Fortune

Opinion | February 4, 2016

Is business about to disrupt the college accreditation system?

By: Stuart M. Butler

It’s hardly surprising that frustrated employers are looking to create an alternative to accreditation as a quality measure of the skills of college graduates. Accreditation has been attacked as a barrier to innovation and improvement in higher education. As the report notes, a 2013 Gallup/Lumina survey documents the profound disconnect in views of quality. Just 11 percent of business leaders believe college graduates are properly equipped for entering the workforce – while 96 percent of college chief academic officers feel they turn out work-ready graduates. The Chamber of Commerce Foundation report is correct in criticizing accreditation as “operated by higher education for higher education” rather than as a quality measurement in tune with the needs of employers and would-be employees.

The report argues that higher education should use the principles of supply chain management, with colleges and employers working together to develop performance measures to assure that graduates have the workforce skills they need.

Some employers have already started to partner with colleges, particularly those in the emerging online sector, to create courses and even the equivalent of majors that more closely fit the requirements of the modern workforce.

For instance, the accredited, online College for America at Southern New Hampshire University partners with McDonalds, the Gap, Anthem Blue Cross and other employers, offering their employees inexpensive degrees that are specifically engineered for working adults.

Other employers are pushing the envelope further by designing groups of courses, often in conjunction with upstart online providers or Massive Open Online Courses (MOOCs), which are the equivalent of college majors and are certified by the employers themselves. For instance, Google, Coursera, Udacity and others are developing a range of “nanodegrees,” “capstones” and similar microdegrees that circumvent the traditional accreditation system.

A challenge facing these alternatives to accreditation is that Pell Grants and federal student loans can only be used at accredited institutions. But that barrier is crumbling a little thanks to low-cost online degrees that reduce the need for loans. And the Obama Administration is launching a pilot program that will extend accreditation to institutions that use non-accredited providers – such as MOOC-employer partnerships – for more than half the curriculum. Meanwhile innovations like Income Sharing Agreements, where students pay for their degrees by selling “shares” in their future earnings, could help generate more private funding and less financial risk, for students embarking on a non-accredited degree.

The Chamber Foundation goes further by arguing for a broad alternative to accreditation through an employer-led quality assurance and college certification system. A coalition of business organizations would confer certification on those colleges and other “talent suppliers” that developed agreed standards and curricula that more closely met the needs of the business community. Meanwhile employers would provide financial and other incentives to students seeking certified credentials, such as priority access to jobs and tuition assistance for students.

The financial and job incentives are a significant feature of the plan. Unlike some legislative proposals that would include business-certified credentials in a new form of accreditation eligible for federal student aid, the Chamber Foundation plan envisions a separate system with private financial help. Rather than get entangled in federally led accreditation, the aim is to allow a talent new supply chain market for workplace-ready graduates to develop and mature outside the current system.

The proposal lays out a three-step roadmap for achieving this system. The first step would be to form a coalition of national, state and regional business organizations to identify employer-led initiatives that might form the basis of a new system. The second would be to design and pilot-test the certification system. And the third would be to bring it to scale.

In parallel with advancing this certification proposal, the Chamber Foundation still encourages employers to pursue reforms of accreditation to try to address employer concerns – although it notes that employers will always be seen by the college establishment as just one stakeholder and not as a major customer.

The Chamber portrays this employer-led certification system as complementing the traditional accreditation system. But, of course, if the plan is successful in gaining wide acceptance, it would become a direct competitor to accreditation for those students seeking a quality measure closely linked to employability when selecting a college. That means most students. As such it would be a powerful – and positive – disruptive influence on a higher education system that is long overdue for redesign.

Editor’s note: This piece originally appeared in Fortune.