Why Good People Can't Get Jobs: Chasing After the 'Purple Squirrel'
Wharton management professor Peter Cappelli'smost recent book --
WhyGood People Can't Get Jobs: The Skills Gap and What Companies Can DoAbout It
-- has inspired a reaction from just about every group with a stake intoday's workforce: employers, employees, recruiters, academics and mediacommentators. Cappelli debunks the oft-repeated argument from employersthat applicants don't have the skills needed for today's jobs. Instead, he putsmuch 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 jobcandidates.Cappelli, who is also director of Wharton'sCenter for Human Resources
, sat down with Knowledge@Wharton to talk about his book. Below is an edited transcript of the conversation.
Knowledge@Wharton: Peter, thanks for joining us. You cover a lot of ground in this book, but one of your themes is that, given the weak economy and bleak job market, companies have a bigger pool of jobapplicants to choose from and, therefore, can be much more selective inhiring. Yet these companies still claim that they can't find candidates with the requisite skills. Canyou talk about that?Peter Cappelli: I think it's important to remember that employers control everything about theprocess. They define the job, they create the requirements for the job, then they decide how theword gets out to people, recruiting-wise. They set the rate of pay, which helps determine howattractive the job is, and then they handle the selection part where they look at the applicants andsort them out.
The obvious point is that there just aren't enough jobs to go around right now, so employers can certainly be picky. But we're not really talking about being picky here. It's not surprising that employers mightactually search more, and it might take them longer to hire now, because there are so many candidates tolook at. Why grab the first one when you have this long queue that you could look at? But the unusualthing, and certainly the negative thing, from everybody's perspective is those 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." Ithink the place we have to begin to answer that question is back with the employers who are making allthose decisions about the process. Are they doing anything wrong?
Knowledge@Wharton: Well, clearly they are, because there's this mismatch between peoplelooking for jobs and employers saying they can't find people to fill them. I think one of the issuesthat you raise is what you call the Home Depot view of the hiring process, which basically says thatfilling a job is like replacing a part in a washing machine. You simply find someone who does theexact same job as that broken part, plug him or her into the wash cycle and that's it. But somecompanies feel they don't have to fill that vacancy and can put the work on existing employees. Sothey don't really know when the existence of too many unfilled positions begins to hurt theirbusiness -- their expansion, their profitability, their competitiveness, whatever. So, isn't that part of the problem? That companies delay hiring employees and don't realize the hidden costs of doing so?Cappelli: That's certainly part of the problem -- that the internal accounting systems in mostorganizations are so poor that they can't tell what it costs them to keep a position vacant. They
This is a single/personal use copy of Knowledge@Wharton. For multiplecopies, custom reprints, e-prints, postersor plaques, please contact PARSInternational:reprints@parsintl.com P.
(212) 221-9595 x407.
All materials copyright of the Wharton School of the University of Pennsylvania. Page 1 of 6
Why Good People Can't Get Jobs: Chasing After the 'Purple Squirrel': Knowledge@Wharton(http://knowledge.wharton.upenn.edu/article.cfm?articleid=3027)
easily know how much it costs to employ somebody, but they can't measure that employee'scontributions. So, in most companies, given their accounting systems, it actually looks like they'resaving money by keeping positions vacant. If you think that's the story, then you're obviously in norush to hire. I think it starts there, and that's clearly not a good thing for society or for employers.But it begins with their own problem: The way their internal accounting is designed encouragesthem not to hire.Knowledge@Wharton: You also say part of the problem is that companies aren't paying marketwages. They're trying to low ball the job market. But why should they pay market wages when theycan get employees cheaply?Cappelli: Well, the thing is they can't -- that's what they're claiming, right? There's a survey doneby Manpower that asks employers if they're having trouble finding people to hire. In that survey,about 11% say the problem they're having is they can't get people to accept the jobs at the wagesthey're paying. So 11% are saying we're not paying enough. If 11% admit this, my guess is the realnumber is probably double that. We're not very good at identifying problems that we createourselves. That's certainly part of it. You know, maybe you can't blame them for trying. But if they're not finding [employees], don't call it a skills gap; don't call it a skills mismatch -- you're justbeing cheap.Knowledge@Wharton: One of your chapters in the book is called "A Training Gap, Not a SkillsGap." You have some figures showing that in 1979, young workers received an average of two anda half weeks of training per year. By 1991, only 17% of young employees reported getting anytraining during the previous year, and by last year, only 21% said they received training during theprevious five years. You note that this especially hurts work-based training programs, such asapprenticeships. So, really, a huge part of the so-called "skills gap" comes from the weak employereffort to promote internal training for either current employees or future hires. Is that correct?Cappelli: Right. I think the story that one hears, particularly around the policy community, is thatemployers can't find the people they want to hire because schools are failing and kids aren't comingout with the right academic degrees and the right knowledge. If you actually look at the data fromemployers 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 consistentfor the 30 years or so that I've been looking at this. And their complaints are the ones, frankly, thatolder people always have about younger people -- they're not conscientious enough, their workplaceattitudes are not diligent enough, they don't want to work hard enough -- those sorts of things.They're not actually looking for young people out of school at all.
