Data-driven decisions make educational background less important
Media interest in the research of one of my university tutors highlighted the problem with the never-ending push to get more young people into higher education while an interview with a pioneering recruitment startup suggested a solution.
A lot of the popular discussions around graduates and recruitment centre on skills. Yet over and over again, employers complain that graduates don’t actually have the skills which could make them useful employees and we journalists report it as if this is a puzzle.
At the same time, a growing body of evidence suggests that having a degree doesnt necessarily give university graduates an earnings advantage. The Guardian recently reported on a new study showing that leavers from 23 UK universities actually end up earning less a decade after graduating than their non-graduate counterparts. The same article cited a study co-authored by academic Ken Mayhew in 2015 that revealed that the UK now has a higher proportion of graduates than any country than Iceland but has fewer jobs in which those skills could be utilised.
Being fortunate enough to study labour economics with Mayhew while I myself was at university altered me to an alternative explanation for why employers might want to employ graduates that education serves as a signalling function. In essence, the argument which has been put forward by numerous Nobel laureates is that being able to complete a degree shows you can juggle tasks, turn up on time and work to deadlines.
What is interesting about the theory is that it means that it would be perfectly logical for bright people to pay for university and employers to look for a degree on a CV even if university itself added no value. Though the reality of how university and the jobs market interact with each other is probably a bit more complex this, a greatwaste of time and money is implied by even a small proportion of students spending three years and thousands of pounds on degrees that just act to certify skills they already have.
So how is any of this relevant to micro business owners? During a fascinating hour-long chat with the founders of SME recruitment platform TalentPool recently, the company’s founders outlined their plans to disrupt the hiring industry by using intelligent algorithms rather than CVs and covering letters to best match up candidates and jobs. While many of the candidates on the platform are graduates of some of Britain’s best higher institutions, its founders emphasised how data-driven decisions make educational background less important.
The conversation quickly strayed into why bright and able young people would choose employment in a small firm over one of the big corporates which bombard students with adverts and spoil them with freebies from the day they step foot on campus. And it wasnt hard to come up with answers: more responsibility from day one, opportunities to make a real difference to a growing company, and a dynamic working environment. One of the only pulls in the opposite direction comes from the higher starting salaries that large firms can offer numbers that are inevitably appealing to a young person saddled with debt.
As depressing as it might sound, this actually represents an exciting opportunity for small firms owners to make a big difference through hiring decisions. Using all the data you can get your hands on to identify the bright school leavers who could make a difference to your business won’t just save them the cost of a pointless degree it will mean a more productive economy.
Look out for our interview with the founders of TalentPool, which will be published next week.
