Only 27% of people end up using their degrees. So why does your company need to see one when hiring Gen Z?

Why Your Business Should Hire for Skills, Not Degrees

At PathMatch, we know the type of interns and new grads that companies want to ultimately hire. Oftentimes better than the companies know themselves. This is because we have one of our collective ears to the collegiate grindstone, and the other to the needs of modern businesses.

Trust us, there is a frighteningly large gap between the two.

This divide is why businesses see a high turnover rate for their early career employees, and a cost-per-hire that averages over $6000 due to these bad hires. Companies usually get to see just a 1-page resume from candidates – that’s assuming the automated Applicant Tracking Systems don’t weed them out first – and all they have to go on sometimes is the name of a college and a degree.

But what does a degree really tell you? Not much. According to a study by the New York Federal Reserve Bank (via earthweb), only 27% of people use their degrees. In other words, someone’s degree is a predictor of their ultimate career path just one-fourth of the time.

So why, then, is your company so adamant that your Gen Z applicants pursue a major related to your job descriptions?

Debunking the Degree

The main reason why employers require one is that a completed degree is a proxy for a) stick-to-itiveness, b) a well-rounded education, and c) a focused education on a specific subject. Of course, these are all great qualities to have in a new employee. A college degree is our standard, accepted proof of quality, in a sense.

Yet hiring managers know deep down that a degree doesn’t really correlate to actual work productivity. After all, if only 27% of people use their degrees, the vast majority of them were the wrong fit for a job in their educational field.

In fact, a study by Harvard Business School found something eye-opening when they surveyed 600 business and human resource leaders:

The results of our survey were consistent across many industries—employers pay more, often significantly more, for college graduates to do jobs also filled by non-degree holders without getting any material improvement in productivity. While a majority of employers pay between 11% and 30% more for college graduates, many employers also report that non-graduates with experience perform nearly or equally well on critical dimensions like time to reach full productivity, time to promotion, level of productivity, or amount of oversight required. - HBS (emphasis ours)

Furthermore, the study also found that hiring college graduates for middle-skill positions often incurred more costs because once hired, “college graduates demonstrate higher turnover rates and lower engagement levels.”

So much for a) and c). At least they know algebra though?

Hiring for Skills, not Degrees

College degrees no longer tell the full story of the student or recent graduate. Due to degree inflation – the rising demand for bachelor’s degrees in jobs that don’t actually require one – employers who have this requirement not only miss out on truly qualified applicants, but also get misled on the real skill sets that college grads bring to the table.

For example, we here at PathMatch know first-hand that a degree in English, Journalism, or Marketing looks good hanging on the wall; but they don’t correlate to knowing the fundamental software that modern businesses need employees to learn. Not many universities are up-to-date enough to teach WordPress, AdWords, Hubspot, and Asana; let alone Webflow, Sprout Social, Marketo, or Buffer.

This even applies to STEM fields:

"Technological skills learned in a student's first year of college are no longer relevant when they graduate," said Jeremy Shaki, Lighthouse's CEO. "The No. 1 thing we teach at boot camp is that you must be constantly learning. That runs counter to what we see in people we find in college."

Instead, employers who focus on skills rather than degrees tend to find candidates who are better fits. LinkedIn’s CEO Ryan Roslansky put it this way:

And one of the most important areas across the global labor market where more adaptive thinking and leadership is needed is around what I’ve been calling a “skills-first mentality.” I think companies that focus on skills as the currency, companies that shift away from more antiquated signals like only degree, or pedigree, or where someone worked, will help ensure that the right people can be in the right roles, with the right skills, doing the best work. I think it’s going to create a much more efficient, a much more equitable labor market, which then creates better opportunity for all. - HBR

Roslansky urges businesses to be adaptable when hiring the new generation of workers, instead of falling back on the old proxy of just looking for college degrees. He notes that in LinkedIn’s own research, “if you take the same role from 2015 to 2022, roughly 25% of the skills that are required for that role have changed.”

The pace of technology and the changing skills required to work in today’s modern businesses require a new approach to finding qualified employees both in and outside of the traditional education system – especially right now when a skills gap problem is plaguing workforces across the globe.

So, is your business still requiring a college degree to even get a resume through the virtual door? It’s high time you reassess your hiring process to focus on skills that really move the needle, instead of just that sheepskin.

Today, students in college can take specific courses and bootcamps to learn the right skills and tools to be a perfect fit for the businesses of their choice. That’s why PathMatch exists, to help students navigate their way to their ideal careers and match them with the perfect businesses looking to hire. If your company is interested in demoing PathMatch’s matching tools, just contact us.