Degrees vs Skills: 5 Reasons Why Skills Matter More than Degrees Today

The importance of degrees

I come from a family that values formal education. The fact that I would graduate high school and go onto University for a bachelor’s degree was a given. Even further, my parents expected that all four of their children would get their Master’s degrees. And we did. 

Most of us didn’t question the path we were set on. We accepted the premise that advanced degrees would further our career trajectories. We embraced the undergraduate and then graduate experiences. We made friends. We made homes on campus, in the libraries and pubs. And we didn’t consider the opportunity cost of those years, jammed in a classroom, rather than in pursuit of other skills development.

The discussion of degree vs skills development didn’t exist. Or at least in my world it didn’t. We were bought into the benefits that we believed of our University degrees would yield:

• Increased chance of employment
• Higher average earnings
• Expanded opportunities
• Prepared for the future
• Develop new relationships

It’s not that my parents were wrong, per se. But this sole focus on degrees, without a view of skills development, is a dated idea.

Today, we know that in the debate of degree vs skills, skills are very important.

Hard and soft skills

Skills are the specific learned abilities that you need to perform a given job or complete tasks. If you’ve ever tried to develop a new skill, you’ll know that they are often built across years of experience, repetition, trial and error. A skill can be anything that one does really well including writing, cooking, playing a musical instrument or coding in Python. Skills can be gained and applied at work or in any area of life.

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While there are lots of different types of skills, skills have traditionally been divided into two categories:

1. hard skills
2. soft skills

What are hard skills?

Hard skills are the skills required to do the individual tasks that are unique to a specific job. 

Hard skills include things like:

• Coding
• Accounting
• Financial modelling
• UX Design
• Statistical modelling
• Copywriting

Some hard skills can be very specific and specialized to a narrow set of jobs while others can be broadly applicable to many types of jobs across different industries. 

The requirements associated with a hard skill are constantly changing and evolving with innovations in technology. So people often require continuous retraining to keep pace with the latest tools and techniques in their field.

‍What are soft skills?

Soft skills are non-technical skills and characteristics that shape the way you work and behave on your own and with others. 

Soft skills include things like:

• Collaboration
• Emotional intelligence
• Adaptability
• Resilience
• Empathy
• Communication

The mix and balance of hard and soft skills that an employee ought to possess truly varies by industry, role and organization. 

But some of the most important soft skills are resilience and adaptability, given how quickly the world is changing, and how much shorter the half life of hard skills are becoming.

5 reasons why skills matter more than degrees today

Today, employers are removing the requirement for degrees from their hiring credentials. In a recent report from the US Chamber of Commerce Foundation, employers are getting ready for a world where skills - not degrees - are the most important requirement when filling a job.

So what's driving this change?

1. Digitization and automation

Digitizing and automating activities are allowing business to:

• Improve performance
• Reduce errors
• Increase output, quality, speed
• And deliver outcomes that people cannot do alone

Automation has contributed to higher levels of productivity since the Industrial Revolution. This, in turn, is generating better economic outcomes and higher standards of living. 

But when it comes to skills, automation is increasing the pace at which skills become less valuable or not needed at all. Machine Learning, RPA (Robotic Process Automation) and NLP (Natural Language Processing) are some of the key technologies that are contributing to the automation of both repetitive, non-complex tasks and complex cognitive tasks that were previously done by humans. 

According to the OECD, more than 1 billion jobs (~ 1/3 of all jobs worldwide), are likely to be transformed by technology in the next decade. At the same time, ~40-50% of employees don’t think they’re equipped to do their current job because of how quickly technology is changing

2. Emergence of more niche markets

The economy is fundamentally changing. As Forbes points out, with the emergence of a wider range of interest groups, social groups, language groups businesses respond by targeting these groups with products and solutions tailored to them.

3. The Changing Nature of Work

Work, and the way we work, is changing. Gone are the days where a person joined an organization when they finished University and College and spent the next three decades climbing the corporate ladder until they finally settled into retirement. 

Today, companies are becoming more networked, team-based, and always finding ways to be quicker to respond to competitive threats or rapid world changes - like a pandemic. As the blistering external rate of change continues to permeate companies of all sizes, the needs of most jobs will continue to shift under the feet of those within them. Additionally, the widespread hybrid work model that’s spawned following the pandemic has been driving greater changes in the nature of jobs and the manner in which employees must re-learn how to interact with their colleagues. Remote work is also leaving gaps in coaching and mentorship as the organic learning that takes place between team members no longer exists.

LinkedIn looked at its user data and saw that the skills for jobs have changed around 25% since 2015 – and by 2027 that number is expected to double. This means that the requirements of one’s job is changing, even if the person in the specific job doesn’t change roles.

4. Diversity, equity and inclusion

We know that access and value of education is not equal in our society. Requiring education can be exclusionary of equity deserving groups and casts a discriminatory and biased shadow over organizations hiring practices. A skills-first lens is a more equitable lens for hiring.

