The American workforce is in flux. This is not significantly different from other periods in our history. What is different are the circumstances that gave rise to current conditions. Six years to the month after the 2008 financial panic, business owners and their employees are still paying a price. But there always is hope, and conditions are slowly improving.
To understand this, we need context. One of the most perplexing and disheartening current circumstances is the gap between job openings and the number of long-term unemployed. According to the U.S. Department of Labor, some 3.7 million people in the labor force actively looking for work have been out of work 26 weeks or longer. Additionally, there are millions more who have become unattached to the labor force, but they would still like jobs. Yet, according to the Bureau of Labor Statistics, there were 4.7 million job openings at the end of July 2014.
Why this chasm? American businesses and employees have different views. The most prevalent idea among CEOs and their human resources teams: a skills gap exists between company needs and worker abilities.
A 2014 study published by Express Employment Professionals yielded startling data. Of the recruiting professionals surveyed, 83 percent reported it was somewhat difficult or very difficult to recruit and fill positions. In 2014, 52 percent of them reported that open jobs go unfilled due to a lack of available applicants. That was up 6 percentage points from 2013, exacerbating the frustrating unemployment picture.
Michael Porter, microeconomist and an expert on competition, believes the skills gap is real, and it stems from a general decline in American business competitiveness.
His conclusions are part of a survey conducted with the Harvard Business School in 2013-14. The survey polled several thousand Harvard alumni to find out what they think is holding back the economy.
The workforce section suggested business skills have become highly regional and industry-specific. This means, like real estate, there is not one big labor market. There are, in fact, multiple micromarkets for talent around the nation.
The survey also found businesses are neither communicating their needs very well nor doing a great job of workforce planning. In the end, this leaves young entrants into the workforce, as well as veterans, wondering what skills are in demand.
There are brighter points coming, and some companies are providing valuable information.
For example, leadership is a common theme, and it has been the No. 1 area for workforce training for years. Leadership perceptions are changing rapidly, and companies need to respond with new ideas.
A fascinating recent blog by Hay Group Consulting directors Georg Vielmetter and Yvonne Sell spelled this out in stark terms. With transparency-inducing personal media like Facebook or LinkedIn, and fast changing technologies supporting their internal value chains, CEOs and their senior managers need to suspend ego. Vielmetter and Sell conclude leaders now must be more adept at engaging rather than commanding, as well as focusing on others rather than themselves.
Lack of technical skills also are reported, as is inexperience. While this is always a Catch-22 for young people entering the workforce, there are smart, cost-effective ways businesses can combat the gap for all workers.
Peter Cappelli of the University of Pennsylvania’s Wharton School outlined some of these recently. One is to simply promote from within. This requires continuous grooming of internal talent, but is cheaper than hiring talent externally.
A second idea is to organize work to help employees learn new skills. The cross training approach has been shown to be highly effective, and it reduces silos. For new hires, Cappelli also suggests companies work with continuing education providers to create the employees they want.
If a young applicant has all the right social skills and attitudes but lacks one or two technical skills, the applicant could be hired on contingency after taking a course or two in a needed subject area. This builds goodwill and incentivizes the new hire.
Finally, Cappelli reminds us continuing education isn’t just for new or recent hires. Whether at their current positions or in applying for new ones, learning new skills or polishing management talent makes employees more valuable and productive.
Typically, employees are directly enrolled in various courses or are reimbursed for tuition if their education paths are complementary to the business.
We know change in the American workforce will continue. Skill upgrades and talent maintenance will be constantly needed, though challenged by nuanced, regional markets. As capital begins to flow into business expansion and worker abilities are constantly refreshed, a virtuous cycle will power forward the American economy. As it does, all of us will adapt to new technology, different ways of human interaction and new sets of career expectations. We should expect that, soon, this re-engineering will make us all better off.
Jeffrey Schmedeke is assistant director of the Management Development Institute at Missouri State University. He can be reached at JeffSchmedeke@MissouriState.edu.
