Skills-Based Hiring: Why Credentials Alone Don’t Cut It in 2025
The Cost of Credential Bias
In today’s fast-changing workforce landscape, procurement leaders are under intense pressure to optimize every staffing dollar—to deliver broader talent pools, measurable ROI, and stronger supplier performance. Yet one of the most overlooked inefficiencies in today’s workforce programs is the overreliance on credentials and degrees.
A recent Gartner (2024) survey showed that 43% of employers experience “degree inflation”—requiring four-year degrees for roles that don’t genuinely need them. For procurement, credential bias creates three costly issues:
- Inflated costs: Degree-qualified talent demands 20–30% higher pay.
- Shrinking talent pools: Qualified candidates lacking degrees are screened out—especially non-traditional, veteran, or diverse applicants.
- Longer time-to-fill: Filtering by credentials slows the sourcing process, driving up vacancy days and lost revenue.
| What Hiring Managers Assume | Risks |
| ✔ Ready-to-deploy talent | ✖ Higher costs |
| ✔ Lower risk | ✖ Limited talent supply |
| ✔ Less time to onboard | ✖ Costly onboarding & upskilling |
Why Credentials Alone Don’t Deliver Outcomes
Rapid Skill Obsolescence
By 2027, 44% of core job skills will have changed(World Economic Forum, Future of Jobs Report 2025). Relying on degree-based job requirements in procurement contracts risks paying a premium for outdated capabilities—while missing next-gen tech and operational skills essential for strategic advantage.
Job-Ready Gaps & Supplier Impact
According to McKinsey (2024), only 37% of employers believe recent graduates are truly “work-ready.” This skills/degree mismatch creates hidden costs for procurement: inflated onboarding, training, and turnover expenditures.
Talent Exclusion, Reduced Diversity
Credential-heavy hiring often excludes veterans, gig workers, returning caregivers, and diverse candidate pipelines. According to SIA (2024), this directly lowers supplier diversity performance and drives weaker DEI outcomes.
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- Predict talent needs before they become bottlenecks.
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Why Credential Bias Persists in Procurement
Despite clear evidence, procurement teams can be slow to shift from degree-first rules.
- Legacy RFP and MSP practices: Many supplier contracts are written with degree mandates for risk mitigation.
- Client and business unit pressure: End users may equate degrees with guaranteed “fit,” pushing back against skills-based approaches.
- Compliance and regulatory perception: Especially in healthcare or engineering, there’s concern that skills-first approaches cross legal or audit boundaries.
“Risk aversion makes procurement stick with credentials. But it’s a false sense of security that’s out of step with evolving industry best practices.” (SIA, 2024)
Shifting to Skills-Based Hiring: The Procurement Advantage
Moving to a skills-first model aligns procurement’s mandate to cut costs, expand supplier value, and accelerate outcomes.
Key Benefits:
- Wider talent pools: Procurement gains access to untapped sources—bootcamps, technical certs, veterans, global remote talent—expanding the eligible applicant pool by as much as 6x (LinkedIn Economic Graph, 2025).
- Faster fills: Skills-mapped sourcing reduces vacancy bottlenecks and time-to-fill by 24%.
- Stronger DEI: Skills-first models drive 3.5× more diverse candidate pipelines and robust DEI scorecards.
- Demonstrated ROI: Companies that fully adopt skills-based hiring models see:
- 19% lower cost per hire
- 3.5× higher pipeline diversity
- 24% faster fill times
(SIA 2024; TestGorilla, 2025; LinkedIn Economic Graph, 2025)
Procurement ROI of Skills-Based Hiring
| Metric | Credential-Based | Skills-Based | Procurement Impact |
| Average Cost per Hire | $9,000 | $7,300 | 19% savings |
| Time-to-Fill (days) | 42 | 32 | 24% faster |
| Supplier Diversity | Low | 3.5× pipeline | Stronger DEI |
Case Study: Healthcare Procurement Rewrites the Rulebook
A large Northeast U.S. hospital system, in partnership with its MSP and procurement, tackled ongoing RN shortages and escalating contract costs.
- Approach: Procurement led a cross-departmental audit, analyzing roles where degree filters did not predict clinical readiness. TestGorilla and internal skills assessments replaced degrees as a default screen.
- Results:
- RN traveler costs dropped 22% through skills-first assessments.
- Supplier diversity expanded 31%.
- 96% fill rate in 30 days—a 2x improvement in speed, improving patient coverage.
- Crucially: The process included risk auditing with legal, HR, and supplier leads—ensuring compliance with state and national credential requirements.
Risks and Mitigation for Procurement Leaders
| Risks | Mitigation |
| Risk 1: Perceived Quality Gaps | Require all suppliers/MSPs to use standardized skills assessments and participate in calibration sessions. |
| Risk 2: Supplier Resistance | Update scorecards and bid criteria to incentivize skills-first success. Share relevant benchmarks with all partners. |
| Risk 3: Regulatory Gray Area | Focus skills-based approaches only on roles without strict credential mandates. Engage compliance/legal for proactive audits. |
| Risk 4: Stakeholder Pushback | Equip procurement with industry data and internal case study outcomes to secure business buy-in. |
Skills-Based Hiring Playbook for Procurement
Procurement ROI of Skills-Based Hiring: Credential-Based vs. Skills-Based, 2025
Cross-Industry & Global Notes
- Global and SME considerations: For decentralized supply chains and SMEs, best practice is to partner with regional/niche suppliers and adapt assessment frameworks to market context.
- Industry nuance: In fields like legal, medical, and engineering, skills-based approaches should only supplement—not supplant—mandatory credentialing.
Conclusion: From Credentials to Competencies
In 2025, procurement organizations still focused on credential-heavy hiring are paying more but getting less. Skills-based hiring isn’t a mere HR trend—it’s a procurement optimization lever, unlocking savings, velocity, and inclusive supplier performance. The time to lead this shift is now.
Hiring the Right Fit – Strategies for a Skilled and Diverse Workforce
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- Competition in the Job Market
- Cost of Hiring
- Skill Shortages
- Attraction and Retention of Skilled Workers
- Diversity and Inclusion in Hiring
