Recent Trends in Government: Skills-Based Hiring

The recent introduction of the Allowing Contractors to Choose Employees for Select Skills (ACCESS) Act (H.R.7887) has continued the movement incorporating skills-based hiring into the federal government. In September of 2023, the Office of Personnel Management (OPM) announced a completed list of common federal skills supporting this broader hiring initiative¹. Skills-based hiring has received significant bipartisan support over the last two years, with an executive order signed by then-President Trump in 2020 (EO 13932) that has continued to be enforced by the Biden administration and the 2023 Chance to Compete Act (H.R. 159), which is currently being reviewed by the Committee on Homeland Security and Governmental Affairs². This federal trend follows recent private sector trends to combat “degree inflation” and other paper requirements that have historically prevented skilled workers from entering the workforce, from moving up in the ranks, and added barriers to employment for historically under-represented groups ^{3, 4}. This upswell in interest and action presents a unique opportunity for human capital and assessment firms, but what is skills-based hiring exactly?

The Basics

In response to the overinflation of degree requirements in job postings in the early 2000s, industry began taking a serious look at resetting their hiring processes shortly before the pandemic and then accelerated the process rapidly following Covid-19 (learn more here⁵). Beginning with the private sector, and particularly in IT, organizations have increasingly tried to address the growing labor shortage by removing degree requirements and decreasing the self-reporting of skills on job applications⁴. In the federal government, this has primarily prompted a transition to using exams and interviews to determine likelihood of success in a given role based on the skills required by that role, and the development of shared certifications to improve coordination between agencies in hiring efforts¹. The federal skills-based hiring movement, and the media attention it has attracted, can also serve as a reminder to federal applicants that experience can serve as an educational substitute, something that has been true for many years⁶.

The Pros and Cons

Among the most prominent reasons for a switch to a more skills-based hiring process is the ability to open access to a larger talent pool¹⁰. Removing paper requirements not only gives businesses the opportunity to market jobs to skilled laborers, but it encourages more applicants, especially those from historically underrepresented groups, to apply. In many cases, this leads to large increases in salary for workers without degrees, increasing financial security and economic stability ⁸. This could also influence a more effective use of taxpayer dollars by ensuring efficiency in operations by hiring those most capable. Skills-based training and hiring can also help to build a better-equipped workforce with opportunity for growth and advancement, contributing to improved employee retention rates ^10.

However, as with any change, this shift has the potential for significant downsides. Skills-based hiring is challenging and time consuming⁹. Creating a rigorous, scientific, and unbiased assessment of the necessary skills for a job, not to mention actually identifying the skills in the first place, takes time, dedication, and expertise that many employers don’t have the resources to undertake. There is also a risk of overlooking traditionally educated or experienced workers with a slightly different skillset⁹. Missing out on the traditional candidate could have negative implications in industries where experience and more general capabilities may be important to building a solid foundation for success.

These risks highlight the need for a robust, well-thought out, and regularly evaluated hiring process, regardless of the organization’s choice to pursue skills vs. degrees (check out our previous blogs on selection and assessment).

What does this mean for federal contractors?

The ACCESS Act is a broad bill that will take time to meander its way through the legislative process.  House Oversight and Accountability Committee members have moved it to the House floor but have expressed concerns about its potential to create unnecessary burdens for federal agencies⁷, and the bill will likely change as it makes its way through the House and Senate. The bill would task the Office of Management and Budget with crafting guidance that not only describes how agencies justify requirements for each contract solicitation and but also encourages creating alternative qualification like industry certifications and “work-based learning programs” ⁷. Ultimately, this means that contractors will have increased access to talent pools that will not be restricted for use by federal requirements. Companies will theoretically have the room to hire individuals with significant experience but who lack a degree (e.g., IT, programming, designers). It also potentially opens the door to expand possibilities for staffing key personnel when submitting proposal responses, removing the specific degree or certification requirements to allow for greater flexibility in proposing qualified individuals with the experience to be successful in key personnel roles. This could allow contractors to clearly demonstrate capability, give organizations the ability to staff the most relevant experts, and provide the most value to a client, not just satisfy reporting requirements.

