Different in Degree: Closing the Talent Gap with Alternative Credentials

Executive Summary

With looming and potentially long-lasting unemployment as a result of COVID-19, both workers and organizations must reconsider the credentials they have and those they need now and in the future. Job losses as a result of the COVID-19 crisis may tempt employers to cherry-pick workers with traditional qualifications. Relying solely on traditional talent pools may be a shortsighted strategy for any company likely to find itself in turbulent and even chaotic conditions. By all means, they should scoop up rare talent that might become suddenly available, but companies would also be wise to look for diverse talent to help them adopt fresh thinking and recognize new opportunities.

Until the recent COVID-19 global pandemic and the resulting economic freefall, we have had a tight labor market where over 90 percent of organizations were operating with unfilled positions,¹ while jobs themselves continue to change rapidly given evolving and new technologies. Accordingly, interest in alternative credentials is growing. Some employers are realizing that their reliance on traditional degrees is not getting them the depth and breadth they need in applicant pools to supply their job demands (e.g., for cybersecurity analysts, project managers, software engineers) or to provide the diverse workforce they desire that is an important lever for both innovation² and engagement.³

A frequent mantra of corporate leaders is that people are our most important asset, but without an emphasis on embracing alternative credentials, organizations may continue to struggle to fill their ranks with the employees who can support and align with organization strategies—the number one talent concern of CEOs.⁴ Despite the recent tight labor market, surprisingly, few organizations are accepting alternative credentials. The Conference Board Labor Shortages Solutions Survey found that only 18 percent of US companies accept alternative credentials, such as a certification. But organizations are gingerly taking steps toward other alternative credentials, such as reassessing skills, creating apprenticeships, or lowering experience requirements.⁵

The benefits of using alternative credentials are many. First, they widen the pool of qualified candidates by using indicators) for the skills and qualifications workers need to possess. Second, they send a message to students and incumbent workers that there are additional pathways to success. Third, increasing the diversity of applicant pools creates a more diverse workforce, which has been found to increase innovation and thus revenue by 19 percent.⁶ Fourth, if organizations can hire workers who have already been educated and trained with entry-level skills, then their investment in training can focus on the next level of skills, saving them money.

Although there is much promise for both employers and workers concerning the alternative credentials that will help them to make the best match and obtain the necessary credentials, there are almost no standards for what alternative credentials should include, how they are developed, and how they should be evaluated. The programs offered range from rigorous and thorough to pieces of paper that are not always worth the ink to print them. Accreditation programs exist for colleges and universities but there is very little in the way of accreditation programs for alternative credentials. The Evaluation Checklist below provides some questions for organizations to consider when assessing credentials.

Questions to Consider When Evaluating an Alternative Credential

Insights for What’s Ahead

With looming and potentially long-lasting unemployment as a result of COVID-19, both workers and organizations must reconsider the credentials they have and those they need now and in the future. Job losses as a result of the COVID-19 crisis may tempt employers to cherry-pick workers with traditional qualifications. Relying solely on traditional talent pools may be a shortsighted strategy for any company likely to find itself in turbulent and even chaotic conditions. By all means, they should scoop up rare talent that might become suddenly available, but companies would also be wise to look for diverse talent to help them adopt fresh thinking and recognize new opportunities.

Employers and workers must both understand and embrace the variety and depth of credentials that exist today. Depending on degrees while ignoring some of the available alternatives may result in setbacks in inclusion initiatives, lost opportunities, and a struggle with talent shortages.

If companies are to make the most of nontraditional talent to help navigate difficult conditions ahead, they need to revise their talent policies for alternative credentials. They need to urgently work with educators and workers to address the disconnects in the credentials “marketplace” in terms of matching supply and demand and tackling quality issues. Much more needs to be done in this area to comprehend and navigate this maze.

To help organizations increase the use of alternative credentials, we offer five actionable insights:

1. To find qualified candidates in the current and future labor market, employers need to take the time to understand the array of alternative credentials available. Employers need to learn how to evaluate the quality, relevance, and predictive capability of alternative credentials. It is imperative for employers to know and appreciate the differences that different credentials offer. A certificate that offers a certain number of classroom or online hours may be very different from a certification that uses a validated assessment to determine whether the student has attained the requisite capability and knowledge. Not all credentials are created equally. With literally hundreds of thousands of different credential programs available, it is not prudent to assume that all credentials represent the same rigor and offer the same value.
2. To both hire and retain workers, organizations should invest in reskilling/upskilling and expanding their benefit policies to include earning specific alternative credentials, including partial or total reimbursement and/or rewards for achievement. Most employers are not investing enough in training programs to reskill workers and to train for anticipated skill gaps. Obtaining alternative credentials (e.g., a certification) is typically cheaper than a four-year college degree and could provide the basis for upskilling and reskilling. With the explosion of student debt, it benefits workers to spend less money preparing for a specific role. Many organizations reimburse part or all of a degree tuition, but most don’t have policies for alternative credentials.
3. In terms of talent acquisition, employers should invest the time to reassess job descriptions and train hiring managers and talent acquisition staff to recognize an expanded view of acceptable credentials. Organizations have been slow to make changes to the talent acquisition process to account for the range and type of credentials available. Given the complexity of and confusion around alternative credentials, it’s important that they use competency-based language in job descriptions that communicates the behaviors and capabilities required for hiring and promotion. Once organizations better understand the competencies that various credentials represent, they need to ensure that their recruitment processes are aligned and that staff are trained to recognize the value of alternative credentials. Predictive analytics should be used to evaluate the success of alternative credentials over time.
4. To prepare for the ever-evolving roles needed in the future, organizations need to hire for potential as well as for specific skills. Skill demands will continue to evolve, and although there may be an abundance of workers, there may well be a continued skill shortage. Focusing on long-term needs creates a build-versus-buy talent strategy that will serve organizations well. When organizations hire for potential, they’re hiring for values, motivation, and capability to learn new skills, and leading organizations are shifting their recruitment strategies. In the past, college degrees have been used as a filter for hiring, but alternative credentials allow organizations to broaden their talent pools with workers from many educational backgrounds.
5. To avoid skill shortages for specific roles and anticipate the skills needed in the future, employers should partner with educators to ensure that curriculum options reflect what is needed in the workforce. All too often there is a disconnect between what educators teach and require of students and what employers need the workers of tomorrow to know and be able to do. For example, employers can proactively work with universities from whom they often recruit to provide insight into their skill and knowledge needs to ensure that faculty and study programs provide required knowledge and skills in their offerings. However, as one engineering professor at a large state university put it, the wheels of change move very slowly in academia and changing curricula is often difficult and slow.