Impact Stories
July 21, 2021 – Future of Work

What is digital credentialing? And how could it change education?

Sean Gallagher of Northeastern University gives us a primer on the state of the field, opportunities, and threats.

What is digital credentialing? And how could it change education?

Sean R. Gallagher is executive director of the Center for the Future of Higher Education and Talent Strategy at Northeastern University, and the author of The Future of University Credentials: New Developments at the Intersection of Higher Education and Hiring.

We asked Gallagher for an update on the state of credentialing, the opportunities, and the consequences for postsecondary education and economic opportunity.

CKF: What is digital credentialing? And how could it change education?

Gallagher: Even before the COVID-19 pandemic, digital credentialing was an established, major trend in higher education and workforce development. In response to consumer demands for a greater focus on career outcomes and affordability, colleges and universities have been “unbundling” their degree programs. New types of educational providers and credential offerings, both academic and professional, are appearing.

“Digital credentialing” refers to this wide and growing array of certificates, digital badges, certifications, and other credentials offered by universities, businesses, professional associations, and countless other entities. The interest in digital credentialing is not only about substitutes to degrees and new competitors to traditional higher education institutions. It also signals the overdue digital transformation of higher education and a related reshaping of how employers’ hiring processes work. This intersection between credentials and hiring is central to connecting individuals to economic opportunity.

The need for transformation is all the more pressing given the recent post-recession return to a record high level of job openings. Demand for online credentials — including certificates and degrees — is booming as workers seek to upskill. Many credential issuers and online education companies reported 70% growth in 2020 alone. On the employer side of the equation, the use of “talent analytics” in H.R. and skills-based hiring is growing rapidly, especially after the recent dislocations in the job market and the forced shift to remote work and online hiring. More employers are embracing hiring strategies that de-emphasize degrees and instead consider alternative qualifications, pre-hire testing, or other assessments to learn skill and ability. By our estimates (based on forthcoming research), half of all employers in the U.S. are either investigating a skills-based hiring approach or already engaging in it. Examples of companies that have been proactive about skills-based hiring include major firms such as Apple, IBM, and Walmart.

This is precisely the type of environment where innovative, new types of non-degree and digital credentials have an opportunity to reshape the landscape, and represent the next level of action in the continued dialogue about “the future of work.”

In this era of unprecedented change in the job market, it is clear that digital credentialing presents a crucial avenue for workers to upskill. The vast landscape of digital credentials offers individuals more choice and much greater affordability. But unanswered are questions such as what constitutes a “quality” credential in the eyes of various stakeholders, and whose responsibility it is to pay for this learning and development that often happens outside of the formal postsecondary education system or existing government financial support structures.

As thousands of providers including universities, numerous start-ups, corporations (such as IBM, PWC, and Google), and professional associations issue digital credentials, a rich marketplace of options has appeared. But this landscape is often referred to by policy experts, practitioners, and researchers as the “Wild West.” We are in an era that needs standards and structure to guide it. Here, technical standards for digital credentialing, thoughtful and informed policy architecture, and innovation pilots between employers and educational providers can catalyze the development of this market and give it support.

These trends and economic imperatives are also ushering in a new era for collaboration between educational providers and employers generally. Many edtech startups are leading the way as intermediaries or bridges between the world of employment and higher education. The bigger-picture shift, however, includes innovation at traditional universities — and the continued shift toward an education system that is more responsive to the needs of industry.

The Charles Koch Foundation partners with social entrepreneurs to drive societal progress through academic research and innovations that help all learners realize their potential. Read more about the Foundation’s support for education.