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The myth of the skills gap?

May 9, 2014

By Joe DeSantis, courtesy of SBAM Approved Partner ASE

Is the skills gap real? Or is it simply a perennial if understandable lament about how hard it is to fill jobs with the best people?

CareerBuilder has come out with a new survey on hiring. There is much good news in it. One piece of good news is that 57% of employers say they plan to hire new college graduates this year, up from 53% a year ago and 44% in 2010. Even better news, perhaps, is that only 24% of employers feel that the colleges are not producing graduates well prepared for the workplace.

That last number refers to the “skills gap” that we have heard much about. Many hiring managers believe in it implicitly, but their numbers may be going down. Consider that a 2011 DeLoitte study showed two-thirds (67%) of employers reporting a “moderate or severe shortage of skilled workers,” and a 2012 Manpower survey found nearly half (49%) of U.S. employers “struggl(ing) to fill mission-critical positions.”

Those comparisons are admittedly not perfect, but they broadly suggest that fewer and fewer employers remain hung up on job candidates’ perceived lack of the skills they need. Or its corollary—the assumption that today’s jobs are completely different from those of a generation ago, and the colleges have failed to keep pace in preparing their students for them.

The perception of the skills gap is nothing new. In fact it has always been with us, which in itself tells you the perception has always had a mythical dimension to it. Consider the following from one Ewan Clague in a paper entitled “The Problem of Unemployment and the Changing Structure of Industry” from the Journal of the American Statistical Association:

I believe this present labor supply of ours is peculiarly unadaptable and untrained. It cannot respond to the opportunities which industry may offer.

Mr. Clague wrote that in 1935, in the depths of the Great Depression when there were hardly any jobs to be had. Still, he blamed high unemployment on the obsolete skills of workers.

And in 1981, during the worst recession to that point since the Great Depression, President Reagan declared after scanning the want ads in the newspaper one Sunday, “These newspaper ads convinced us that there are jobs waiting and people not trained for those jobs.”

The respected management professor Peter Capelli of the Wharton school believes that employers who perceive a skills gap need to look to themselves for the solution to their inability to hire good people. Capelli, the author of Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It, rejects the idea of the skills gap. He offers several reasons why today’s employers perceive the skills gap, and what they have to do about it:

  • Technology being dominant in the workplace, employers expect tech-savvy young people to hit the ground running and make significant contributions to the bottom line with virtually no learning curve allowed.
  • Because their populations are already at bare-bones levels, particularly in HR and training, they cannot provide the learning and support needed at the early stages of employment.
  • They know how much it costs to employ somebody, but they do not know how much it costs to not employ somebody. They think they are saving money by leaving a position open while they wait for the “purple squirrel”—the Superman/Wonder Woman candidate—to come along. They are not. They are losing money but they do not know it.
  • Studies, including the CareerBuilder study cited above, show that the skills employers most covet are the soft skills that only come with greater maturity, and the intimate job knowledge that only comes through experience. These are attributes that relatively few recent college grads have.
  • Because they deal with floods of candidates, employers rely too much on applicant tracking software that is inadequate to identify the skills they really want. There is not enough human contact in the process, and talented but non-standard candidates are left out completely.

The solutions, according to Dr. Capelli:

  • Invest in training, in all its forms, including apprenticeship-style arrangements that allow raw recruits to contribute while they learn, regardless of the increased cost.
  • Figure out what it costs to train someone internally for advancement and plan for those costs; promote from within and thus open entry-level positions that younger people can handle while they learn.
  • Pay what it takes. If the scheduled salary seems out of line with the quality of the candidate, that’s the market.
  • Be more open to the approach of  “just get(ting) somebody in there and doing the job.” Stop hoping for the purple squirrel to come along.

Finding the right people to fill open positions is blessedly hard work, often frustrating, inherently risky, and impossible to do on the cheap. Invest the money it takes to build more human contact into your recruiting system, and train and develop your current people. There are no purple squirrels.

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