The impact of signalling on career advancement

August 2021

Dr Caitlin Ferreira, a member of The Global Academic Council

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The COVID-19 pandemic has fundamentally changed how we work. The shift towards and acceptance of remote working has opened up remote working opportunities around the globe. While the globalisation of the workforce brings with it many different benefits for employees, it also brings with it a fiercely competitive labour market. This means that finding ways to distinguish your skillset in the labour market is now more important than ever, this is where signalling comes in.

What is signalling?

It’s pertinent to begin by discussing what exactly we mean by signalling. In order to understand this, we need to briefly examine something known as signalling theory. Signalling theory looks at the transmission of information between individuals where one is the sender of information and the other is the receiver. The theory is concerned with reducing information asymmetry between these individuals, which essentially means how we can get two parties to know the exact same information. To exemplify what this information asymmetry actually means in practice, let’s discuss an example presented by Connelly and co-authors. Think about a new tech firm getting ready for an IPO, just before their IPO they choose to fill their board with a range of highly skilled and experienced individuals – but why? The simple reason is the signalling effect that this action has. Ultimately, these highly qualified and experienced individuals seek to enhance the legitimacy of the firm. This move offers a signal about the quality, credibility and legitimacy of the firm (the sender) to potential investors (the receivers). Investors may have a bolstered confidence in the firm as a result of these individuals being on the board and potentially be more likely to invest. 

When you think about signalling theory as the use of any kind of signal (whether an action or a piece of communication) to communicate certain characteristics, you’ll start to see signals all around you. Next time you’re browsing an E-commerce website, closely examine all the content on a product’s information page. You’ll quickly notice small signals that guide you to assign certain characteristics to the products. I’m sure you’ve seen some common signals like “Recommended by dermatologists”, “Only 3 left”, “Exclusive offer” or some iteration of these in different contexts. These phrases seek to create an association between the product and certain characteristics. Marketers commonly use signals in their strategies to differentiate products and services and these tactics can readily be applied to the labour market in order to differentiate your skillset. 

Using signals in the labour market

Let’s think about how you can use your own set of signals to put your best foot forward in the job market. Just like marketers, you too need to find ways to best differentiate yourself in a pool of candidates with similar skill sets. The original work on signaling theory was actually focusing on how applicants could reduce the information asymmetry between themselves and prospective employers. Put yourself in the shoes of an HR or recruitment practitioner, you know that you can only truly evaluate an applicant’s performance once they’ve been hired, but that could result in very costly hiring decisions. All you’ve got are 50 applications in front of you, but how can you accurately determine the best candidate for the job? Think about your CV, what is on there that acts as a signal of your skills, knowledge and abilities to potential employers?

Education and other types of certification, and the proof thereof, has long been thought of as a signal for a number of different characteristics to potential employers. Throughout one’s education, a student will develop and hone many different hard and soft skills and the proof of education (whether a degree, a certification or a short course completion) acts as the proof of those learnt skills. Students learn how to meet deadlines, work independently, communicate with others in a professional manner, resolve group conflict and master time management all before they’ve even opened a textbook. The piece of paper that a student leaves with serves as proof of the mastery of these skills in addition to the hard skills linked to the specific content. 

It is for this very reason that an approach to lifelong learning and the constant renewal of skills is vitally important in order to set yourself apart and ensure your career advancement. The world of work has drastically changed and it’s vital that you’re consistently developing your skills to keep pace with advancements and using key signals to best indicate this skillset to your current or potential employers. 


Dr Caitlin Ferreira is currently a lecturer in Industrial Marketing at the Luleå University of Technology as well as an adjunct faculty member in Marketing at the University of Cape Town. 

She obtained her Ph.D. in Industrial Marketing from the Luleå University of Technology and she holds three further degrees in Marketing, Economics and Finance from the University of Cape Town

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