Workforce.com

Steer Clear of the Skills Gap

March 1, 1996
The search for the perfect job candidate can lead in many directions. Just when we think we're on the right track, a reference comes back, or a test score comes in, that forces us to chart a new course.

Unfortunately, what throws us off track most often these days is finding our candidates—both new hires and those up for promotion—lacking the skills needed for the sought-after job. With workers lacking in everything from basic reading, writing and math skills to the enigmatic art of leadership, companies are facing a skills gap today more pronounced than ever before. Based on the research of Menlo Park, California-based Robert Half International Inc., deficits are most prevalent in three areas:

  1. Basic analytical, communications and organizational skills necessary for entry-level, white-collar positions
  2. Technological skills needed for a wide range of job classifications
  3. Leadership skills that allow managers to pursue a strategic corporate vision for greater long-term competition.

One major factor triggering all of these gaps is raw demographics. In the wake of the baby boom—and as the first wave of boomers nears retirement—there simply are fewer candidates entering the workforce. Studies from the Bureau of Labor Statistics predict that the '90s collectively will see the slowest rate of labor force growth since the 1950s. In addition, there are separate factors contributing to the gaps between what's needed and what workers have for the different skills sets. Knowing these factors will help companies come up with solutions that, eventually, will pave the road to staffing success.

Roadblock number one: insufficient basic skills.
Finding competent entry-level employees—candidates with high aptitude in reading, writing and arithmetic—is a significant challenge for many employers. More than 50% of the 360 companies surveyed by the National Association of Manufacturers in 1992 reported serious deficiencies in basic math, reading and problem-solving skills. And there hasn't been much improvement since. According to a 1994 Business Week article, Motorola turns away 90% of its applicants for manufacturing positions because of insufficient math and communications abilities. And BellSouth sometimes interviews as many as 50 applicants for a single administrative position.

A major contributing factor, sadly, is the public education system. In a 1994 U.S. Department of Labor study of junior high school and high school students' math skills in 15 industrialized nations, Americans finished a woeful 13th. Add to that an elevated high school drop-out rate, and a growing disparity between income level and extended educational opportunities, and you have a dearth of entry-level workers without basic skills.

When these people are hired, it's challenging for many employers to create training programs that address these gaps. "A lot of training stresses technical proficiency without putting the particular skill in context," says Colleen Shaughnessy, vice president of HR at Zenger-Miller, a San Jose, California-based educational training firm. "It's easy to find word-processing wizards. It's not as easy to find those who actually can read and understand what they're inputting, are able to proof it for errors and correct it."

Roadblock number two: techno-illiteracy.
Over the last two decades, the growing ascent of information technology—personified by a shift as simple as that from the typewritten memo to e-mail—has created a chain reaction of needed skills. Not only is there a demand for a relentless implementation and adaptation to new software and hardware, there's the broader implication—the need to communicate quickly, accurately and strategically in every facet of business, both internally and externally.

Whenever there are rapid technological advancements, there's a certain amount of lag time until employees feel confident using the new system—whether its e-mail or automated machinery. This on-going demand for bringing groups of employees up to speed has created a technological backlog, resulting in a constant need to update skills. Employees must master new software applications. Trainers are needed to provide guidance. Trainers have to be trained. And with new products introduced so frequently, the ongoing need for technology education will likely continue for years.

The problem is compounded for jobs that require even greater technoliteracy. A survey conducted last June by RHI Consulting, a division of Robert Half International, polled executives from the nation's largest 1,000 companies. It found that 38% of them believe difficulty in finding skilled workers will have the single most significant impact on their company's information-technology capabilities in the next three years.

And, the shortage of personnel with appropriate technical expertise extends to the industries that manufacture these new software and hardware products. "From a recruiting standpoint, Silicon Valley is more competitive than ever," observes Tom Capizzi, worldwide director of HR for Quantum Corp., a Silicon Valley-based manufacturer of mass-storage hard disk drives. "The hundreds of companies here are all after the same skills." Those skills—primarily in the computer programming, software development and system design fields—are in high demand. For some very specialized areas, such as application-specific integrated circuits and rewrite engineering, qualified candidates are scarce, even worldwide.

