The Skills Gap Myth: Why Companies Can’t Find Good People

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Last week’s disappointing unemployment report has refocused attention on the question of why, despite modest signs of economic recovery in recent months, American companies aren’t hiring.

Indeed, some of the most puzzling stories to come out of the Great Recession are the many claims by employers that they cannot find qualified applicants to fill their jobs, despite the millions of unemployed who are seeking work. Beyond the anecdotes themselves is survey evidence, most recently from Manpower, which finds roughly half of employers reporting trouble filling their vacancies.

The first thing that makes me wonder about the supposed “skill gap” is that, when pressed for more evidence, roughly 10% of employers admit that the problem is really that the candidates they want won’t accept the positions at the wage level being offered. That’s not a skill shortage, it’s simply being unwilling to pay the going price.

(MORE: Why Aren’t There More Jobs?)

But the heart of the real story about employer difficulties in hiring can be seen in the Manpower data showing that only 15% of employers who say they see a skill shortage say that the issue is a lack of candidate knowledge, which is what we’d normally think of as skill. Instead, by far the most important shortfall they see in candidates is a lack of experience doing similar jobs. Employers are not looking to hire entry-level applicants right out of school. They want experienced candidates who can contribute immediately with no training or start-up time. That’s certainly understandable, but the only people who can do that are those who have done virtually the same job before, and that often requires a skill set that, in a rapidly changing world, may die out soon after it is perfected.

One of my favorite examples of the absurdity of this requirement was a job advertisement for a cotton candy machine operator – not a high-skill job – which required that applicants “demonstrate prior success in operating cotton candy machines.”  The most perverse manifestation of this approach is the many employers who now refuse to take applicants from unemployed candidates, the rationale being that their skills must be getting rusty.

Another way to describe the above situation is that employers don’t want to provide any training for new hires — or even any time for candidates to get up to speed. A 2011 Accenture survey  found that only 21% of U.S. employees had received any employer-provided formal training in the past five years. Does it make sense to keep vacancies unfilled for months to avoid having to give new hires with less-than-perfect skills time to get up to speed?

Employers further complicated the hiring process by piling on more and more job requirements, expecting that in a down market a perfect candidate will turn up if they just keep looking. One job seeker I interviewed in my own research described her experience trying to land “one post that has gone unfilled for nearly a year, asking the candidate to not only be the human resources expert but the marketing, publishing, project manager, accounting and finance expert. When I asked the employer if it was difficult to fill the position, the response was ‘yes but we want the right fit.’”

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Another factor that contributes to the perception of a skills gap is that most employers now use software to handle job applications, adding rigidity to the process that screens out all but the theoretically perfect candidate. Most systems, for example, now ask potential applicants what wage they are seeking — and toss out those who put down a figure higher than the employer wants. That’s hardly a skill problem. Meanwhile, applicants are typically assessed almost entirely on prior experience and credentials, and a failure to meet any one of the requirements leads to elimination. One manager told me that in his company 25,000 applicants had applied for a standard engineering job, yet none were rated as qualified. How could that be? Just put in enough of these yes/no requirements and it becomes mathematically unlikely that anyone will get through.

What do we do about this situation, where jobs are going unfilled while good candidates are out there? For starters, employers should ask themselves whether their current practices are truly working for them. Then they need to ask: Wouldn’t we be better off helping good candidates complete the requirements to be a perfect fit rather than keeping positions open indefinitely?

A generation ago, employers routinely hired people right out of school and were willing to provide almost all their skills. Apprenticeships and similar programs provided ways for the employees to essentially pay for the training themselves. Employers — and especially those who expect colleges to provide most of their skills — should also work more closely with educational institutions to develop the candidates they need.

It makes no sense to expect that a supplier will produce what you want if you give it no advanced warning of what that might be and no help developing it. But the first step is to recognize that this problem is self-inflicted.

Peter Cappelli is Professor of Management and Director of Wharton’s Center for Human Resources. He was previously co-director of the National Center on the Educational Quality of the Workforce for the U.S. Department of Education. This article was adapted from his new book, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It, which is out this week.

MORE: The Bleak Unemployment Report: Is Europe to Blame?

5 comments
delicatemelodies
delicatemelodies

The current disenfranchised cannot wait for corporate culture hiring practises to slowly shift into a more realistic and mutually beneficial system

delicatemelodies
delicatemelodies

Thats good long term economic recovery advise. But in the short term, immedaite present what can the unemployed and inexperienced new workforce do to convince the employers they are qualified while the hiring managers are keeping the potentially unrealistic standards?

WeldonHGebhard
WeldonHGebhard

I lost my $50K, co car, exp. account job of 30 yrs. I then went to work in industry doing basically the same thing for $9.50 per hour.  I did not refuse a job.  But, I was making $40 K after 6 mos.  My philosophy is don't look for a job take one and prove yourself worthy.

Josh73
Josh73

The hundreds of job postings on each corporate website are essentially fake as it is impossible to qualify for any of them unless you've done that very job at that very company already.  By having all of those job postings (which are fake), companies are just attempting to signal financial health to investors.  By citing the "skills gap" (which is fake) they have an excuse to seek cheaper labor in other countries.

If these companies want to do business in America and receive the goodwill that being an "American company" has historically bestowed by conveying the connotations of "cool" and "quality," then they should be required to hire Americans or else pay a larger corporate income tax.