Skills-Based Hiring: Why Credentials Are Out & Competency Is In

Skills-Based Hiring: Why Credentials Are Out and Competency Is In

Skills-based hiring is a recruitment strategy that evaluates candidates on demonstrated abilities, not diplomas. Companies using it report wider talent pools, stronger retention, and better job performance. The catch is that most companies announcing it aren’t actually doing it, and the gap between the press release and the interview room is where the real story lives.

Last October I sat in on a debrief for a senior infrastructure role at a logistics company in Long Beach. They’d rewritten the JD three months earlier. Pulled the “bachelor’s in computer science or related field” line. Added a skills assessment section. Posted it on LinkedIn with a note about their commitment to skills-first talent practices. Three rounds of interviews later, the hiring manager passed on a candidate with eleven years of production Kubernetes experience, a CKA certification, and a track record that included migrating a 400-node cluster from on-prem to AWS without a single production outage. The reason on the rejection form was “not a culture fit.” When I pushed, the real answer came out. “He went to a bootcamp.” The degree line was gone from the JD. It wasn’t gone from the room.

That’s not unusual. That’s the median outcome.

I’m Tom Kenaley. I run technical placements at KORE1, which means I spend most of my weeks reading job descriptions that say one thing and watching interview panels do another. KORE1 benefits when companies hire through our IT staffing team, so read everything below with that in mind. I’ll flag where the advice tilts in our direction and where it doesn’t.

What Skills-Based Hiring Actually Means

Skills-based hiring is a recruitment approach that prioritizes a candidate’s demonstrated competencies, measurable technical abilities, and relevant work output over formal educational credentials, years of experience, or job title history when making hiring and screening decisions. The goal is to match the person to the work, not to the pedigree the work used to require.

Simple enough on paper.

The reason it needs a 2,000-word guide instead of a sentence is that “demonstrated competencies” hides an enormous amount of operational complexity. Who defines the competencies? How do you measure them without turning every interview into a four-hour gauntlet? What happens when the hiring manager’s gut still defaults to the resume with Stanford on it? Those are the questions that separate companies doing skills-based hiring from companies talking about it.

The NACE Job Outlook 2026 survey puts adoption at 70% of employers for entry-level roles, up from 65% the prior year. Seven in ten say they use the approach at least half the time during screening and interviews. Those numbers sound like a movement. They are not what we see on the other side of the req.

The 1-in-700 Problem

In 2024, the Burning Glass Institute and Harvard Business School published the most honest study anyone has done on this topic. They tracked what happened after companies removed degree requirements from job postings. The headline: roughly 3.6% of roles dropped the requirement. The actual change in who got hired was almost invisible. Out of 77 million annual hires, about 97,000 went to non-degreed workers in roles that previously required one.

Fewer than 1 in 700.

That number should be uncomfortable for anyone who has published a blog post about their commitment to skills-first hiring. It was uncomfortable for us. We route candidates to these roles. We see the rejection reasons. The study confirmed what the rejection data already told us: most degree requirement removals are performative. The JD changes. The filter in the ATS changes. The hiring manager’s mental model does not.

Not all of it is bad faith. Some of it is structural. A hiring manager screening 200 applicants for one senior DevOps role doesn’t have eight hours to review portfolios and run assessments. The degree line was a shortcut. Removing the shortcut without replacing it with a better one just makes the process slower and the manager more reliant on gut feel, which usually means defaulting to the same proxies they used before.

The companies that actually moved the needle, the 37% the study called “Skills-Based Hiring Leaders,” did something different. They didn’t just delete a line from the JD. They rebuilt the screening pipeline. Assessment tools. Structured scoring rubrics. Interviewer training. The degree line was the last thing they removed, not the first.

Where Government Is Pushing Faster Than the Private Sector

More than 30 state governors have signed executive orders or legislation removing degree requirements from public sector jobs. Pennsylvania alone opened roughly 92% of state government positions, about 65,000 jobs, to candidates without four-year degrees. Colorado set a 2025 deadline to strip unnecessary requirements from every eligible role. Washington state told agencies to replace degree-and-year requirements with skills, abilities, and knowledge assessments by the end of 2025.

The federal government moved too. Executive orders under both administrations pushed skills-based hiring for federal roles, and OPM’s 2025 Merit Hiring Plan codified it: agencies may only require a degree when the law says so for that specific position in that specific state.

Government is an interesting case because it is harder to hide behind “culture fit” when there is a public mandate, a compliance reporting structure, and a governor’s office that will notice if nothing changes in the actual hiring numbers twelve months after the executive order hit the press. The private sector doesn’t have that kind of accountability, and it shows. Nobody audits whether your “skills-first” LinkedIn post actually changed your interview rubric. Which is why the gap between adoption claims and hiring outcomes is so much wider on the corporate side.