When you look at what they want, they want experience -- everybody wants somebody with three to fiveyears' experience. What they're really after are the skills that you can't learn in a classroom, that you canonly 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 somebodywho is currently doing the same job right now. The problem is that nobody wants to give those peopleright out of school any experience. Nobody wants to take somebody who's never done this job before andtrain them. Now, I can understand why it's better, easier, if you're an employer to hire somebody who's already beentrained -- or it seems like it's better. But it's creating this skills problem, because nobody wants to give people that initial experience. And again, in many cases, it would pay off to take people who are reallyqualified in many ways -- except for these quite specific skills -- and help them get training. You can paythem less while you're training them. You can require that they get some of these skills before you engagethem. But because of the accounting systems, employers, for the most part, have no idea what it wouldcost them to train somebody. They have no idea whether they're actually saving money by trying to chasethese people who already have jobs and hire them.
Knowledge@Wharton: It's one of the Catch-22s that your book seems to be filled with. Employersdon't want to train their employees because they fear they'll leave the company -- which employeesare actually doing more and more frequently these days -- which means all the effort and expense
All materials copyright of the Wharton School of the University of Pennsylvania. Page 2 of 6
Why Good People Can't Get Jobs: Chasing After the 'Purple Squirrel': Knowledge@Wharton(http://knowledge.wharton.upenn.edu/article.cfm?articleid=3027)
of the training process will be wasted. But that means it's increasingly heard for employers to findtrained job applicants. It seems like there's an impasse here.Cappelli: There's certainly a Catch-22 for the employees -- that you can't even get your foot in thedoor because you have to have experience to get the job. It's worth pointing out that employersused to do all this training. There are ways that you can train and recoup the benefits of it.Apprenticeship programs, for example -- a longstanding approach to have the applicants ... work as they're learning. The way we train doctors is the same, the way we train consultants andaccountants, exactly the same. Those firms lose virtually everybody -- the accounting firms andconsulting firms -- in five years. But along the way, the people are learning while they're working.So they're getting trained, but the company is still making money off them even though they alllearn. It isn't that hard to figure out how almost any employer could do something like this, butthere's just a kind of knee-jerk reaction that says, "We're not going to do it at all."Knowledge@Wharton: You mentioned that there's discrimination against unemployed jobapplicants for a number of reasons. Maybe companies feel they aren't up to date on their skills,maybe they're older workers. So, is there any way around this, short of federal regulations that barsuch discrimination, which would no doubt be difficult to enforce?Cappelli: The older worker issue is particularly important because for the most part, older workershave everything that those employers say that they want in new hires -- better work attitudes;experience doing the work; they don't need ramp up time; they don't need training -- or they don'tneed as much -- and yet, there's still widespread discrimination against older workers. There arelaws against it and yet, it still seems to happen.
I think the problem begins with employers understanding their own self-interest. I think that's the ironyhere. I'm not making any argument that employers ought to do something simply for the social good. Butit's just not in their interest to do what they're doing now, which is to chase the same small group of people who already are employed someplace else. It makes sense to train people. It makes sense to give people a chance. It makes sense to be more realistic about what your job requirements are so that you canactually fill the positions.I think that's the real puzzle about all of this -- that employers are not doing what's in their self-interest.So, how could they get better at this? Well, maybe they could get help from people outside, and thatincludes the academic world, to just point out how expensive it might be to simply chase outside hires allthe time. For example, our colleague here, [Wharton management professor] Matthew Bidwell, has done
an interesting studycomparing people who were hired from the outside to people who were promotedfrom within. People who are promoted from within do much better on cost and productivity accounts --which doesn't mean you should never hire from the outside. But it certainly can pay off to develop fromwithin. So, I think that employers have to begin with better information. And the irony about this is if youlook at any other aspect of their business -- such as how much each supplier contributes or what the costsare of having [inadequate] inventory are -- they have incredible detail about it. When it comes to people,they have got no idea about any of these things.
Knowledge@Wharton: Has the role of the typical company HR department been enhanced,minimized, made irrelevant in this hiring process these days?Cappelli: I think that part of the story is that the HR departments have been gutted over the last 20years. Particularly in this recession, there's a lot of downsizing, but especially in HR. The trainingdepartments are largely gone out of most companies, and a lot of the recruiting functions are goneas well. So, in the old days, you ask a hiring manager to create a job description. There would be anHR person there to help him do it or to push back if they had requirements which were crazy orout of whack with the market. Now those folks are gone, and basically, those wish lists of hiringrequirements get baked right into applicant tracking software. Human eyes rarely see applicants
until the very end of the process. So, we're trying to push the automation too far. There's nothingwrong with the automation, per se, and you need to screen all these applicants. But trying to get ridof the people altogether means that we're relying on the machines to make the decisions. Human judgment is still pretty important.
All materials copyright of the Wharton School of the University of Pennsylvania. Page 3 of 6
Why Good People Can't Get Jobs: Chasing After the 'Purple Squirrel': Knowledge@Wharton(http://knowledge.wharton.upenn.edu/article.cfm?articleid=3027)
Search History:
Result 00 of 00
00 results for result for
p.
More From This User
Notes
Load more
