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11 Apr. 2016 | Comments (0)

 
The Committee for Economic Development of The Conference Board (CED) is a nonprofit, nonpartisan, business-led public policy organization that delivers well-researched analysis and reasoned solutions to our nation’s most critical issues.

 

Despite higher levels of educational attainment among young workers, employers complain of a “skills gap” in which high school and college graduates are deficient in the skills needed by new hires. A 2014 report from the online job analytics company Burning Glass found that:

  • “Increasingly, employers are seeking baccalaureate talent for what have been sub-baccalaureate jobs.”

  • The shift has been dramatic for some middle skill jobs. For example, 65% of postings for executive secretaries and assistants now call for a bachelor’s degree, but only 19% of incumbents have a B.A.

  • “In other occupations… the skill sets indicated in job postings don’t include skills typically taught at the bachelor’s level, and there is little difference in skill requirements for jobs requiring a college degree from those that do not. Yet the preference for a bachelor’s degree has increased. This suggests that employers may be relying on a B.A. as a broad recruitment filter that may or may not correspond to specific capabilities needed to do the job.

  • Jobs resist credential inflation when there are good alternatives for identifying skill proficiency… That is likely because those positions are governed by… measurable skill standards such that employers do not need to look at a college degree as a proxy for capability.”

Currently, because many employers 1) are uncertain about the skills and knowledge that predict job performance, and 2) lack reliable means of assessing whether applicants have these skills, many rely instead on applicants’ educational attainment and the prestige of the school they attended as a noisy predictor of how well qualified the applicant is for a particular job.

Costs of the Current Way of Hiring… and an Alternative

This approach to hiring has real costs – to employers, job seekers, and the larger US economy:

  • Employers hire the “wrong” people: not every student who attains a particular degree or graduates from a “top” school is necessarily the best fit for a position;

  • Employers fail to hire some of the “right” people: some highly qualified people who lack two- or four-year degrees fail to advance in the hiring process;

  • Students and their families overinvest in postsecondary education, understanding (correctly) that the degree is necessary for getting a good job, even if it has limited value in training them in the actual skills needed. Students and families waste time and money pursuing unneeded education. This is a significant burden, especially for low- and middle-income individuals; and

  • Innovative, non-traditional, and potentially more efficient ways of acquiring job skills have difficulty gaining traction because employers are hiring based on degree attainment rather than actual skills.

The Committee for Economic Development (CED) of The Conference Board believes that easily-administered assessments that predict an applicant’s future job performance will be a game-changer – for low- and middle-income job applicants, for employers, and ultimately for the postsecondary sector. We believe that tests of certain foundational skills are likely to be good predictors of applicants’ future job performance. We know that valid, reliable tests for some of these skills (e.g., writing, critical thinking, quantitative reasoning) already exist. Technology has made the assessment of other “soft” skills (e.g., teamwork, creativity) increasingly possible through gamification and other means, although the validity of these assessments needs to be tested more rigorously.

The Experiment

Essential Competencieswill be a four-year, real-world experiment of competency-based hiring by a select group of businesses. The project will rigorously examine the feasibility and efficacy of competency-based hiring and potentially will provide a “proof of concept” for this innovation. The four-year pilot will be structured as a true experiment, with randomization to the extent feasible – at the level of either the individual job applicant or the HR manager.

As part of the project, approximately 15-20 companies will use standardized tests of key competencies to screen applicants for their US-based workforce at initial stages of the hiring process. These employers will commit, for a subset of their new hires, to using scores on the standardized screening tests in lieu of traditional proxies for an applicant’s knowledge and skills (such as the applicant’s postsecondary institution and degree). That is, applicants who score highly on the tests of key competencies will advance to the next stage of the employer’s standard hiring process (e.g., being interviewed) regardless of their formal education. The competencies covered by the screening tests will be key skills and knowledge important to many positions, such as written and oral communication, critical thinking, and teamwork. Employers participating in the effort will also track the performance of their new hires – those hired through the pilot process and a representative sample of those hired through their traditional screening processes – over the course of the project.

We envision a battery of relatively short assessments that applicants can complete online within a day or less. The precise list of skills we will assess will be determined during the planning year, with input from participating employers. However, we envision that it will consist of some subset of the following skills that appear consistently in taxonomies of “foundational skills” required across a broad range of jobs and industries:

Teamwork, oral communication, written communication, math/quantitative skills, critical thinking, planning and organizing, problem solving, creativity, ability to work with people of diverse backgrounds

Criteria for developing the final list of skills to be tested as part of the assessment battery will include: the availability of a (potentially) valid online test of the skill; input from participating employers regarding the importance of the skill; and previous research correlating scores on assessments of particular skills with actual on-the-job performance. 

The result will be a battery of approximately five to ten online assessments that all job applicants will take as part of their application process. For applicants assigned to the intervention group, employers will receive a multi-dimensional “profile” of each applicant’s degree of skill in the areas assessed.

We will determine the effectiveness of the new competency-based approach to screening (as compared to current screening approaches that depend heavily on the applicant’s educational attainment) by comparing the on-the-job performance of individuals hired in the two different ways. Our measures of performance will be:

  • New hires’ job performance, as measured by the employer’s performance measurement system

  • New hires’ retention in the job and within the company (during the pilot)

Benefits of Participation

We are currently recruiting companies for Essential Competencies. Benefits of participating include:

  • Higher performing employees. To the extent that competency-based screening leads to better matching of job applicants to job openings on the basis of skills, this should lead to better job performance.

  • Broadening the hiring pool to include more non-traditional applicants.  Competency-based approaches to hiring open up well-paying jobs to applicants who can demonstrate they have the skills needed but might lack a traditional 2- or 4-year degree.

  • Opportunity to build usable knowledge at the cutting edge of HR research. Participating companies will convene as a group twice a year during the project to share lessons and experiences among themselves as well as experts. Companies will also gain expertise in business experiments, a growing way to speed innovation.

  • Participation in a high-profile experiment with the potential to benefit the larger community. Competency-based hiring is a topic of great interest within the larger business and public policy communities as a way to improve social mobility, postsecondary education, and US labor markets. Essential Competencies gives companies an opportunity to be part of the solution.

CED will lead the project in collaboration with The Conference Board. Expert advisors include Dr. Robert Hahn (University of Oxford) and Dr. Robert Metcalfe (University of Chicago). The planning year will run from April 2016 through March 2017, during which time we will be recruiting companies. The actual experiment is slated to run from spring 2017 through spring 2020.

For further information, or if you are interested in having your company participate in this exciting experiment, please contact Dr. Monica Herk at mherk@ced.org.

 

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  • About the Author: Monica Herk

    Monica Herk

    As Vice President for Education Research, Monica oversees research to support policy statements in which CED's business leader Members contribute to the improvement of U.S. education from pre-kinderga…

    Full Bio | More from Monica Herk

     

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