Digital Credentials as a Superior Signaling Mechanism in the Hiring Process

Employers struggle to find the best candidate for a job because of friction in the hiring process. Hiring friction results from complexities with conveying information about skills.  Conveying knowledge about a skill is difficult because of lacking standards for skill sets, variations in terminology, and understanding which skills should be communicated.  Other factors not related to skills, such as resume length, grammar, and formatting issues, create additional friction in the process.  If any aspects of the resume are perceived to be incorrect, then the hiring manager discards it. On average, a hiring manager makes this analysis in under ten seconds. 

The use of Applicant Tracking Systems (ATS), automated systems commonly used to vet prospects, has further complicated the problem.  ATS use specific parameters to identify ideal candidates.  One study published in 2021 noted that 88% of employers indicated that qualified high-skill candidates were eliminated from contention because they did not meet the criteria noted in the ATS.

Ultimately, employers are not effective at advertising the skills they need, and job seekers are not good at communicating the skills they have.  Digital credentials are a mechanism that can solve hiring friction.  Digital credentials are sometimes referred to as digital certificates, digital badges, micro credentials, among other names.  These terms are generally synonymous and used interchangeably.  Digital credentials are electronic systems that verify the existence of skills. Credly, an organization that provides a digital credentialing platform, calls digital credentials a “common language of verified skills”.  Current research is attempting to determine how effectively digital credentials can reduce hiring friction.

Here is a video further discussing the value of digital credentials and digital badges in the hiring process. https://youtu.be/ydqitGkwIHY?si=VJlPCylvKJfC19OI