Data is confirming what we already know: recruiting is an imprecise activity, and degrees don’t communicate much about a candidate’s potential and fit. Employers need to know what a student knows and can do.

Something is clearly wrong when only 11% of business leaders — compared to 96% of chief academic officers — believe that graduates have the requisite skills for the workforce. It’s therefore unlikely that business leaders are following closely what’s going on in higher education. Even the latest hoopla around massive open online courses (MOOCs) amounts to more of the same: academics designing courses that correspond with their own interests rather than the needs of the workforce, but now doing it online.

But there is a new wave of online competency-based learning providers that has absolutely nothing to do with offering free, massive, or open courses. In fact, they’re not even building courses per se, but creating a whole new architecture of learning that has serious implications for businesses and organizations around the world.

It’s called online competency-based education, and it’s going to revolutionize the workforce.

Say a newly minted graduate with a degree in history realizes that in order to attain her dream job at Facebook, she needs some experience with social media marketing. Going back to school is not a desirable option, and many schools don’t even offer relevant courses in social media. Where is the affordable, accessible, targeted, and high-quality program that she needs to skill-up?

Online competency-based education is the key to filling in the skills gaps in the workforce. Broadly speaking, competency-based education identifies explicit learning outcomes when it comes to knowledge and the application of that knowledge. They include measurable learning objectives that empower students: this person can apply financial principles to solve business problems; this person can write memos by evaluating seemingly unrelated pieces of information; or this person can create and explain big data results using data mining skills and advanced modeling techniques.

Competencies themselves are nothing new. There are schools that have been delivering competency-based education offline for decades, but without a technological enabler, offline programs haven’t been able to take full advantage of what competencies have to offer.

A small but growing number of educational institutions such as College for America (CfA), Brandman, Capella, University of Wisconsin, Northern Arizona, and Western Governors are implementing online competency-based programs. Although many are still in nascent stages today, it is becoming clear that online competencies have the potential to create high-quality learning pathways that are affordable, scalable, and tailored to a wide variety of industries. It is likely they will only gain traction and proliferate over time.

But this isn’t vocational or career technical training nor is it the University of Phoenix. Nor is this merely about STEM-related knowledge. In fact, many of these competency-based programs have majors or a substantive core devoted to the liberal arts. And they go beyond bubble tests and machine-graded exercises. Final projects often include complex written assignments and oral presentations that demand feedback from instructors.

The key distinction is the modularization of learning. Nowhere else but in an online competency-based curriculum will you find this novel and flexible architecture. By breaking free of the constraints of the “course” as the educational unit, online competency-based providers can easily and cost-effectively stack together modules for various and emergent disciplines.

Here’s why business leaders should care: the resulting stackable credential reveals identifiable skillsets and dispositions that mean something to an employer. As opposed to the black box of the diploma, competencies lead to a more transparent system that highlights student-learning outcomes.

College transcripts reveal very little about what a student knows and can do. An employer never fully knows what it means if a student got a B+ in Social Anthropology or a C- in Geology. Most colleges measure learning in credit hours, meaning that they’re very good at telling you how long a student sat in a particular class — not what the student actually learned.

Competency-based learning flips this on its head and centers on mastery of a subject regardless of the time it takes to get there. A student cannot move on until demonstrating fluency in each competency. As a result, an employer can rest assured that when a student can use mathematical formulas to make financial decisions; the student has mastered that competency. Learning is fixed, and time is variable.

What’s more, many of these education providers are consulting with industry councils to understand better what employers are seeking. Businesses and organizations of all sizes can help build series of brief modules to skill up their existing workforce. The bundle of modules doesn’t even necessarily need to culminate in a credential or a degree because the company itself validates the learning process. Major companies like The Gap, Partners Healthcare, McDonald’s, FedEx, ConAgra Foods, Delta Dental, Kawasaki, Oakley, American Hyundai, and Blizzard are just a few of the growing number of companies diving into competencies by partnering with institutions such as Brandman, CfA, and Patten. By having built that specific learning pathway in collaboration with the education provider, the employer knows that the pipeline of students will most certainly have the requisite skills for the work ahead.

For working adults who are looking to skill-up, the advantages are obvious. These programs are already priced comparable to, or lower than, community colleges, and most offer simple subscription models so students can pay a flat rate and complete as many competencies as they wish in a set time period. Instead of having to sit for 16 weeks in a single course, a student could potentially accelerate through a year’s worth of learning in that same time. In fact, a student who was working full-time and enrolled at College for America earned an entire associate’s degree in less than 100 days. That means fewer opportunity costs and dramatic cost savings. For some, that entire degree can be covered by an employer’s tuition reimbursement program—a degree for less than $5,000. It is vital to underscore, however, that competency-based education is about mastery foremost—not speed. These pathways importantly assess and certify what a student knows and can do.

Over time, employers will be able to observe firsthand and validate whether the quality of work or outputs of their employees are markedly different with these new programs in place. Online competency-based education has the potential to provide learning experiences that drive down costs, accelerate degree completion, and produce a variety of convenient, customizable, and targeted programs for the emergent needs of our labor market.

A new world of learning lies ahead. Time to pay attention.