In today’s workforce, it’s getting more and more important to talk about skills. Evaluating employees based on their skill sets, as opposed to work history, can help level the playing field for increased diversity while also helping companies pinpoint the talent they already have. Technology changes will disrupt one in three jobs in the next few years—and upskilling those U.S. workers will cost $34 billion, according to the World Economic Forum.

Yet teaching these skills can be highly cost-effective, since recruiting an outside hire to do a given job can be six times more expensive than upskilling a current employee, according to research reported in Harvard Business Review.

That leads to the question: How do companies prioritize certain skills, train for them, and then hire and promote around them? Focusing on credentials is one way forward, provided employers have the right preparation, implementation, and follow through.

AARP recently released a report on the current state of the credentials landscape and challenges employers face in utilizing them. The report was expanded on during a From Day One webinar with Heather Tinsley-Fix, a senior advisor at AARP; Roy Swift, PhD, the executive director of Workcred; and Amy Dufrane, PhD, executive director of HR Certification Institute (HRCI), who illuminated ways to utilize credentials to bring us to a more skills-based workforce.

The Challenge of Leveraging Credentials to Prove Skills

“We know that skills are the most important aspect for finding the right person for the right job, but they’re often very difficult to identify–both in terms of what skills the job actually entails and whether candidates possess them,” noted Tinsley-Fix. That challenge is reflected in the fact that many employers (62%) occasionally hire workers lacking required degrees, but few do it often (12%), according to the AARP survey. Even so, there’s a shift in thinking that employers can act on. According to Tinsley-Fix, 76% of employers surveyed said they focus on skills first and education second. And 66% of employers believe their organization needs to place greater emphasis on skills.

Still, employers have hesitations relying on credentials to recognize skills. AARP’s research found that experience often trumps credentials for employers, especially when they do not know what the credentials mean. Around four in ten employers cited barriers to accepting credentials, including continued bias toward degrees, difficulty determining the validity of a credential, and the lack of infrastructure or platforms to clarify what each credential includes, either in terms of content or degree of expertise. “Another barrier employers face is when their existing hiring processes don’t include credentials in evaluating candidates,” added Tinsley-Fix. “Whether that's the hiring platforms they use, or the steps in their hiring process, if credentials aren't seamlessly embedded, employers are going to be less inclined to consider them when evaluating candidates.”

The Current Credential Landscape 

It’s a complex, messy system when it comes to the country’s post-secondary credential system. The players include the federal and state governments, professional and trade associations, academic institutions, federations of state boards, apprenticeship programs, employers, bootcamps and higher education. The biggest challenge, according to Swift, is that these players are too often operating in their own silos: “The professional societies are many times not at the table with higher education and industry when they should be. We are not bringing all the stakeholders together.” Understanding the system, Swift added, will help employers be able to judge which credentials are legit.

Understanding Different Credential Types

There are nearly 1 million kinds of credentials issued in the U.S. today, what Swift called a “wild, wild west world with no real one database.” So it’s helpful for employers to research the offerings as much as possible. “When someone says they have a credential, you have to peel the onion one more time and find out what credential they have,” he said.

Credentials are an umbrella term that encompasses certificates, badges, degrees, certifications, and licenses. While certificate and certification are often used interchangeably, Swift pointed out “a certificate is an educational credential that may or may not have an assessment.” Employers will want to further understand what kind of certificate someone has and who granted it. Certification, on the other hand, is not an educational credential. Then there are degrees offered by educational institutions and licenses issued through government agencies.

How to Identify Quality Credentials 

Given this broad landscape, employers must do some work identifying quality credentials. When it comes to certification, Swift offered Workcred’s Degrees of Rigor breakdown that starts at standardized exams and goes up to third-party accreditation. Swift also stressed that certification needs appropriate documentation and structure, like being embedded within a membership or independent organization as well as prerequisites based on data. Job task analysis—the involvement of experts and relevant practitioners—is also key. Finally, examinations should have detailed rubrics to ensure objectivity, more than one evaluator, and a cut-score process that determines the pass and fail rates.

HRCI, which focuses on certification for HR professionals, asks that those who complete their credentials demonstrate continued competence, meaning that every three years, they get re-certified through work activities, conferences and additional learning. The organization is also accredited by the International Accreditation Service, the National Commission for Certified Agencies, and the Institute for Credentialing Excellence.

Next Steps to Merge Credentials with Reskilling

A major priority in refining and better utilizing credentials is research to understand how credentials can benefit older workers and more broadly support career changes. Training providers, certification bodies, and state and federal agencies can all address this need by sharing data and highlighting challenges.

On the employer end, workplaces can make the move toward reskilling and upskilling. “Eight-seven percent of executives have said they’re experiencing skills gaps in the workforce or were expecting them, but less than half of them had any sense of how they were going to address it,” Dufrane pointed out.

It should be prioritized, she believes, in the C-suite. “CEOs are digging in more to people analytics, the skills they have or the skills they need, and those analytics are key for employers to be looking at,” she said. With clear data, leaders can clarify their reskilling strategy and how it can be implemented within their workforce. Ideally, she said, companies will help employees identify relevant credential training with outside partners, as “individuals who work for companies want to go outside of their companies for upskilling and reskilling training.”

Editor's note: This is the third story in a three-part series. The first is “How Reskilling Energizes a Multigenerational Workforce,” and the second installment is “Getting Past the Myths About Older Workers and New Skills.” From Day One thanks our partner in producing this series, AARP.

Emily Nonko is a Brooklyn, NY-based reporter who writes about real estate, architecture, urbanism and design. Her work has appeared in the Wall Street Journal, New York magazine, Curbed and other publications. Series logo by Heather Jones.