As jobs evolve to require higher-level skill sets than ever before, companies throughout the United States are becoming far more aware of – and concerned by – the increasing difficulty of finding qualified workers to fill them. While the skill shortages affecting certain industries such as nursing and information technology have received broad media coverage over the last decade, far less attention has been given to the fact that companies in ALL industries are beginning to suffer growing skills gaps. As the global economy continues to become more knowledge- and service-based, companies will need more – not fewer – workers with the mission-critical skills that create competitive advantage and drive business growth. The pressure to bridge the ever-widening skills gap, which used to be felt solely by corporate training and development functions, has now begun affecting every facet of talent management – with particularly dramatic implications for the recruitment process. In this article, Bart Valdez, President of FirstAdvantage Corp, Employer Services identifies some of the ways the growing skills gap is impacting recruitment and offers companies, scrambling to manage the issue, some advice on how to update their recruitment strategies to tighten the gap – and beat the competition in the process.
Last month, when the U.S. Department of Labor released its annual report on the status of the American workforce, it was accompanied by a letter that ranks as one of U.S. Secretary of Labor Elaine L. Chao’s most positive in years – and with good reason. Citing a declining unemployment rate, 46 months of uninterrupted job growth and the introduction of 8.2 million new jobs since August 2003, the 55-page report provided Chao with ample evidence for calling the country’s economic fundamentals in good shape despite such recent challenges as the declining housing market, increasing energy prices and continued volatility in the capital markets.
Yet amid all the positive indicators in the report loomed one significant question mark that has the potential to dramatically weaken corporate growth and competitive prospects, and, by extension, the U.S. economy overall: the growing skills gap.
Key Skills in Short Supply
While earlier DOL market assessments have made note of the skills gap, this year’s report painted a more-urgent picture of how significantly the need for some skills will outpace availability in the coming decades and, in doing so, hopefully, will prompt businesses to focus intently on the issues and consequences associated specifically with the skills gap rather than just those arising from larger labor shortages.
The distinction is an important one, particularly in terms of talent recruitment issues. Companies that view skills gaps as simply a subset of deepening worker shortages – and treat them accordingly – are at risk of taking a non-strategic view of recruitment and, potentially, sacrificing quality of hire for quantity or speed. Certainly, the market’s current use of rapidity as a success metric indicates that companies may already be heading down that road. Getting an open position filled as quickly as possible is important, but not nearly as critical as getting a positioned filled as quickly as possible with a candidate possessing the right skills for the needs of the business.
The American Society for Training and Development, a trade association that monitors workforce development issues, defines the skills gap as the growing disconnect between an organization’s skill needs and the capabilities of its workforce. And while the skills gap will most certainly be compounded by growing labor shortages, the long-term business implications of skills shortages are far more crippling to a company’s potential for innovation and growth than broader worker shortages.
That’s the primary reason the ASTD calls the skills gap the most significant challenge facing U.S. businesses today. The organization’s research reports have long noted that many businesses are finding themselves ill-equipped to grow because the skills required to do so – high-level technology expertise for innovating new projects or Six Sigma-type experience for creating new strategic processes – are in increasingly short supply.
The forces that have brought on these shortages are complex and multi-faceted. The gravitation away from a manufacturing-based economy to a knowledge-based one has created a fundamental shift toward jobs requiring higher skill levels. Fifty years ago, the great majority (between three-quarters and 80 percent) of all jobs in the United States were unskilled. Today, it’s the opposite, which means most jobs require some level of higher education.
As job requirements have changed, higher education has not kept pace with the demand for new skills. Between 1980 and 2000, the number of workers with some education or training beyond high school grew by nearly one-fifth, or 19 percent. But that growth is slowing and expected to drop to 4 percent between 2000 and 2020. The ASTD believes that by 2020, the trend could result in a shortage of 14 million skilled workers.
The Right Hire versus the Rapid Hire
With these trends making it harder than ever to recruit the right candidates to the right roles, a number of us in the HR community have grown increasingly concerned by some companies’ inclination to loosen their identification, screening and assessment practices in the misguided belief that these processes make it more difficult for them to successfully – and rapidly – recruit the skilled workers they need to drive growth.
While getting a promising candidate identified and locked in quickly in a tight labor market is certainly something to strive for, it can be disastrous for companies if thorough assessments are sacrificed in the process. Hiring a candidate ill-equipped to handle the skill demands of a particular position or the long-term objectives of the broader competitive strategy is worse, financially speaking, than leaving a key role unfilled for a few more weeks. And even if the candidate in question possesses the right skill sets for the needs of the business, if the personality characteristics, work ethic and behavioral attitudes aren’t in synch with the corporate culture then the hire could do more harm than good. And finally, if the company hasn’t thoroughly connected the dots between the business objectives and the skills needed to fill them, then even the most highly skilled, culturally appropriate hire won’t be able to produce the desired business outcomes.
