From Degrees to Competencies: What A Shift to Competencies Could Mean for Employers and Students

For many generations, a college degree has reigned supreme in the labor market. Its been the proverbial ticket to good jobs. Often-cited census data show that over a lifetime, people with bachelors degrees make $1 million more, on average, compared to people with only high school diplomas. After the Great Recession, as new jobs were created, 99% of them required at least some college education. Were starting to see a similar pattern emerging as new jobs have been added during the pandemic recovery. 

In many respects, a college degree has served as the main currency in our labor market, a signaling device that the holder can persist to completion and therefore is work ready or highly qualified. Yet, not all jobs that require a degree actually need them. Inflating the academic requirements of a job is common practice, and it can happen at all levels, from frontline sales positions to managers. Stories abound of workers who have stellar employment histories and job performance, and are effectively carrying out managerial functions, but nevertheless cant be promoted to a managerial job until and unless they get that degree. One 2017 Harvard Business School study estimated that there are likely around 6 million jobs that unnecessarily require a college degree as a proxy for competencies. 

But that trend appears to be changing. Today, many employers particularly large employers  are exploring how they might hire and promote based on evidence of the specific set of knowledge, skills, abilities, and dispositions required for success in a particular context: what some have come to call competencies. Work experience and formal credentials are still important, but they would no longer be used as proxies for the specific competencies that matter most in the job seeker-to-job matching process. 

A system where competencies are front and center would require new tools and strategies, such as:

• Digital platforms that help individual workers and learners explore competency-based career pathways.
• Competency-based curricula underlying degrees and other credentials.
• Competency-based learner records that capture achievements that individuals acquire throughout their lifetime from both formal learning environments and work or life experiences.

With these tools and strategies, employers could better articulate the competencies needed for particular jobs and could identify the best candidates for those jobs in a way that expands their talent pipeline. 

These new tools could also provide important benefits to individual job seekers. Todays labor market offers a great deal of opportunities and different pathways to career advancement and success, but it is not easy to navigate. Competency-based tools can provide individual jobseekers more clarity about their own skills and abilities, along with a clearer picture of how their existing competencies map to occupations and career pathways. 

In addition, there is potentially an equity-related benefit to having competencies place a more prominent role in candidate screening and hiring. A shift to competencies could reduce the reliance on personal networks and other biases favoring already-privileged individuals in the hiring process. While this shift is likely not a silver bullet to solve labor market inequality, it is an important and needed step in the right direction. 

Some of Americas education providers including some colleges and universities have responded to employers interest in moving toward competency-based hiring by clarifying the competencies that their graduates have, as well as by offering alternatives to the bachelors degree, especially short-term certificates and badges. In addition, there is a growing interest in the concept of incremental credentials, which would allow an individual learning to earn short-term credentials connected to new job opportunities, while also continuing to learn and add on to each credential in a way that builds toward associate and bachelors degrees. 

But there is much more that postsecondary institutions will need to do in order to become key players in a competency-based labor market. They will need to be able to:

• Communicate with employers about needed competencies
• Validate the competencies of students and graduates, and 
• Develop an internal infrastructure for managing the competency data associated with courses, programs, and students. 

This will not be an easy lift, but it will be critical for ensuring credential transparency in both credentials and learning records.

This blog is part 2 in a CAEL-Credential Engine series exploring competency transparency in our learning and labor market systems, the potential role that postsecondary institutions can play, and the work needed to get there. The full series is:

• Part 1:  Competency Transparency in our Postsecondary Systems: Revamping Postsecondary Data Systems to Support Equitable and Competency-based Learning and Hiring 

• Part 2: From Degrees to Competencies: What A Shift to Competencies Could Mean for Employers and Students

• Part 3: Competencies Alone Are Not Enough: The Tools that Put Competencies to Work
• Part 4: Digging in The Competency Sandbox: Is Our Postsecondary System Ready to Play?