Is Your Business Ready for the “New-Collar” Worker?
By Lauren Park, Lauren Gibbons Paul | 10 min read
Lawrence Dearth, leader of one of the largest staffing companies in the United States, gently brings a reality check when he sits down with a new client to talk about filling desperately needed IT roles. “We help our customers shape their understanding of what the talent market is, especially nowadays,” says Dearth, president of Insight Global, a US$3.4 billion Atlanta-based company that places approximately 80,000 people annually.
A customer from the greater Pittsburgh area might come in seeking recent Carnegie Mellon computer science grads – widely viewed as the crème de la crème of tech hires – to fill key entry-level software engineer spots. “That’s one of the greatest technology schools in the country. But they’ve probably already exhausted that talent pool if they’re coming to us,” says Dearth.
But it’s not all bad news. “We tell our customers, ‘Actually, here’s how much better the talent pool will look if you remove the four-year degree requirement for that position.’” Dearth says that for the past five years, they’ve seen a shift to skills-based hiring, especially in contract positions, and this shift is now showing up in permanent roles.
“What [candidates have] done in the last five to six years is so much more important than whether or not they have a degree in management information systems or computer science,” Dearth says, adding that they’re not seeing the four-year degree being mentioned in job descriptions anymore. Only about one-third of the 3,400 permanent positions for which Insight Global is currently recruiting mentions a four-year degree, even as a “nice to have.” The average salary for these positions? Around $120,000, which is striking when you consider the widespread perception that lacking a college degree will result in a minimum-wage job.
When it comes to hiring IT professionals, things are tough all over. The Wall Street Journal says that as the novel coronavirus outbreak begins to transition from pandemic to endemic, U.S. employers are looking to fill more than 10 million roles, driven in part by surging consumer demand. The prolonged hiring drought is threatening our recovery and reshaping major segments of the economy.
Technology roles have been notoriously hard to fill for a decade or two but are now coming into glaring focus as companies undertake key digital transformation initiatives. IT leaders see the shortage of talent as the biggest barrier to adoption of two-thirds of the emerging technologies that power digital transformation, according to a Gartner report. Clearly, human capital organizations need to act fast.
Now, a few years after the concept first appeared, HR and human capital organizations are getting real about making the transition to hiring people without four-year college degrees as a way to quickly onboard people with essential digital skills. These “new-collar” workers develop the skills needed to work in technology jobs through nontraditional education paths – community colleges, vocational schools, software boot camps, technical certification programs, high school technical programs, and on-the-job apprenticeships and internships.
Hiring new-collar workers immediately opens access to a pool of potential employees who would previously have been overlooked by most hiring managers. Expanding talent pools can pay significant dividends in terms of not only filling important roles but also improving organizational in terms of diversity, equity, and inclusion (DEI). The OneTen organization, for example, specifically aims to enable the hiring of 1 million Black individuals who do not have four-year college degrees into “family-sustaining careers” over the next 10 years. The payoffs for DEI can be huge by filling important roles and bringing new perspectives into the workforce. But experts say hiring new-collar workers means you’ll have to take another look at your talent strategy. You’ll need a solid plan for vetting candidates’ hard skills and measuring and developing their critical soft skills, such as collaboration and problem-solving.
Faster ways to develop needed skill sets
Observers agree. Around 2016, Ginni Rometty, then-CEO of IBM, coined the term “new collar.” Certainly, the concept was then coming into focus at other major employers of tech staff, where it was called shifting to “skills-based” hiring. Whatever the term, the practice chips away at the primacy of the four-year degree for IT jobs, whether entry-level or higher up the organizational hierarchy, thereby widening the applicant pool and providing access to career paths that previously would have been out of reach for many people.
“Like many companies, IBM was competing for talent to fill the entry-level software engineering and data science job roles that were critical to its business,” says Eric Bokelberg, innovation leader for IBM Talent Transformation Services. “IBM as a company has always had a strong commitment to education. Our HR leaders realized that we could use that commitment to build new technical resource pools.” Since 2011, IBM has been developing access to STEM-related jobs through its P-TECH partnership with public high schools and community colleges in underserved communities. This program helps high school students learn marketable tech skills and obtain coveted internships – with IBM and other companies – providing an alternative pathway into high-paying tech jobs that offer upward mobility. “There’s a multiplier effect,” adds Bokelberg. “P-TECH’s success has encouraged other companies to join the program, thereby creating more opportunities for nontraditional students and filling more tech jobs for businesses large and small.”
IBM also enables job access to other communities, such as neurodiverse people and those who are reentering the tech job market. There are many pathways to success in an IT career; these programs recognize that the standard-issue four-year college diploma is not for everyone and doesn’t have to be.
New-collar hiring: What it takes to succeed
Human capital organizations are rethinking their talent strategies in the face of talent shortages, when the skills are most critically needed for transformation initiatives. Many are pursuing borderless talent; they’re now able to recruit and hire people from larger swaths of the world than they could before. Hiring managers are recasting what an acceptable candidate looks like, with an emphasis on both hard skills and soft skills such as collaboration, problem-solving, flexibility, and empathy. New-collar workers come through the door with qualifications (certifications and proven mastery of technical skills), but they often need some support to help develop and amplify innate human capabilities, including creativity and resilience, which are very important in an atmosphere of constant change, says Cathy Gutierrez, workforce transformation leader and senior manager at Deloitte.
