Do Credentials Matter in This Hot Jobs Market?

Struggling to find candidates, more companies are overlooking lack of experience or degrees. The pros and cons.

The newest jobs report was released Friday morning, telling US employers something they already knew: It’s an employees’ market. The number of job openings is near a record high, and the unemployment rate is 3.9%, the lowest in more than a decade.

So it may not be surprising that some job requirements have been downgraded from “mandatory” to “preferred.” Indeed, whether they’re looking for salespeople, senior managers, or nearly anything else in between, firms are filling roles with candidates who don’t have the prior experience or educational background that the roles—at least on paper—demand.

Relaxing the necessary degrees or work experience is OK, experts say, if companies do a good job gauging a candidate’s underlying skills. “The credentials listed in a job description are a proxy for skills and competencies,” says Nathan Blain, senior client partner and global leader for organizational strategy and digital transformation at Korn Ferry. “Someone doesn’t need a degree to demonstrate that they have the skills required to do the job.”

Relaxing requirements isn’t really tweaking a firm’s talent strategy, says RJ Heckman, a Korn Ferry vice chairman. For instance, if a sales manager can find candidates who are energetic, articulate, persuasive, and driven—the skills of a good salesperson—then he or she can overlook the fact that the candidates have no prior sales experience.

In fact, from a financial perspective it can help organizations keep hiring costs down by not having to compete dollar for dollar with competitors or invest as much in retraining existing staff. Lessening requirements, theoretically, helps organizations both increase their supply of available talent and decrease the price they have to pay for that talent. Korn Ferry estimates organizations worldwide could end up paying an extra $2.5 trillion to secure talent as a result of an estimated shortage of 85 million properly skilled workers by 2030.

But companies had better be sure that they’ve screened those less-experienced candidates effectively, Heckman says. Compromising on experience or formal education is one thing, scrimping on skills and competencies is another. “If you are putting people into roles that are pivotal to the execution of your strategy, then compromising on essential job requirements could ultimately weaken your competitive position,” says Heckman. Pivotal positions aren’t limited to senior or executive roles, either. Customers are usually the first ones to notice, and tell others, when product or service quality on the frontlines has slipped, for instance.

Heckman says organizations with strong screening and assessment practices are better able to adjust their talent strategies in response to economic and labor market conditions. A thorough onboarding process and a learning-agile candidate can reduce, if not eliminate, the risk in hiring someone who lacks the credentials historically required for a role. “Companies are smart to be more thoughtful about what talent to pay more for and where they can compromise,” says Heckman.