Technical skills, albeit of a different nature, also are critical in more mature fields. "Engineers are the heart and soul of our company," says Laurie Sachtleben, a spokesperson for San Francisco-based Chevron Corp. "We're concerned about the future supply of qualified talent for our varied petrochemical and structural engineering needs." As for today's needs, Sachtleben reports that Chevron—despite its desire to promote workplace diversity—has difficulty finding an ample supply of female and minority petroleum engineers and biochemists.

Roadblock number three: undeveloped leadership qualities.
As difficult as it is to find employees with the basics, as challenging as it is to hunt down those with technical expertise, for many American corporations, it's even more of a problem to build a cadre of managers adept at providing vision and leadership in a time of rapid transition. Over the last 15 years, there has been enormous pressure on corporate leaders to produce quarterly profits—even at the expense of such long-term, business-building areas as research, product development, marketing and promotion. The result of this short-term focus has been that managers haven't had the time to develop, much less instill, long-term strategic thinking. Unclear about the company's long-term vision, managers begin operating more on a day-to-day basis, putting out fires rather than planning methodically.

This in turn impacts staffing. While most would agree the trimming of excess layers of managerial fat has been necessary to boost productivity, some companies have gone too far. Some firms cut too deeply in middle management, leaving themselves scrambling for new hires they have to find and train. In addition, virtual elimination of college campus recruiting during the last recession left many firms without a level of fresh candidates—individuals who today might be on the cusp of a management career.

"Education is an easy target. But you can't just blame the system without doing something about it. We decided to put our money where our mouth is."

"American business has put so much emphasis on rewarding immediate results," says Peggy Hiraoka, executive vice president of human resources of EurekaBank, a 36-branch Northern California savings institution, "that, too often, we don't care how things get done—only about the outcome. Consequently, not enough emphasis is placed on developing values, leadership and motivation skills for managers, because the payout is long-term and hard to measure."

In other words, our contemporary economy has created a breed of managers that's narrowly adept—be it in operations, marketing or finance—but not broad-thinking for the long-term. This has particularly profound implications as the economy continues expanding globally.

A new breed of manager is needed and highly sought after. "There's a real need in the marketplace for executives who understand the big picture and can work across many disciplines with many levels of people," says Sean Dowdell, an executive with San Francisco-based Bank of America. "Now isn't the time to think short-term," he adds. Instead, managers need to have overall business sense and be able to blend their area of expertise with other big issues involved in keeping close to the customer.

Invest greater time and resources to counter trends.
In all of these key skills areas—basics, technology, leadership—the impact is profound. On a purely tactical level, skills shortages lengthen the time it takes to fill positions. At EurekaBank, for example, some positions currently call for 10 to 12 interviews per hire—even after pre-screening. "In the past, it would take five to seven interviews to find the right candidate," says Hiraoka.

Quantum's Capizzi concurs. "Time-to-fill is now much longer," he says. "With the limited pool of qualified professionals, we have to keep the pipelines open. We stay in contact with candidates, even when they're not in the market. We like to remind them we're here and keep them apprised of the technical innovations going on at Quantum." There's also higher probability for decreased productivity and morale as departments scramble to complete projects without the proper staffing level.

Fortunately, there are ways companies can improve the skills—basics as well as technological—of incoming workers to narrow the gap. Some companies are adopting a long-range view. Chevron, with its reliance on a steady stream of analytical executives, is aggressively working on the root of the problem: education.

