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The Best Job Candidates Don't Always Have College Degrees

Many companies find that skills-based pre-employment tests are better predictors of success on the job.

Last month, the U.K. office of the accounting firm Ernst & Young announced that, starting next year, it will no longer require new hires to have a college degree. Candidates for jobs at EY’s U.K. office used to have to meet the grade baseline of a B average in college, but will soon be evaluated instead based on the results of a series of pre-employment tests.

EY said in a statement that the decision came after an internal 18-month study of 400 employees found little evidence that academic success was correlated with how well new hires performed on the job. Further, EY believes that removing these grade requirements will widen their candidate pool: “Transforming our recruitment process will open up opportunities for talented individuals regardless of their background and provide greater access to the profession,” said Maggie Stillwell, EY’s managing partner for talent in the U.K.

Degrees and good grades have long been proxies for the kind of cognitive skills required for jobs in knowledge industries. But many say that these credentials don’t meaningfully predict job performance, and companies are starting to catch onto that. “There is a long literature in psychology showing that job performance and college grades are poorly related,” says Peter Cappelli, a professor at the Wharton School of the University of Pennsylvania who studies hiring and the American workplace. “It is remarkable how frequently companies rely on hiring criteria for which there is no evidence of it working.”

America’s tech sector has been the most outspoken about the irrelevance of degrees and grades when it comes to hiring: Laszlo Bock, Google’s senior vice president of people operations, has been quoted as saying that while good grades don’t hurt, they're “worthless as a criteria for hiring.” The company administers sample-work tests—the best predictor of success on the job, writes Bock—and he says that they’re “less concerned about grades and transcripts and more interested in how you think.” One study found that pre-employment skill testing results in employees with significantly higher attendance rates and reduces turnover.

Beyond grade requirements, another concern with credentialism is that it might exacerbate inequality. Researchers have found that top firms often prefer students from elite institutions because they believe that this nets them the “best” candidates—but they fail to recognize that such practices favors graduates from the most affluent backgrounds. “Relying on grades is something that companies do to make themselves feel that they are getting elites,” says Cappelli.

At least two companies are building their business models around this  gap in the hiring process, and sell their services to companies seeking new employees. Gild, a recruiting startup in San Francisco, deploys robots and fellow developers to gauge a prospective programmer’s coding skills. And HireArt, a startup based in New York, develops custom pre-employment skill tests for companies to assess their talent pool.

“We've found that traditional hiring, which is based primarily on credentials, is a terrible approach for junior roles," says Nick Sedlet, the co-founder of HireArt. “The labor market is changing much faster than colleges can keep up.”

Cappelli points to the IT company CapGemini, which has taken this logic one step further. “They are actually recruiting IT candidates who have not been to college, training them and then also sending them part-time to college to get IT degrees.  The reason, they say, is because they get cheaper workers who stay longer, and the best ones are loyal and really good,” explains Cappelli.

For the time being, credentialism remains the norm. As Bill Gates remarked earlier this year, attending college is still a “much surer path to success” than not going. Even while EY’s U.K. branch is changing, things in America are remaining the same. “In the U.S.,” says Dan Black, the director recruiting at EY Americas, “we take a holistic approach at hiring students candidates, and the grade requirements removed by the U.K. firm are not applicable to our hiring process.”

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