The end of credentialism? AI has created a new standard of capability

If information that once took years to acquire can increasingly be retrieved, tested and applied in seconds, then it changes the whole economics of enterprise knowledge.

For employees, this is transformative. They can get answers much faster than ever before, but it exposes a problem long hidden in plain sight: knowing something has never been the same as knowing how to use it well, and in a way that helps the business.

In this way, not only is AI having remarkable impacts on workplace productivity and training, but it is also making a huge mark on the concept of credentialism – the tendency to overvalue formal, paper qualifications awarded by educational institutions or professional bodies as the primary measure of potential candidate capability.

At the hiring stage, HR understandably tends to treat credentials as the default proof someone is equipped to perform a particular role.

Yet people like Ivan Illich were challenging this assumption as far back as the 1960s, arguing that many of the skills required to perform professional tasks are developed through practical experience, apprenticeship and real-world problem-solving, not simply through formal schooling.

An end to credentialism, expedited by AI, could matter enormously for HR.

Where will we get the skills we need?

First, we need to take a big step back and remember HR’s true purpose.

In an ideal world, an HR professional should advise business leaders on organizational design, help navigate employee relations issues, and evaluate the workflow implications of technology implementation – all while aligning with an ever-changing business strategy.

None of these challenges comes with a neat textbook answer; they require judgement, adaptability, commercial understanding and the ability to apply knowledge when circumstances are unfamiliar.

A solid foundation in processes, laws and regulations – the foundations of traditional credentials – can help HR professionals navigate these situations. But without experience applying that knowledge and skills in practice, they must develop the ability to do so on the job.

To be clear, this is not an argument for abandoning degrees or professional qualifications. Those credentials still establish that a person has dedicated themselves to acquiring or deeply engaging with a particular body of knowledge, and they also provide a common professional language and signal commitment to their profession.

The problem comes when we ask them to prove something they were never designed to prove: that an individual can perform effectively in a complex, changing environment. How do we close this gap?

Credentialism has costs for employees, too

When qualifications become proxies for ability, people invest in signals of competence, not real capabilities. The person who acquires the favored qualification (e.g., an Oxbridge grad) can end up being rewarded over the colleague who has developed the capability in practice.

For employers, degree requirements can become convenient filters rather than meaningful evidence, quietly excluding people with the skills to succeed who have not followed the conventional educational route.

AI makes this weakness harder to ignore because it changes what knowledge itself is worth.

Think about employment law, for example. Good HR professionals will always need a strong understanding of legal and regulatory principles, but do they really need to memorize every relevant provision if they can reliably retrieve the appropriate information when they need it via an AI tool?

Instead, perhaps what they need is the judgement and discernment to know which question to ask, whether the answer is relevant, whether the source is reliable, and how to translate that information into a sensible course of action for the business.

If AI can democratize access to facts while simultaneously increasing the premium on human judgement, that is a fundamental change in what it means to be qualified that renders credentialist thinking outdated, and moves the agenda instead to ensuring workers can prove they move the organizational needle.

How do organizations move forward?

In this context, the much-discussed shift towards skills-based hiring becomes much more meaningful for the HR leader.

That means defining the capabilities required for a role before assessing candidates and using structured scenarios, simulations and skills-based assessments to establish whether candidates can actually demonstrate them.

The same principle should apply to promotion and internal mobility. Progress should increasingly be validated through performance, skills and demonstrated impact rather than simply years in role or qualifications held.

Some organizations are already showing what this can look like. One of the world's largest medical technology companies, Medtronic, for example, recently recredentialed 504 roles across IT, supply chain, manufacturing, HR and sales, replacing degree requirements with explicit skills and demonstrated capabilities.

Combined with funded education and career pathways that give employees clearer routes into new opportunities, the aim of travel is clear: widen line-of-business managers' access to talent that conventional degree requirements can exclude.

Doing this is bringing tangible upside. Our data suggests an estimated $26m in savings on a $14.5m investment, with other organizations like Rolls-Royce, Walmart and Amazon all redesigning internal mobility around the same principle.

We fully expect more and more companies to look at AI as a catalyst for a wholly new, less-credentalist approach to hiring, promoting and training talent.

Of course, this is not a simple fix. Making capability-based progression work requires leadership commitment and different incentives for managers. And if AI curbs credentials, it will present new L&D and HR challenges in its place.

In an AI-enabled workplace, the organizations that thrive will be those that place less emphasis on what people can remember or what certificates they hold, and more on what they can do. How they think, apply knowledge, make decisions and create value.

That is a significant challenge for HR and L&D, but also an opportunity to build a much more effective, inclusive and genuinely skills-based approach to talent.