5. Half life of skills is shrinking

A skill's half life is the rate at which the value of a skill declines by half.

All skills have different half lives, and the length is determined by how quickly that skill is being disrupted by changes. For example, the half life of digital marketing skills is very short because the digital advertising platforms are constantly changing their algorithms and core technology that alters the success of an advertising campaign. Folks in digital advertising constantly need to be staying on top of trends in order to ensure their skills are keeping pace with the technology.

The World Economic Forum tells us that the rate of professional skill obsolescence is intensifying. Once estimated at 10 to 15 years, the half-life of a skill today is five years and likely shorter for pure technical skills.  This means that a skill learned today is likely to be half as valuable in five years or less vs historically where skills lasted a decade or longer. 

Harnessing the power of skills

With skills increasingly becoming the currency of competition, you may find yourself at a loss for how you might go about reorienting recruitment and development efforts to focus on skills. Shifting an organization’s talent philosophy from credential-based to skills-based can be daunting. But it's worth it. There are several ways to start building out a skills-first approach but really there are 4 tenants:

1. Skills Profiles
2. Skills Inventories
3. Competencies
4. Application-based learning

Let’s go through each one:

Skills profiles

Skills profiles are individual representations of the skills associated with a person or the skills that are required for specific types of roles. 

Instead of basing the requirements for roles on years of experience and credentials, skills profiles focus on:

• What an individual must be able to do
  vs 
• What they have done in the past 

In a time where there are more ways to acquire and develop skills, organizations that anchor their recruitment and talent management practices around skills profiles can multiply their talent pool at much lower cost than those who don’t. 

Additionally, widely distributed skills profiles give immediate transparency to everyone in an organization on the types of skills the company values and what skills profiles are most critical to their business strategy. 

And as a very critical last point, which shouldn’t be considered as last whatsoever, it helps eliminate, or at least reduce, bias from the candidate evaluation processes.

Skill inventories

A skills inventory is a comprehensive database that documents and identifies the breadth and depth of hard and soft skills that exist within an organization.

This data is traditionally gathered through employees’ self-assessed proficiencies. It can also be gathered through formal skills assessments. Skills inventories are created around individual skills profiles and help organizations understand the skills of the organizations. It also helps organizations understand the dispersion and concentration of skills across pockets of the company. 

Importantly, or even maybe more exciting, Skills Inventories also help organizations baseline where their glaring skills gaps exist. Once you know a problem, only then can you go about solving it! 

A well defined, well maintained and fulsome skills inventory can also be a powerful enabler of internal mobility and career pathing as it immediately becomes easier to identify the transferable skills that exist across seemingly unrelated organizational functions and disciplines. Skills inventories also help talent and business leaders strategically identify current and future recruitment, workforce planning or learning and development needs. Skills inventories are key for aligning the strategy of an organization and the people investments that are required to drive that strategy.

Competencies

While a skills-first approach is one of the most important components of future proofing talent management and recruitment strategies, skills must be complemented by an emphasis on competencies to ensure a holistic approach. 

Unlike skills, competencies are a person’s knowledge and behaviours that lead them to be successful in a job. They are by nature, broader and go beyond being able to complete certain discrete tasks. Although different, in scope, competencies encompass a cross section of multiple discrete skills. Problem solving, strategic planning, data-driven decision making, and influence are examples of competencies. While skills (especially hard skills) are emphasized at the start of your career, competencies become more important as you get more senior.

Application based learning

L&D programs continue to fail organizations and employees, despite the billions of dollars that continue to be funneled towards them annually. But it's not your fault! 

Despite organization’s opting to decentralize general L&D (vs executive L&D) through “choose your own learning adventure” programs via employer sponsored content or individual learning allowances, the data shows that it’s still not working.

75% of managers are dissatisfied with their company’s Learning & Development (L&D) function and only 12% of employees apply new skills learned in L&D programs to their jobs. Sadly, much of the investments organizations make when it comes to learning is either focused on the wrong things or don’t tie the goals of employees to the organization’s strategy. A skills-first L&D strategy leaves this approach behind in favor of fostering flexible work assignments, internal gigs/ projects and customized individual learning programs that blend learning content with real life assignments that are part of an employee’s job. 

By focusing on skills, employees can tangibly bridge the gaps across individual skill profiles while the organization deliberately fills gaps in their skills inventory. This is how skills-first organizations ensure they are making the right L&D investments to drive their strategy and provide their people with the growth opportunities they desire to stick around.   

tirl Workforce

There is no quick fix or easy way to shift towards a skills-first strategy but there are tools out there that can help you (hint: we are one of them). With skills rapidly becoming the currency of the changing world of work, a skills-first approach is the key to ensuring organizational resiliency, enabling exciting and dynamic careers for current and future employees and making sure you can compete in some of the most volatile business environments we’ve seen.