Opportunities for Growth in Human Capital Contracting

If they aren’t immediately clear, the implications of this bill for federal human capital firms are three-fold and potentially overwhelming. First, this act allows our organizations to participate in hiring skilled individuals to perform work without degrees, particularly skilled workers in the IT, technology, and data fields who may have certifications and are able to prove their skill level. Second, it opens the door for huge amounts of federal dollars previously restricted to degree holders being unlocked for (potentially) more inclusive contract staffing requirements, particularly in administrative and professional services fields. Finally, and perhaps most importantly, many federal agencies will be looking for help in either:

1. developing policy and guidance for the implementation of skills-based hiring alternatives,
2. identifying skills, performing job task analyses, and building banks of relevant degree alternatives across thousands of government jobs,
3. developing skills-based trainings for new employees, or developing trainings for hiring managers⁸,
4. developing and implementing the assessments that identify qualified individuals during the selection and assessment process, or
5. all the above.

These could lead directly to more contract solicitations as agencies work to meet the requirements of a new skills-based hiring culture. Keep an eye out for these opportunities as they appear!

References

1. Wagner, E. (2023b, September 21). OPM advances skills-based hiring initiative with common competencies update for federal jobs. Government Executive. https://www.govexec.com/management/2023/09/opm-advances-skills-based-hiring-initiative-update-common-competencies-federal-jobs/390530/

2. Wagner, E. (2023a, January 24). Agencies Are Emphasizing Skills and Experience in Hiring. The House Has Voted to Make it Official. Government Executive. https://www.govexec.com/workforce/2023/01/agencies-have-been-emphasizing-skills-and-experience-hiring-house-has-voted-make-it-official/382159/

3. OPM Releases Skills-Based Hiring Guidance. (2022). U.S. Office of Personnel Management. https://www.opm.gov/news/releases/2022/05/release-opm-releases-skills-based-hiring-guidance/

4. Fuller, J., Langer, C., & Sigelman, M. (2022, February 11). Skills-Based Hiring Is on the Rise. Harvard Business Review. https://hbr.org/2022/02/skills-based-hiring-is-on-the-rise

5. The Emerging Degree Reset. (2022, February 9). The Burning Glass Institute. https://www.burningglassinstitute.org/research/the-emerging-degree-reset

6. Damp, D. (2023, June 28). Skills-Based Hiring Initiative in the Federal Government. ClearanceJobs. https://news.clearancejobs.com/2023/06/28/skills-based-hiring-initiative-in-the-federal-government/

7. Wagner, E. (2024, April 12). Skills-based hiring for contractors advances in the House. Government Executive. https://www.govexec.com/management/2024/04/skills-based-hiring-contractors-advances-house/395706/

8. Millet, J. (2024, April 26). How the federal government can approach skills-based hiring. Federalnewsnetwork.com. https://federalnewsnetwork.com/commentary/2024/04/how-the-federal-government-can-approach-skills-based-hiring/?readmore=1

9. Neves, J. (2022, September 12). Skills-based Hiring: The Complete Guide. Day.io. https://day.io/blog/skills-based-hiring-complete-guide/ 10. McKinsey. (2022, November 15). Taking a skills-based approach to building the future workforce | McKinsey. Www.mckinsey.com. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/taking-a-skills-based-approach-to-building-the-future-workforce

Adrien McCulloch joined FMP Consulting as a Human Capital Consultant in September 2022. He holds an M.A in Industrial/Organizational Psychology from George Mason University. Adrien has three years of experience working in the public sector with experience in military psychology, performance management, strategic planning and workforce management, and data analysis. He is committed to making the workplace better suited to taking care of people.