Credentials and Credentialing

Higher education performs two critical functions: dissemination of knowledge and information (education), and certification of that knowledge and information (credentialing). We spend the majority of our work in higher education on the first half of that equation. We argue about relevance and value, about teaching and research, and wrestle endlessly about better ways to help students learn and succeed. In contrast, our efforts on credentialing and its role in the market are light. Sean R. Gallagher, the chief strategy officer for Northeastern University, has done academia a great favor by focusing a critical eye higher education’s other key function in The Future of University Credentials: New Developments at the Intersection of Higher Education and Hiring. It is an important corrective. This book should resonate in discussions about the direction and purpose of higher education.

Gallagher comes to the task with a business and an education background. His point of entry in academia was information technology, but his concern here is not online education. Rather, he looks at how academic credentials, and the skills and knowledge they represent, are understood and interpreted in the world of work. He knows, too, that technology is changing that relationship. Gallagher’s extensive interaction with businesses, hiring managers, and executives grounds his arguments in data. We often make assumptions within higher education about how our degrees and programs prepare our graduates. However, most of the time we simply do not know what goes into the evaluation of a recruiter when offering a position to a recent alum. This book helps answer that question and more. What, exactly, does a credential mean to a student, a college, or a firm?

The market of credentials is massive and expanding. In 2010-2011, approximately 1 million associate’s degrees, 1.7 million bachelor’s degrees, and nearly 1 million advanced degrees were awarded by higher education. In 1980, half that number of degrees were awarded. Complicating matters, an untold number of certificates (credit and non-credit) are awarded each year. Gallagher’s attention is on university credentials within the knowledge economy. He notes that with more students in higher education and completion rates slowly rising, we can expect even more credentials in the future.

The correlation between university credentials and higher salary is well-known and often studied. The “college premium” is used a value proposition by institutions of higher education to recruit. But not all colleges credentials have the same value and premiums change over time. Institutional selectivity has a high correlation with graduate earnings. Further, researchers have identified a “sheepskin effect” when it comes to salary. Completing the degree increases earning. Learning does not seem to have the same impact as completing and receiving the credential. Common wisdom, Gallagher notes, is that completion indicates other positive traits, like persistence and determination. Since the traits are valued by employers, they are willing to pay more for them.

How does all this work when it comes to business? Gallagher spells out the differences between recruitment (attracting potential employees) and selection (making and offer and hiring). Educational credentials are among the most important qualifications, especially in the early part of a candidate’s career, in securing employment. With more candidates possessing degrees, many employers require degrees to narrow pools. The countervailing pressure is to sure that requirements does not have an adverse impact on questions of diversity and fairness. Legislation and court cases have shaped processes, too, so that credentials are usually a better way than direct assessment for employers to make selection decisions. Employers want technical skills but more often than not they seek the skills promoted through a liberal arts education.

Many social scientists – and I would place Gallagher among them – subscribe to a human capital theory of these processes. Higher education serves as a filter to the labor market, helping institutions make decisions with imperfect knowledge. College degrees – and college reputation – send signals and provide information. Gallagher’s research highlights the importance of degree completion and what it signals. Interestingly, he has also found little evidence of college reputation having much of an impact on hiring managers with a limited number of exceptions at both ends of the reputation spectrum. A Harvard or another Ivy League university credential may stand out, just as an online for-profit might be noticed by a hiring manager. But most institutions in the middle spectrum of reputation, however, there is little correlation between salary and academic reputation. In addition, Gallagher stresses that a college’s reputation very rarely outweighs other factors in the decision to make an offer.

Gallagher provides a high-level history of the rise of IT certifications, MOOCs, and online education, as well as the market’s contraction. These alternative modes of learning and credentialing will continue to play an important role for students and employers. There is no one best model, however, Gallagher writes. The value of these credentials is shifting as the market shifts. Gallagher’s research indicates that candidates who possess alternative models of credentials signal initiative and ambition to hiring managers. These new credentials, though, do not challenge the value of university degrees in the hiring process.

Disruption via technology is not going to stop, Gallagher argues. He anticipates additional kinds of certifications and many more types of analytics to assess decisions. Testing can give businesses information about employees skills, strengths and weaknesses – and these could be connected to credentials. LinkedIn, the world’s largest professional social networking company, is exploring this dimension. Credentialing figures prominently in LinkedIn profiles. The company also recently acquired Lynda, an online training company, to close the loop on skills development and signaling to the market. E-portfolios and other models to capture meaningful student work are increasingly popular within the academy to assess student learning and outside of higher education to see higher level skills. The trend points to competency-based hiring.

Higher education is innovating as well. Accreditation, which has traditionally focused on the institution, is experimenting with ways of turning its attention to students and student outcomes. Gallagher highlights several experiments, all of which tend to make the outcomes of a credential more specific. There is also lots of experimentation with digital badges, other forms of certificates, and competency based education (CBE) certifications. The future Gallagher envisions is messy and dynamic.

The book ends with high level conclusions:

• The university degree will be with us – and at the top of credential food chain – for the foreseeable future.
• Credentialing innovation will continue – but the market and the strategies need to evolve before any clear models take hold.
• Higher education should expect the demand for more advanced credentials in an economy that prizes lifelong learning.
• Standard language around credentials would help – but don’t expect it to happen soon.
• Meaningful credentialing has to move away from the old “liberal arts v. career” mindset. Employers want broad skills.
• Look for more project based and experiential credentials in the future.
• More attention – research, regulations, and transparency – are needed as we navigate the new terrain.
• Higher education would be well-served to look closely at professional credentialing and standards to guide internal expectations.
• Expect more data and information from more sources – and higher education should give consideration to these inputs.
• Institutions of higher education should think strategically about their brand, their place in the market, and their credentials.
• Tradition and prestige will not have the same weight in the future as employers seek to diversify their workforce.

I recommend The Future of University Credentials. Gallagher rightly recognizes the back-and-forth of education and business as an ecosystem, one whose rules are shifting as technology advances and disrupts. The economy is changing rapidly, with ever greater dependence upon higher-level technical, analytic, communication and thinking skills. College credentials help categorize those skills and make them visible to the market. If we can study and make sense of this complicated ecosystem, we can do a better job educating and preparing students for success.

David Potash