What Actually Changes When You Do It Right

The companies in our queue that run real skills-based hiring, not just the branding version, share a few patterns. Not one of them will surprise you. The hard part isn’t knowing what to do, it’s convincing a hiring committee that spent fifteen years screening resumes to suddenly trust a take-home assessment scored by two engineers who never saw the candidate’s LinkedIn.

They rewrote the job description around tasks, not credentials. Instead of “bachelor’s degree in computer science and 5+ years of experience,” the req says “build and maintain CI/CD pipelines in GitHub Actions, manage Terraform state across three AWS accounts, and participate in on-call rotation for production Kubernetes clusters.” One of those descriptions tells you what school someone went to. The other tells you what they’ll do on Tuesday. We had a client in Irvine rewrite six DevOps reqs this way last year. Pipeline volume went up 3x. More importantly, the quality of the first-round interviews went up because candidates self-selected on whether they could actually do the work, not whether they had the right line on their resume.

The assessment piece varies by role, and it should. A senior backend engineer does a take-home that mirrors a real production task, reviewed blind by two engineers who don’t see the resume until after scoring. A project manager walks through a past initiative with a structured rubric that scores planning, stakeholder management, and recovery from something that went sideways. The key is that the assessment exists, that it’s scored before anyone looks at credentials, and that the scoring criteria were written down before the first candidate walked in. If you need a framework for building these, our technical interview guide for hiring managers walks through the mechanics by role type.

They trained hiring managers on what to screen for. This is the step everyone skips. You can build the best assessment rubric in the industry and it won’t matter if the person scoring it still anchors on where the candidate went to school. Two of our clients run calibration sessions before every senior hire, where the hiring manager scores a sample candidate packet blind, then compares notes with the recruiter to check for proxy bias. Takes 30 minutes. Catches the problem before it gets to the offer stage.

A few things they didn’t do. They didn’t remove all requirements overnight. They started with roles where the degree-performance correlation was weakest, usually mid-level technical roles and operational positions, and expanded from there. They also didn’t pretend that credentials never matter. Nobody is hiring a nurse practitioner without a license. The argument is not that credentials are worthless. The argument is that a four-year computer science degree is a poor predictor of whether someone can debug a memory leak in a containerized Python service at 2 AM, and that better predictors exist.

The Roles Where This Hits Hardest

Not every role benefits equally. The biggest gains happen where the gap between what a degree teaches and what the job requires is widest.

BCG’s 2023 research confirmed the pattern: engineering is the only field across five countries where employers actually increased degree requirements. Safety regulations, licensure, and the specialized nature of the work make that logical. For everything else on the tech side, the paper ceiling is a choice, not a requirement.

The TestGorilla State of Skills-Based Hiring 2025 report adds a number worth knowing: 94% of employers using skills-based methods say it’s more predictive of on-the-job success than resumes. Resume usage is down to 67%, from 73% the prior year. The direction is clear even if the speed isn’t.

What This Means for Your Talent Pipeline

The math is straightforward. If your JD requires a bachelor’s degree, you are excluding roughly 62% of American workers who don’t have one, according to Bureau of Labor Statistics educational attainment data. In tech, the exclusion is narrower because the field skews educated, but it still filters out a meaningful share of qualified candidates, especially in infrastructure, security, and operations roles where hands-on experience and certifications carry real weight.

Drop the requirement and you don’t just get more applicants. You get different applicants. Veterans with six years of systems administration in a classified environment who never used the GI Bill for a four-year degree. Career changers who spent a decade in finance before completing a nine-month data engineering bootcamp and building a production pipeline at their first tech job. Self-taught developers who have been shipping code for eight years but never sat in a lecture hall. Those people exist in large numbers. They are invisible to any ATS that filters on “bachelor’s degree.”

The diversity angle is real and measurable. LinkedIn’s data shows employers using skills-first approaches are 60% more likely to make a successful hire. The Harvard/Burning Glass study found that non-degreed workers at skills-based leader companies had retention rates 10 percentage points higher than their degree-holding colleagues in the same roles. They also saw a 25% average salary increase from their prior positions, which suggests they were being significantly underpaid relative to their actual skill level before someone gave them a shot.

If your team is already running a skills gap analysis and finding the same shortfalls quarter after quarter, this is worth examining. The gap might not be a talent shortage. It might be a filter problem. We have watched clients close long-open reqs within three weeks of rewriting the requirements around competencies instead of credentials, and in more than a few cases the person they hired outperformed the degreed candidates who’d interviewed earlier. If building a talent pipeline is something your team has been trying to do, widening the aperture on who qualifies is the single fastest lever you can pull.

How to Start Without Blowing Up Your Hiring Process

Full transformation is a multi-quarter project. Most companies should not attempt it all at once. Here’s the sequence that works, based on what we’ve seen in our client base.

Pick two or three roles where degree requirements are clearly decorative. If the job is “manage Terraform modules and respond to PagerDuty alerts,” a bachelor’s in computer science is not load-bearing. Start there. Leave the regulated and research-heavy roles alone for now.