Hiring managers are recasting what an acceptable candidate looks like, with an emphasis on both hard skills and soft skills such as collaboration, problem-solving, flexibility, and empathy.
“Organizations are jumping at the chance to gain access to these new tech talent pools,” she says. HR and business leaders need to recognize that new-collar workers may require a different type of upskilling, however. The four-year college experience provides opportunities for class project work with exposure to different points of view and ways of working, as well as experience with leadership roles in student organizations or athletics, all of which are beneficial to the work world. “Someone who did not have those experiences at school will need support to gain skills in these areas,” she adds. Mentoring can help bridge those gaps.
Cultural resistance to hiring non-degreed workers is another potential obstacle to embracing new-collar workers: the talent organization has never worked this way and may not trust that getting rid of the university-degree requirement can result in employees who are just as productive as traditional hires. A certain type of college degree carries cues – “This is our type of person.” When those cues are no longer in play, many hiring managers are left unsettled.
One way that some talent organizations come to accept new-collar workers? By first removing the traditional-degree requirement for contract positions where the need is urgent. If that approach works well, says Dearth, managers tend to become more accepting of the new pathways into the organization.
Dearth sees the willingness to develop employees’ skills as particularly relevant for hiring younger people. “Millennials realize they can do anything once they put their minds to it. They are very self-taught. They’re looking for companies that have a culture of developing their potential: ‘We don’t expect that it’s something you have necessarily learned in school,’” he says.
AI eases the transition
There is no question that new-collar hiring increases the burden of writing job descriptions and reviewing resumes, because it increases the volume of applicants significantly. Both tasks are made easier through technology tools such as eightfold.ai talent acquisition. Billing itself as a “Talent Intelligence Platform that delivers diverse talent and hidden gems who have the skills to succeed in any role,” eightfold.ai helps automatically match candidates to job profiles based on their existing and adjacent skills. “If you have data analytics on your resume, that’s not too far from being a data scientist, so this tool will catch you for those jobs too,” says Gutierrez. At the same time, the algorithm can identify and weed out résumés that are not right for the position – whether or not the candidate has a college degree. “This area has been very hot in the last two to three years because without AI, [dealing with resumes] can be very tough.”
Building job descriptions traditionally has been an especially tough task for hiring managers, says Stephen Donnelly, strategic/enterprise developer for eightfold.ai. “AI can help if you’re struggling to name a skill. Let’s say we know Joe is good at this job. You tell our system we’re trying to find more Joes and the AI will prompt, ‘Are you looking for these skills?’” says Donnelly. If Joe is good at project management, the system will put that into the job description. But on the other hand, the system will flag that requiring “project management” in the job description will weed out a lot of good applicants. Eightfold.ai loads data from a company’s systems of record and builds from there, learning which types of candidates had the most success.
Technology platforms for assessment are also helpful in this regard; Codility is a popular cloud-based platform for assessing skills. According to Jeremy Schmidt, director of global talent acquisition for Codility, the platform removes a lot of the unconscious bias that creeps in at the top of the hiring funnel. “It helps give everybody the same opportunity for a role based on their technical skill set rather than their name and where they went to college,” says Schmidt.
Codility helps hiring managers narrow the ever-burgeoning flood of resumes they receive for hot positions. For example, assume Microsoft needs to hire C# engineers. If they post a job, they will likely receive a minimum of 2,000 applications; that number might reach 10,000 if there is no requirement for a four-year degree. “There’s no way for a recruiter to go through all of those to pick out which ones might be the best fit,” says Schmidt.
So the Microsoft hiring manager works collaboratively with the Codility customer service team to define what they’re trying to measure, ultimately putting together a practical candidate assessment that is delivered securely online to the entire group of applicants. “The test measures their skill sets in a certain area. And then [managers] can take the top 50 candidates from the list based on the technical aptitude and start there,” he says. This makes the process much more manageable.
AI also comes to the rescue for one of the most onerous of HR tasks: writing job descriptions. “This is a challenge in so many ways and always has been,” says Bokelberg. “Jobs are constantly evolving. You want to standardize them for efficiency’s sake, but every manager thinks the job they’re hiring for is unique and needs its own description.” AI can provide enormous assistance, he adds, helping identify the right terms in the job description to reach a diverse and qualified pool of candidates.
At the intersection of the Great Resignation, the emerging post-pandemic period, and the work-from-home explosion, there is no question that this is a challenging time for hiring managers. From his vantage point as head of a large staffing firm, Dearth is philosophical.
“Companies are attracting candidates at higher rates and hiring people at very high rates, but they’re also losing talent at really high rates, so many people are looking for new opportunities, in part driven by the new element of remote work,” he says. “It’s just a really dynamic time. There are so many changes in America in the work marketplace right now. Companies are trying to figure this out while at the same time just trying to hire enough to keep the lights on and their digital initiatives going.”
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