The University of Phoenix Career Institute has released the latest report in its Career Optimism Special Report Series, titled "The Illusion of Progress in Skills-Based Hiring." The study finds that while skills-based hiring approaches are gaining traction among employers, significant gaps in standards, tools, and training create an illusion of advancement and contribute to dysfunction in the talent pipeline.
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The report highlights a disconnect between employer intent and execution. Many organizations aim to prioritize demonstrable skills over traditional credentials, yet inconsistent evaluation methods, outdated systems, and insufficient training hinder progress. This results in qualified candidates being overlooked, prolonged hiring processes, and frustration on both sides of the talent equation amid rising application volumes and stagnant job growth.
Skills Lost in Translation and Systemic Barriers Application systems often fail to capture true candidate capabilities, with 48% of hiring stakeholders acknowledging that strong candidates can still be missed due to unclear demonstration of skills. Poorly structured processes exacerbate this issue, filtering out talent before human review and contributing to the perception among 58% of job seekers that qualifications alone are insufficient for success.
Referrals Maintain Strong Influence Despite widespread statements that personal connections play a minor role, the data shows referrals remain a dominant factor in final decisions. This reliance on networks can undermine skills-based intentions and limit access to diverse talent pools.
AI Introduces Trust and Bias Concerns Perceptions of bias in AI-driven hiring tools create a divide between candidates and employers. While AI promises efficiency, limited auditing practices leave questions about fairness and reliability unaddressed for the majority of organizations.
Training Deficiencies Among Hiring Managers A notable gap exists in preparing non-HR stakeholders—who frequently lead interviews and decisions—with proper training. This contributes to inconsistent evaluations and perpetuates reliance on subjective judgments over objective skill assessment.
"Skills-based hiring can be a powerful driver of economic mobility and can help employers access overlooked talent—but only if intent and infrastructure are aligned," says Alison Lands, VP of Employer Mobilization at Jobs for the Future. "That means measuring and hiring for what predicts success on the job, supported by clear standards and consistent evaluation."
"The Illusion of Progress in Skills-Based Hiring reveals a hiring ecosystem looking to evolve while struggling to keep pace with rising expectations. Employers want to prioritize skills—but without consistent training, clear standards, or unbiased tools, the process risks becoming even more opaque," says Cheryl Naumann, Chief Human Resources Officer, University of Phoenix. "At University of Phoenix, we're at the start of that journey as well, which is why we launched this report – to understand the landscape where progress is being made, where critical gaps remain, and what it will take to make skills-based hiring work in practice. There's a real opportunity for business and education to align on the frameworks needed to make skills-first hiring a reality, and we're committed to continuing this important dialogue while preparing our students with the skills to thrive in today's talent market, including how to market their skills effectively."
The report calls for action across stakeholders: C-suite leaders to redefine qualifications and align systems with training; HR to provide consistent tools and structure; higher education to embed real-world experience and skill articulation; and job seekers to emphasize hard and soft skills demonstrated through practical application.
Download the complete whitepaper at https://www.phoenix.edu/career-institute.html.
ABOUT THE CAREER OPTIMISM SPECIAL REPORT™ SERIES: THE ILLUSION OF PROGRESS IN SKILLS-BASED HIRING The Career Optimism Special Report™ Series: The Illusion of Progress in Skills-Based Hiring compromised of a 20-minute online survey conducted among 2,000 U.S. adults in two categories including n=1,000 Job Seekers and n=1,000 Hiring Stakeholders. Job Seekers were U.S. adults (ages 18 and up) who were recently hired or actively seeking employment at the time of research and Hiring Stakeholders were U.S. adults (ages 25 and older) who were employed full-time and had influence (participated in an interview, gave feedback on a candidate during the process, etc.) over hiring decisions at their company at the time of the research. Fieldwork was conducted from June 2–13, 2025. The survey was designed to assess the state of the hiring process, the direction it's headed, and the barriers that get in the way, both for candidates trying to break through and hiring managers trying to find the right talent. The quantitative survey was supplemented with 10 qualitative one-on-one video interviews with Hiring Stakeholders from the survey respondents who agreed to be recontacted for additional research.
ABOUT UNIVERSITY OF PHOENIX CAREER INSTITUTE®
Housed within the university's College of Doctoral Studies, the Career Institute conducts impactful research and collaborates with leading organizations to explore broad and persistent barriers to career growth. Through annual studies like the Career Optimism Index® and targeted reports, the Institute shares actionable insights to inform solutions. For more information, visit www.phoenix.edu/career-institute.
ABOUT UNIVERSITY OF PHOENIX
University of Phoenix innovates to help working adults enhance their careers and develop skills in a rapidly changing world. Flexible schedules, relevant courses, interactive learning, skills-mapped curriculum for our bachelor's and master's degree programs, and a Career Services for Life® commitment help students more effectively pursue career and personal aspirations while balancing their busy lives.
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