While a resume and interview and other standard processes can provide a fairly reliable indicator of the level of basic skills a candidate has achieved, the other skill levels are more difficult to ascertain. Some IT candidates, for example, may be well schooled in programming and network design but less facile in actually applying their “book knowledge” to the needs of an individual company. Gauging their actual skill levels through computer literacy and software skills tests may add an extra step to the hiring process, it also adds tremendous certainty to a process that has always involved more guesswork and leaps of faith than most HR directors are comfortable with.
In addition, all the interviews in the world won’t be able to tell a hiring manager whether a candidate possesses the soft skills and behavioral abilities to grow with the demands of the role. But these characteristics are as important – if not more – in ensuring an organization is equipped to bridge skills gaps over the long term.
Preparing for Right Skilling
According to a recent ASTD poll of 300 corporate respondents, 66 percent said they were currently experiencing a skills gap in their organization and almost 20 percent said they were expecting skills gap to arise within the next year. And while most believe that these gaps are occurring because older workers are retiring in larger numbers than ever before or because the technology in most workplaces has grown more sophisticated, the real reason for the gaps is that organizations are changing their organizational structures to become better positioned to meet the demands of an increasingly competitive global business environment.
As such, many companies are becoming aware of the need to “right skill” their workforces, but most aren’t quite sure of how to begin the process. Right skilling, which has been defined as redeveloping and expanding the skills of an employee, is a long-term initiative involving ongoing training and development measures but, in our view, the path to success in right skilling starts with a recruitment process that not only assesses an employee’s skill level for the job at hand, but also his or her potential to develop new skills and abilities to meet future organizational needs.
As skills shortages deepen and right skilling initiatives become more common, hiring leaders will be under more pressure than ever to not only hire candidates with the skills and abilities to meet current organizational needs, but also with the potential to adapt as companies change their organizational structures to stay in step with competitive market dynamics. While hiring directors have long struggled to accurately gauge a potential candidate’s “soft” skills, innovative new identity assessment programs have come on the market that offer HR an effective means of gauging these hard-to-measure attributes such as cognitive abilities, customer service attributes and sales attributes. The most advanced of these tools also provide HR directors with the means to assess the potential risk factors associated with a particular candidate, thereby equipping HR directors to do more to ensure the hire will be a long-term addition rather than one that leaves – or is asked to leave – after a few months.
Meeting Market Needs with a Balanced Assessment Solution
It has never been easy to identify and successfully recruit those employees with the skill sets and attitudes that match both the business needs and the organizational culture. As market forces turn ordinary recruitment challenges into a high-stakes business wager, the implementation of innovative candidate assessment solutions and other recruitment best practices can help companies both mitigate the most intense pressures of the growing skills gap and make the recruitment and hiring process far less of a gamble.
In our view, the most effective solutions are those that measure both the hard and soft skills of candidates to ensure the hire in question will meet an organization’s immediate and longer term needs. Organizations that support their recruitment processes with performance-based and knowledge-based skills testing, along with identity behavioral assessments will be the best positioned to close the growing skills gap with the right candidates for the short and long terms.
President, First Advantage Talent Acquisition Solutions
With over 15 years as a visionary in operations and business development, Bart Valdez brings a natural talent for identifying key trends and needs in the marketplace and creating and executing strategic business objectives around those needs to facilitate and sustain corporate growth. Early on, Bart recognized that the growing shortage of skilled workers was going to require companies of all sizes to increase their emphasis on hiring and retaining talent. As a result, Bart’s overarching focus at First Advantage has been to integrate and globalize the company’s service offerings in ways that strategically address this growing need.
Bart joined First Advantage in 2000 as the Chief Operating Officer for the company’s background screening division. Today as President the Employer Services Segment, Bart is responsible for the financial performance and the growth and direction of the segment as a whole. Over the course of his tenure with First Advantage, Bart has overseen 32 acquisitions and helped lay the foundation for the company to become the $250 million integrated talent acquisition solutions provider it is today.
Prior to First Advantage, Bart held the position of Chief Financial Officer for Global Med Technologies, a medical information technology company providing information management software products and services to the healthcare industry. Prior to working with Global Med, Bart worked with Baxter Healthcare where, during his tenure as Director of Operations, he drove unprecedented growth by developing and deploying a just-in-time delivery system for hospitals. The system allowed Baxter to broaden their product set, increase the value delivered to clients, and ultimately win more clients.
Bart received a Bachelor of Science degree in management from Colorado State University and holds a master's degree in business administration from the University of Colorado. Bart is also a member of the Society for Human Resource Management (SHRM) and the Human Resource Planning Society (HRPS). He is a seasoned speaker in the industry and has been invited to share his insights at major industry events such as ASIS February 2007, HR Summit Bangalore, and ID Analytics Conference.