"From the perspective of having enough skilled employees tomorrow, math and science education is the key to our future," says Chevron's Sachtleben. Recognizing the underdeveloped skills of today's American students, Chevron currently spends $7.8 million a year—a full third of its annual contributions budget—to support education. Of this, the company targets more than 25% to education at the K-12 level. "Education is an easy target. But you can't just blame the system without doing something about it," Sachtleben says. "We've decided to put our money where our mouth is. Ultimately, it's a national competitiveness issue."

Other corporations are committing to education after making the hire. Schaumburg, Illinois-based Motorola Inc., which gives all employees 40 hours of training a year (and plans to quadruple that by the turn of the century), is a prime example of a company using in-house training to its advantage. "If knowledge is becoming antiquated at a faster rate, we have no choice but to spend on education," says CEO Gary Tooker. Because of its training programs, which are tightly bound to strategic business goals, Motorola has reported strong productivity gains. As a result, the company's chip division has succeeded in opening microprocessor manufacturing facilities in less than half the time typically required, helping the firm speed new technologies to market.

Quantum is another company working harder than ever at developing talent from within by establishing Individual Development Plans. These plans are designed to help employees develop the skill sets required to move ahead in the organization. "We do whatever we can to help our people advance," says Capizzi. "We're also developing a retention program to ensure that once they have the skills we want, they stay with us."

B of A's Dowdell shares the same sentiment, "Training is very important to us. The more knowledgeable our people are, the better-equipped they are to come up with new ideas and approaches. That kind of insight and perspective is critical to continue our track record of success."

Sometimes, however, companies just don't have the time or resources to get employees up to speed in basic or technological skills in time for particular projects. In these cases, employees can fill the gaps with contingent workers. The recent exodus of qualified employees from many corporations has spawned an increasingly dynamic and well-educated contingent workforce, from which human resources managers are increasingly drawing. Their staffing strategies include outsourcing and hiring contract employees, temporaries and consultants.

There has been an exceptionally significant upsurge in the use of contingents for technical positions the last few years. Many IS workers have opted to pursue the consulting field, making it significantly easier for companies to access needed skills. For the companies that engage such employees, the benefit is an ability to draw on a wide range of professionals who can offer immediate access to information systems expertise and other skills. This approach also helps corporations deal with the sudden shifts that have become increasingly common in a sometimes volatile market. As Quantum's Capizzi says, "At the information systems level, we turn to contract engineers and consultants to help us get over peak workloads."

Although it's becoming more commonplace to hire contingents at the executive level, filling the gap in leadership skills still remains the most difficult. Outsiders don't make for good leaders, and leadership skills aren't easy to teach. Still, there are specific techniques that can boost employee effectiveness. They require tremendous courage and vision, beginning at the top and, hopefully, flowing throughout the corporation.

One example was developed by Louis Csoka, director of HR and organizational effectiveness at the Conference Board, based in New York City. Csoka's techniques are designed to bolster several key performance areas in such skill sets as stress management, team building, goal setting and attention skills.

Csoka's research has uncovered a strong link between the use of performance enhancement techniques and the bottom line: Surveyed companies were compared with Forbes' list of leading companies based on profitability, growth, sales, net income and profit margins. Of the companies compared, 62% that offer four or more performance enhancement components appeared in Forbes' top 25; only 18% offering three or less also were in that ranking. With these results, it appears many companies are starting to see a payoff for an investment in training. And, as they take note, so will others.

EurekaBank regularly participates in programs to build managerial competency and offers significant training and retraining. "We provide all the guidance and counseling we can," says Hiraoka.

Whatever solutions emerge, it's clear new ways of thinking, planning and hiring will be required to see us through to the next century. The old models rapidly are being discarded. No longer are staffing and skills development a matter of filling slots on an organizational chart. We must plan for workforce readiness, and continue to adjust as new technologies, competitors and approaches surface. The challenges can seem daunting, but the opportunities can become that much greater. And, with any luck, the road to recruitment success in the future will be a little less obstructed.

Personnel Journal, March 1996, Vol. 75, No. 3, pp. 44-49.