Competency-based education (CBE) is an approach to higher education that is based on students mastering specific skills that are aligned to certain competencies. These competencies can be aligned to objective measures of student preparedness or aligned to labor market needs and defined in collaboration with employers. Rather than measuring students’ progress in terms of course completion and “seat time,” a competency-based system measures students’ progress in terms of tangible skills and allows students to progress at their own pace.

From a labor market perspective, the success of CBE at scale seems to depend in large part on two factors: employers’ ability to define the skills and competencies needed for a particular field, if not for a particular job, and their ability to adjust hiring practices to recognize and evaluate candidates based on new signals, namely students’ CBE credentials. There is good reason to doubt that either of these conditions currently exists, putting the employment match benefits of CBE—one of its key purported advantages over traditional education and credentialing—at risk.

The American Enterprise Institute (AEI) recently commissioned a survey of 429 “hiring decision-makers” at U.S. firms that actively recruit from higher education institutions. Several findings underscore the gap between the aspirations of CBE advocates and current labor market practices:

  • More than 50% of respondents have no familiarity with CBE other than perhaps having once heard the name. Only 9% of respondents have a strong understanding of how CBE works.
  • While nearly 60% of respondents indicated interest in using CBE to evaluate and hire potential candidates, respondents are more likely to consider CBE-based hiring for entry-level jobs rather than jobs that require more experience.
  • While “finding qualified applicants” and “properly judging candidate’s qualifications” were the two most frequently cited challenges in the hiring process (selected by 37% of respondents), approximately 80% of respondents reported their firm does not formally define job-specific qualifications or competencies for open positions. In addition, employers overwhelming report that “fit” is the most important criteria in hiring decisions at their firm.
  • Respondents report that general skills—problem-solving, teamwork, and communication—are more important in the hiring process than more specific skills—data analysis, technology, or math; additionally, respondents reported concerns that CBE programs may equip students with specific skills at the expense of necessary general skills.

These findings are consistent with an increasing reliance on “fit” by firms nationally, which researchers have shown can result in a less diverse workforce.

To be sure, some employers are cognizant of the shortcomings in their hiring processes, and have taken steps to improve. For instance, some are engaging vendors such as Findly, Saville Consulting, or CEB Global to infuse more objective criteria into their search and hiring processes. The problem with these companies is that their assessments of candidates’ skills are generally completely disconnected from students’ higher education experiences, and these assessments are not feeding back into higher education curricula and academic pathways.

The only scalable solution, as I see it, is for colleges and employers to work together to define the skills—both general and technical—that set graduates on the right path for a promising career. Some of these skills will be field specific, defined by representatives of relevant programs and industries. Others will be the kinds of skills that all graduates are expected to have, regardless of field, and should be defined by stakeholders from groups that are more broadly representative. All skills should be based on evidence—from large-scale research and data on particular firms’ experience—about what makes an employee successful. They would also have to be iterative—as industries change, so do the skills needed in starting employees. Once they’ve each invested in defining relevant skills, employers will be more likely to consider objective assessments of candidates’ skills in hiring, and colleges will be more likely to align their curricula and assessments to develop and measure these skills.

These efforts would need to have national and regional components—national to define the broad outlines of skills needed for an industry, and regional to define the particular needs of local employers and the local institutions that still prepare many of their employees. Structures exist, in each sector, with the convening power to achieve this goal. At both the national and regional level, there are industry and professional associations and there are academic discipline and institutional associations. The problem is that these groups work in isolation, when for a challenge like this, they need to work together.

Bridging the gap between college and the labor market unequivocally benefits students, especially students with the greatest needs. However, promoting CBE as more affordable, more nimble, and more connected to industry without deeply engaging employers in the design process will likely only further the divide.