No degree required? Companies re-thinking their hiring process

Companies are increasingly dropping or easing requirements like degrees in job postings to tap into broader talent pools. Canva, WiseTech, and Culture Amp are among the growing number of companies adopting this strategy to enhance recruitment and foster diversity in their workforce.

This shift aligns with the rising trend of prioritising skills over traditional qualifications, known as the skill-first approach. It urges managers to evaluate candidates based on their skills rather than solely on their past experiences.

According to LinkedIn research, Australian hiring managers could potentially discover ten times as many suitable candidates for a given role on average by embracing a skills-first approach. This shift not only streamlines the hiring process for companies but also opens up opportunities for underrepresented individuals who may not possess formal degrees.

However, research conducted abroad raises doubts about the effectiveness of this movement. Closer-to-home studies reveal that while the wage gap between graduates and non-graduates is narrowing, individuals with bachelor's degrees still earn an average of 51.3% more per week than those who did not complete year 12.

Charlotte Anderson, Canva's attraction, belonging, and community lead, states that the primary motivation behind Canva's decision to eliminate degree requirements from job advertisements in 2020 was to enhance workplace diversity.

In an interview with AFR Boss, Anderson explains that removing degree requirements enabled Canva to form teams that more accurately reflected the diversity of its customer base, although she does not provide specific data to support this claim.

According to ABS data, only 32% of individuals aged 15 to 74 in Australia held a bachelor's degree or higher last year.

Anderson emphasises that for Canva, the focus is less on the educational background or alma mater of potential candidates and more on the skills they bring to the table, their past experiences, and their values.

Shifting the emphasis to skills rather than rigid educational criteria has facilitated Canva in finding more suitable candidates and has empowered managers to recruit employees for various roles within the company based on their skill sets rather than their professional pedigrees.

This approach aligns with Canva's broader commitment to lifelong learning, encouraging employees to view their careers as "rock climbing walls" rather than traditional ladders.

Anderson explains that this model allows for lateral movement within the organisation and is equally valued as vertical advancement. This perspective helps to keep employees engaged and motivated to perform at their best.

Similar to Canva, Culture Amp and WiseTech have also experienced enhancements in their workforce diversity, which they attribute in part to their decision to eliminate degree requirements from most positions.

Culture Amp made the move to drop degree requirements from its job advertisements approximately six years ago, with exceptions made for legal positions and other regulated roles where educational qualifications are mandatory.

In addition to the diversity advantages, the company prioritises assessing whether job candidates possess the necessary skills for a particular role, rather than relying on degrees as indicators of these skills.

Justin Angsuwat, Chief People Officer of Culture Amp, highlights that numerous studies indicate that possessing a degree is actually a weak predictor of skills. Therefore, instead of using degrees as a proxy, Culture Amp opts to directly evaluate candidates based on their skills.

Utilising diversity as a catalyst for innovation is becoming increasingly prevalent

Angelina McMenamin, head of talent at WiseTech Global, emphasises that recent enhancements in workforce diversity have resulted in more effective problem-solving within the software company.

McMenamin underscores the significance of this development, particularly given WiseTech Global's core identity as a product-driven company. With a substantial portion of its global workforce (62%) and nearly two-thirds of its Australian team occupying technical roles, the company focuses on developing world-class software solutions for the international logistics sector.

She explains to BOSS that breakthroughs often emerge when individuals from diverse backgrounds and skill sets collaborate, facilitating the discovery of innovative solutions to longstanding challenges.

McMenamin also highlights the cultural ethos at WiseTech, which prioritises a skills-first approach.

She mentions the company's CEO, Richard White, as an example, noting that he did not hold a degree when he founded the company. White's diverse career trajectory, ranging from a rock musician and guitar repairer to a self-taught software engineer, CEO, founder, STEM education advocate, and philanthropist, exemplifies the myriad pathways to success embraced by WiseTech.

The importance of degrees is diminishing

Jonathan Tabah, a director in Gartner's HR practice, notes a growing trend among companies to eliminate degree requirements from job postings.

He explains to BOSS that in today's fast-paced economy, obtaining a three-year degree no longer guarantees candidates possess the necessary skills for their roles. The rapidly evolving skill sets demanded by various positions outpace traditional university curricula.

Tabah emphasises that organisations are realising they can no longer rely on conventional methods to ensure they hire individuals with the requisite capabilities due to this dynamic skills landscape.

When asked about this shift, Vicki Thomson, CEO of the Group of Eight, an association representing Australia's leading research-intensive universities, acknowledges that a university education isn't essential for everyone. However, she stresses the importance of advanced skills typically taught on campuses.

Thomson highlights the diversity of educational pathways, emphasising the need for collaboration between universities and vocational education and training (VET) institutions to cultivate the skilled workforce essential for the nation's prosperity.

Furthermore, it remains uncertain whether removing degree requirements from job advertisements results in a higher proportion of individuals without degrees securing employment.

Limited practical impact

In the United States, a recent report by the Burning Glass Institute and Harvard Business School revealed a nearly fourfold increase in the annual number of positions where employers removed degree requirements between 2014 and last year.

However, the researchers indicated that this shift had minimal real-world consequences. An examination of 11,300 positions within large corporations revealed that, on average, there was only a 3.5 percentage point increase in the proportion of employees without a bachelor's degree hired for these roles. Furthermore, not all of this change could be attributed to the adoption of skills-based hiring practices.

The researchers clarified, "Considering that this 3.5 point shift applies solely to the 3.6 per cent of roles that dropped degree requirements during this period, the net effect amounts to a mere 0.14 percentage point increase in the hiring of candidates without degrees."

In other words, despite the hype surrounding skills-based hiring, the promised increase in opportunities materialised in less than 1 out of 700 hires last year, according to the researchers.