One of the hot topics du jour is “credentialing,” or a universally accepted way to verify that an individual possesses a specific skillset. I am, admittedly, a firm believer in the value of education outside of providing for a professional career. But for the purposes of this discussion, I’m going to completely ignore that side of the issue.
I’m instead focusing on the value of education in terms of employers and hiring. People go to school to 1) learn skills that prepare them for any range of trades that they want to pursue as a career; and 2) to signal to employers that they possess such skills. But the system is imperfect; here’s an example:
At Deutsche Bank, I served as an analyst recruiter and saw firsthand how unfairly focused all bulge bracket banks are on feeder schools. Reviewing a resume from a “non-elite” school would only occur when people inside the bank pulled strings to highlight such specific candidates. Meanwhile, we had clearly structured processes to ensure that everyone who applied from Dartmouth (or Harvard or Duke, etc.) had his or her resume reviewed – and not just by a random set of eyes, but by alums of that school. I knew when a Dartmouth kid took Econ 26, 36, and 46, that he had a real interest in the finance world; I also knew never to ask accounting questions in the interview because Dartmouth just didn’t teach that as a subject. That’s a significantly different experience than being the one guy from Podunk State who happened to get a shot through incredible personal hustle. He got grilled on accounting and was given a much higher bar to clear.
This system may be unfair, which is an issue in and of itself – good schools get the best jobs, but not everyone has the same access to good schools to begin with. The other huge problem with the system is how inefficient it is. The most competitive jobs should go to the most competitive (i.e., qualified) individuals. Those individuals may have attended an Ivy League school; but oftentimes, they didn’t and the current job market has no efficient way of screening for that. In other words, very few firms are hiring very few of the right people.
Indulge Me in a Brief Analogy
Think about the job market as the corporate bond market. Investors cannot possibly know all they need to know about every corporation that’s out there trying to sell them bonds. Yet investors are comfortable investing in XYZ Corp. just as they are investing in General Electric. They may require a higher interest rate to compensate for additional risk, but they’re still willing to commit many hundreds of millions of dollars to XYZ for the promise of payments down the road. Why? Because S&P and Moody’s gave XYZ Corp a BB+ or Baa credit rating. Investors don’t need to fully trust XYZ or MNO or UVW Corp.; they just need to fully trust S&P and Moody’s. Those ratings agencies enable liquidity in the corporate credit market.
The education market has no such equivalent and is, consequently, nowhere near as liquid as it could be. The implications for market inefficiency are truly staggering. Selective investors – in this case, highly desired employers like Google or Goldman Sachs – have no ratings agencies to compare educational qualifications across different institutions. As a result, they choose to invest in – hire from – AAA-rated institutions like the Ivy League. College branding has effectively become the ratings agency for individuals. This isn’t necessarily a problem until you consider that college education is supposed to provide the skills that are being assessed in the first place. In other words, it’s as if every single corporate bond issuer gave themselves their own credit rating instead of Moody’s or S&P.
This Is Where Credentialing Comes in
From that lens, it’s clear that credentialing is a BFD because credentialing would serve as the ratings agency that enables liquidity in the job market. When realized to its full extent, credentialing would remove all the friction between academic experience / innate talent and career qualifications. It would allow everyone to demonstrate verifiable skillsets through a ratings agency-esque standardized platform that every employer knows has thoroughly vetted such claims. It would, in other words, mean resumes go from unstructured prose into scientific equations. Every qualification turns into a building block that, in the aggregate, provides a relevant, quantifiable measure of an individual’s fit for a specific job.
It’s early days for credentialing and MOOCs would argue that they’re the most logical providers. Coursera’s “Signature Track,” announced a little over a year ago, allows users to get an official certificate of qualification when they successfully complete specific courses. Though I can’t imagine a single tech employer who would currently hire an individual because he / she completed an online course on Python programming, Coursera hopes that in time, their branding is trusted enough to enable exactly that kind of decision. Coursera doesn’t provide its own content so it’s not biased relative to universities. It would argue that it can adequately serve as a third-party, neutral “ratings agent” of educational degrees and as a result, employers should trust what it says. This is an entirely separate discussion.
What is so personally appealing to me is that credentialing would serve as the basis for the democratization of learning. Anyone can take a MOOC, from anywhere, and under most constraints. There are no application systems – or in other words, gating thresholds based on other credentials. It’s a great way to combat the current system. Sure, the Ivy League experience may provide a better education than Podunk State’s program. But acceptance into the Ivy League is not based on equality of opportunity and that’s the core of the problem.
The current, biased, system exists for a reason. Bulge bracket banks, and every employer out there, know the Ivy League brand and trust it. They value an Economics degree from Harvard with its numerous Nobel laureate faculty more than an Economics degree from the 200th-ranked university that doesn’t have any Nobel laureates. They also know that MIT has likely done a decent job of collecting some of the smartest high school engineers out there and developed that raw talent well.
But did MIT find the top 1,100 smartest engineers in the country in 2014? Not by a long-shot. But employers are okay with betting that MIT has a better chance of having someone in that 1,100 than Podunk State. Institutional branding is an easy way to streamline an unfortunately painful hiring process and employers are willing to trade perfection for expediency. This is one of the unfortunate (but not illogical) legacies of a much more privilege-centric era that unfairly rewarded institutional branding over individual capabilities.
At its best possible outcome, credentialing would replace this “institutional branding” discrimination by allowing anyone with enough gumption and talent to signal qualification to employers. If you have gumption, if you have talent, take this standardized class open to everyone and prove your talent and work ethic. If there are standard institutions out there –ratings agencies for education – that all employers trust, we allow everyone to prove his or her own merit. When everyone interested in a marketing career has equal access to Coursera’s toughest Marketing Strategy class, employers know that they’re more likely to find the best Marketing minds in the world by picking the A+ students.
I hope it’s clear why this ideal system is important. First – it removes the massive unfairness inherent in the current educational system. The supposedly “smartest” schools out there provide the best outcomes, but don’t offer fair access to the entire population. Second – it’s corrects the incredible inefficiencies of today’s job market. The most competitive jobs are typically hiring the most qualified applicants by looking just at the “smartest” schools…which aren’t necessarily taking in the smartest students.
Credentialing, i.e., having ratings agencies for personal education, is dependent on too many things happening, from having everyone know of and view MOOCs as reasonable ways to build professional skills; to having MOOC courses provide real career relevant knowledge; to having employers trust the courses; and so on. But like I said – it’s early days and this is exactly how I imagine the ideal system would look when it first started.
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