The Shift to Skills: How Businesses Are Reshaping Hiring Beyond the College Degree
By Agatha Agbanobi
In 2024, the U.S. workforce began experiencing a notable shift in how employers evaluate candidates, with skills-based hiring rapidly replacing traditional degree requirements across multiple industries. However, that pace has since slowed due to implementation challenges.
According to McKinsey's Workforce Transformation Report, "the percentage of companies adopting skills-based hiring practices increased from 40% in 2020 to 60% in 2024", representing a substantial shift in hiring philosophy. McKinsey research further indicates that "hiring for skills is five times more predictive of job performance than hiring based on education.” The National Association of Colleges and Employers (NACE) reinforces this trend, finding that "close to two-thirds of employers responding to the Job Outlook 2025 survey reported that they use skills-based hiring practices for new entry-level hires". This shift is particularly pronounced in sectors facing acute talent shortages, including healthcare, manufacturing, technology, and public sector organizations. In healthcare, the demand for skilled professionals continues to outpace supply. The technology and manufacturing sectors continue to face skill gaps that university degrees don’t readily provide for some of their critical roles, especially in the areas of AI and automation. With government jobs, employers are preparing for a potential 6 million work shortage that will happen by year 2032 due to Baby Boomer retirements from state government jobs, (of which they hold 27%), and local government jobs, of which they hold 26%. So, it follows that more than half of U.S. states have issued policy directives for government agencies to focus on skills-based hiring and eliminate degree requirements, which is becoming increasingly too expensive to attain even with financial aid support.
However, the promise of skills-based hiring faces significant implementation challenges that Talent Acquisition professionals must carefully navigate. Harvard Business Review's research shows that despite widespread removal of degree requirements from job postings, "for every 100 of these new postings, fewer than four additional candidates without degrees are actually hired". This disconnect between policy and practice suggests that many organizations struggle to effectively evaluate skills without relying on traditional educational proxies. The Burning Glass Institute notes that "degrees were perceived as indicators of persistence, of foundational skill, and of general capability", making the transition to skills-based evaluation particularly challenging for hiring managers accustomed to degree-based screening. Manufacturing and public sector organizations face additional hurdles, as they must balance skills-based hiring with regulatory requirements, union considerations, and established career progression frameworks that have traditionally emphasized formal education. Furthermore, the increased emphasis on skills assessments requires significant investment in evaluation tools, which must be designed with bias mitigation and equity in mind, training for hiring managers, and potentially longer recruitment cycles as companies develop more sophisticated screening processes in this initial change management phase.
The strategic implications of this change in hiring extend well beyond talent acquisition, encompassing workforce development, brand positioning, and organizational culture. Organizations that successfully implement skills-based hiring generally report access to more diverse talent pools, reduced time-to-fill for critical positions, and improved job performance outcomes when candidates are matched based on actual capabilities rather than educational credentials. However, the transition requires substantial organizational commitment and resources, including investment in equitable, unbiased skills assessment technologies, comprehensive training for hiring managers, and revised performance management systems that align with competency-based evaluation. The U.S. Bureau of Labor Statistics projects that "more than 19 million openings are projected each year, on average, from 2023 to 2033" across all education levels. Thus, forward-thinking organizations must develop sophisticated approaches for identifying, assessing and developing skills because the most successful and retained hires still have room for growth. The most successful implementations will have to combine skills-based hiring with robust upskilling programs, mentorship and sponsorship systems, and career pathing that recognize diverse routes to role competency and transferable skills for critical roles to help promote internal promotions. This creates the agile and inclusive workforce that will be capable of adapting quickly to evolving industry demands.
Sources
McKinsey & Company. "Workforce Transformation Report." December 30, 2024. Cited in "Skills-Based Hiring Trends: Big 2025 Statistics & Best Data."
National Association of Colleges and Employers (NACE). "Nearly Two-Thirds of Employers Use Skills-based Hiring Practices for New Entry-level Hires." Job Outlook 2025 Survey.
Harvard Business Review. "What Companies Get Wrong About Skills-Based Hiring." May 13, 2024.
The Burning Glass Institute. "Skills-Based Hiring: The Long Road from Pronouncements to Practice." February 14, 2024.
U.S. Bureau of Labor Statistics. "Projected job openings by educational requirements." The Economics Daily. 2024.
Testlify. "65 key skills-based hiring statistics for 2025." December 30, 2024.
Society for Human Resource Management (SHRM). "Skills-Based Hiring Is Gaining Ground." April 8, 2024.
Georgetown University Center on Education and the Workforce. "After Everything: Projections of Jobs, Education, and Training Requirements through 2031." November 12, 2024.
National Governors Association. "New Report: Growing Number of States Drop Degree Requirements." February 26, 2024.
