A new book from Wharton management professor Peter Cappelli about jobs and hiring has inspired a reaction from just about every group with a stake in today's workforce: employers, employees, recruiters, academics, media commentators. That's because Cappelli debunks the oft-repeated employer argument that applicants don't have the skills needed for today's jobs. Instead – labor laws notwithstanding – he puts much of the blame on companies themselves, including their lack of information about hiring and training costs and on computerized applicant tracking systems that can make it harder, not easier, to find qualified job candidates.
Director of Wharton's Center for Human Resources, Cappelli talked about his book, Why Good People Can't Find Jobs. Excerpts from the conversation follow.
Knowledge at Wharton (KW): Given the weak economy and bleak job market, you say companies have a bigger pool of job applicants to choose from and can be much more selective, yet they still claim they can't find candidates with the requisite skills. Why?
Peter Cappelli (PC): Employers control everything about the process. They define the job, create the requirements for it, and then decide how the word gets out, recruiting-wise. They set the rate of pay, which helps determine how attractive the job is, and they handle the selection of applicants.
The obvious point is there aren't enough jobs to go around right now, so employers can be picky. But we're not really talking about being picky. The unusual and certainly negative thing is employers who say, "Look, we're just not hiring, or we're waiting a very long time to hire, because we can't find what we want." The place to answer that question is back with the employers making decisions about the process. Are they doing anything wrong?
KW: Clearly they are. There's a mismatch between people looking for jobs and employers saying they can't find people to fill them. Some companies feel they don't have to fill a vacancy, that existing employees [can handle the workload]. But they don't really know when the existence of too many unfilled positions begins to hurt their business, their expansion, their profitability. Isn't that part of the problem, that companies delay hiring and don't realize the hidden costs of that?
PC: The internal accounting systems in most organizations are so poor they can't tell what it costs them to keep a position vacant. They easily know how much it costs to employ somebody, but they can't measure that employee's contributions. So, in most companies, it actually looks like they're saving money by keeping positions vacant. If they think that, obviously [there's] no rush to hire.
KW: Companies aren't paying market wages; they're trying to low-ball the job market. But why should they pay market wages when they can get employees cheaply?
PC: The thing is they can't. That's what they're claiming, right? A Manpower survey asks employers if they're having trouble finding people to hire. In that survey, about 11 percent say they can't get people to accept jobs at the wages they're paying. So 11 percent are saying we're not paying enough. The real number is probably double that. We're not very good at identifying problems we create ourselves. If they're not finding [employees], don't call it a skills gap; don't call it a skills mismatch – you're just being cheap.
KW: A huge part of the so-called "skills gap" comes from the weak employer effort to promote internal training for either current employees or future hires. Correct?
PC: Right. The story that one hears, particularly around the policy community, is that schools are failing and kids aren't coming out with the right academic degrees and the right knowledge. If you actually look at the data from employers themselves when they report problems they're having with recruiting, they never talk about academic skills as being near the top of the list. In fact, their complaints have been consistent for the 30 years or so I've been looking at this. And their complaints are the ones, frankly, that older people always have about younger people: They're not conscientious enough, their workplace attitudes are not diligent enough, they don't want to work hard enough. They're not actually looking for young people out of school at all.
They want experience. Everybody wants somebody with three to five years of experience. What they're really after are the skills that you can't learn in a classroom, skills that you can only learn by doing the job itself. So the craziness about the hiring requirements is that in most cases, employers are looking for somebody who is currently doing exactly the same job someplace else. That's partly why they don't want to look at an applicant who is currently unemployed. They want somebody who is currently doing the same job right now.