entry-level positions, especially if the role if the candidate has less experience in the industry. It also simplifies the screening process by a large margin, as the presence of a degree will be the minimum standard for eligibility. Also, this style of hiring tends to be cost-effective and reduces the requirement for skills efficiency testing. 

Why Companies Use One or The Other

Naturally, the hiring style also depends on the type of role you seek to fill. There are certain specialized fields where a degree is paramount, Whereas skills-focused jobs can apply to multiple positions in different industries.

Jobs Where A Degree Is Required:

• Entry-level positions: In these positions, experience is not required to be successful, and candidates can work and gain experience.

• Law: This career sees candidates study between two to four years, depending on the type of course they take. This does not include specialized fields which require additional years of studying and taking the bar exam. 

• Accounting: As a general rule of thumb, it takes about four years to complete an accounting degree, but extra effort is required for certifications such as a CPA.

• Education: To become a teacher, it can take up to five years to qualify for an education degree and a few more to earn a doctorate education.

• Engineer: Depending on the field of engineering, it takes up to six years to qualify.

• Medical and Health: This is a wide-scope field that includes nursing and specialist surgeons. It can take up to 11 years for the candidate to qualify before they can begin practicing. 

Jobs That Are More Skills-Focused:

• IT positions: Knowledge of coding, programming, network configuration, operating systems, hardware, and other skills are sought after. 

• High-volume hiring roles: These are often spaces like call centers or retail spaces that see seasonal changes. They are usually required to fill positions quickly, and candidates’ skills are valued above all. 

• Technical roles: These jobs require a specific set of skills that are useful in different industries. These include technical writing, data analysis, project management, and even search engine optimization.

• Sales and marketing: This requires candidates to have experience in the industry and the ability to prospect, outreach, critical thinking, product knowledge, and problem-solving abilities

• Senior appointments: These refer to skills and experience developed over the years by the candidate. They carry more weight and speak to how well they will be suitable for the role rather than a degree.

• Retail and services: These require soft skills and technical skills in order to be successful.

• Administration: Requires knowledge of data, computer literacy, organizational skills, communication, and sometimes also customer service. 

Conclusion

Degree-based hiring, or competency-based hiring, has been the main method of filling vacant positions for many years; however, for the past few years, a new style of hiring has emerged: skills-based hiring. 

Particularly for IT positions, we’ve noticed that talented developers often lack an official certification or education but still have great technical skills. Identifying these is key to establishing a solid recruitment process that allows you to evaluate a candidate’s experience and skills.

If you’re looking for IT talent, contact us. We can help you scale your team in less than two weeks with candidates who match your requirements. 

Ihor Shcherbinin

Ihor, is the VP of Recruiting at DistantJob. He specializes in sourcing and placing top remote developers for North American companies. His expertise covers the entire recruiting cycle, from pinpointing job needs to finalizing hires. Known for his skill in remote staffing solutions and offshore team integration, Ihor excels in matching the best tech talents with U.S. organizations. His approach to virtual developer hiring is marked by insightful candidate selection and strategic offer negotiation, ensuring the right fit for every role.

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