Rewrite those JDs around observable tasks and measurable outputs. Not “strong communication skills” but “lead a weekly 15-minute standup and write post-incident reports that non-technical stakeholders can act on.” Every line should describe something you could watch the person do in the first 90 days.

Build or buy an assessment for each role. For technical roles, a 90-minute take-home that mirrors real work is the gold standard in our experience. For non-technical roles, a structured scenario interview with a rubric that two interviewers score independently before comparing notes. The rubric needs to exist before the first candidate shows up, not after, and it cannot include “years of experience” or “educational background” as scored dimensions.

Train the interviewers. This is the part that determines whether the rest of it matters. A one-hour calibration session where the hiring panel reviews a sample candidate profile and scores it against the rubric, then discusses the scores out loud, will expose more hidden bias than any policy memo. Run it before every senior hire until the team internalizes the framework. Most of our clients who stuck with this saw measurable improvement in offer acceptance rates within two hiring cycles, because candidates could tell the interview was actually evaluating their work instead of their resume.

Measure it. Track the percentage of hires who don’t hold a degree in the role’s traditional requirement. Track their 90-day performance ratings against the baseline. Track retention at six and twelve months. If the data says skills-based hires perform the same or better, you have the evidence to expand. If it doesn’t, you have specific data about which roles or which assessment methods need adjustment, and that data is worth more than a hundred conference talks about the future of hiring because it comes from your own pipeline with your own candidates in your own market. Either way, you’re making decisions from numbers instead of ideology.

What Employers Keep Asking Us

Aren’t we just lowering the bar?

Opposite. You’re raising it. A degree requirement is a proxy. It says “this person probably learned some relevant things at some point.” A skills assessment says “this person can do the specific work we need done, and here’s the score.” The bar moves from assumed competence to demonstrated competence. We placed a DevOps engineer last year who’d been rejected by four other companies’ ATS filters because he didn’t have a degree. He passed our client’s hands-on assessment with the highest score of any candidate in the pipeline. Proxies are lower bars disguised as high ones.

How do we handle roles where a degree is legally required?

You don’t touch those. Licensed professions, regulated engineering roles, positions where state or federal law mandates specific educational credentials stay exactly as they are. Skills-based hiring is for the other 80% of your org chart where the degree requirement exists because someone copied it from a template in 2014 and nobody questioned it since.

Our hiring managers say they already evaluate skills. What’s different?

Ask them to show you the rubric. If there isn’t one, or if it was written after the interviews, they’re evaluating gut feel and calling it skills assessment. The difference between “I know a good candidate when I see one” and actual skills-based hiring is documentation, structure, and scoring that happens before anyone sees the resume. Most managers genuinely believe they’re evaluating skills. The rejection data usually tells a different story.

Does this actually improve diversity numbers?

86% of employers using skills-based methods reported improved workforce diversity in TestGorilla’s 2025 survey. The mechanism isn’t complicated. Degree requirements disproportionately filter out Black, Hispanic, and lower-income candidates because degree attainment in the US tracks closely with household income and race. Remove the filter, hold the performance bar constant, and the pipeline diversifies. It’s not a DEI program. It’s a selection accuracy improvement that has DEI as a side effect, which is actually more durable than the other way around because it survives budget cuts and political shifts.

We tried removing degree requirements and nothing changed. Why?

Probably because you only changed the JD. The Harvard/Burning Glass research calls this the “pronouncements without practice” problem and it describes 63% of the companies they studied. Removing the degree line from the posting without changing the screening criteria, the assessment method, the interviewer training, and the ATS configuration is like taking the lock off the front door but leaving the deadbolt. Candidates without degrees apply. They get screened out at the next stage by different proxies. Nothing changes except the company gets to say it changed.

What’s the real cost of switching to assessments?

$3,000 to $15,000 per role to build a custom assessment framework from scratch, depending on complexity. Off-the-shelf platforms like HackerRank, Codility, or TestGorilla run $5,000 to $30,000 annually depending on volume. The math works if the alternative is a $14,000 bad-hire cost, and it usually is. A contract-to-hire arrangement through a staffing partner can also function as a built-in assessment period if you’re not ready to invest in tooling yet.

The Honest Version

Skills-based hiring works. The evidence is overwhelming on that. Companies that actually implement it, not just announce it, see wider pipelines, stronger retention, better performance scores, and more diverse teams. The problem has never been whether it works. The problem is that implementing it requires operational change, not just policy change, and operational change is harder to put in a press release.

If you’re reading this because your company just removed degree requirements from a handful of JDs and wants to call it a strategy, read the Harvard/Burning Glass study. The 1-in-700 number will tell you whether your effort is landing or just performing. If you’re reading this because you want to actually change how your team hires and need someone on the sourcing side who screens for competency instead of credentials, talk to our team. We’ve spent years routing candidates into these pipelines and watching what actually sticks, which means we can tell you where the process breaks before it costs you a quarter.