There’s much talk in the media these days about a so-called "skillsgap" or "skills mismatch." That is, employers are saying they’re nothiring because the available job pool lacks people with the requiredqualifications. Peter Cappelli, director of Wharton’s Center for HumanResources, says of this contention, in effect, "Nonsense."
Cappelli’s new book, Why Good People Can’t Get Jobs: TheSkills Gap and What Companies Can Do About It, is full of well-reasonedobservations, backed up by research, that debunk the skills-gap theory. Infact, he believes the skills gap ("We’d like to fill that job, but no one’s applied whohas all the skills we need") is partly a myth generated by the media andpartly a screen created by employers who themselves are setting up their ownbarriers to hiring.
Says Cappelli, "I think it’s important to remember thatemployers control everything about the process"—from defining the job andlisting requirements through setting the pay rate and deciding how to advertisethe spot, and ending with sorting through and selecting candidates. So blamingthe candidates just doesn’t add up.
Cappelli acknowledges that much of the blame can be laid,instead, with the continuingly poor economy. It makes employers reluctant toadd visible payroll and benefit costs: Their emphasis is on keeping costs down.But one of Cappelli’s consistent themes is that those same employers haveinadequate internal accounting methods to tell them how much money they’re losing by failing to fill vacancies. At a certain point (and Cappelli hasevidence that many employers have gone beyond this point), asking existingemployees to take on the work of colleagues whose positions remain vacantbecomes counter-productive—it literally reduces productivity.
And, he says, there are other uncalculated advantages ofeach vacancy filled, especially the ideas and innovations an individual wouldbring to the table. Companies with too few employees are eating away at thecompetitive advantage that made them successful, and they don’t know how tomeasure that loss.
Employers haveerected other barriers to hiring. One technique Cappelli has encountered islow-balling the pay rate for particular openings. Despite a stagnant economy,the best-qualified candidates aren’t going to apply for a job that pays lessthan comparable jobs with other employers. In a recent Manpower survey hecites, 11 percent of respondents acknowledged underpaying for some vacancies,but Cappelli feels that percentage can be roughly doubled.
Another barrier is less intentional: Applicant trackingsystems are so rigid that if a candidate lacks only one or two of the skillsthe employer lists as essential, the system may well drop the candidate out ofthe running. That’s not the way things used to work, Cappelli says. Considerthat in 1979, employers offered each person in their workforce an estimated 2.5weeks of training every year. By 1991, only 17 percent said they receivedtraining in the previous 5 years, and by 2011, just 21 percent had done so inthe previous 5 years.
Wouldn’t it work better, Cappelli asks, if you hired someonewith almost all the requisite skills and experience—and a great attitude, ofcourse--and trained the person in the missing skills? He adds that you can paythe person less while he or she is being trained. But he thinks employersbelieve that once they invest in training someone, he or she will leave foranother employer. Meanwhile, employers don’t know what it would cost them toprovide limited amounts of training.
Going around incircles. Cappelli describes what he calls the Home Depot view of hiring:Employers believe that filling a job is like replacing a part in a washingmachine. You simply find someone who does exactly the same job as the brokenpart and plug him or her into the machine. That creates some vicious cycles:Candidates who lack experience can’t get hired, so they can’t get experience. And,employers shy away from candidates who are currently unemployed.
Furthermore, there’s still a significant amount of agediscrimination in hiring, despite the fact that older workers have better workattitudes, experience in doing the work, and need less ramp-up time andtraining. Writing about Cappelli’s book for TheNew Yorker, economist James Surowiecki notes that currently unemployedconstruction workers probably do lack the skills needed for most other kinds ofjobs. But why, he asks, are companies listing sales reps and office supportstaff on their hard-to-fill jobs lists?
Cappelli cites a company that had 25,000 applicants for astandard engineer’s job—and rejected them all. Surowiecki mentions a 2010index developed by three economists, which shows that "recruitingintensity" is still nearly 20 percent lower than it was before therecession began. Employers need to take their eyes off the cost side of theequation and recognize that with a lot of unfilled openings, they’reoverworking the employees they do have. Worse, chronically high unemploymentkeeps demand weak, so they’re missing out on sales opportunities.