'Why Companies Aren't Getting the Employees They Need'

By PETER CAPPELLI

My article in The Journal Report on Leadership—"Why Companies Aren't Getting the Employees They Need"—generated an avalanche of reader response. In that piece I argued that companies too often put the blame on our education system for their inability to find the skilled workers they need. Instead, I wrote, companies "need to drop the idea of finding perfect candidates and look for people who could do the job with a bit of training and practice."

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Peter Cappelli writes that companies "need to drop the idea of finding perfect candidates and look for people who could do the job with a bit of training and practice."

Most of the emails I received were in support of my argument, especially from readers struggling to get a job themselves. No surprise there. But a remarkable number of those who wrote were in positions where they were hiring, including recruiters. They reported that their organizations had shortages of employees because they would not train or invest in new hires.
My favorite email came from somebody in a company that had 25,000 applicants for an engineering position and the staffing people said none of them were qualified. Could that really be possible?
It's impossible to respond to all of the many hundreds of comments I received. So let me just offer some thoughts on what I felt were some of the most interesting ones.

Automated Screening

Many readers talked about applicant tracking software and other computerized systems that screen applications electronically. Employers are overwhelmed by applications, and there is no way they can go through them all by hand. So they use these systems to help. The downside is that the screening criteria are imperfect. Typically they look for keywords, and if you don't include the right keywords, out goes the application. One letter described how the author was told he was perfect for the position—except that his previous job title didn't match that of the vacancy, which in turn was a title unique to that company.
Several people wrote in to say that the problem with hiring is that the education system is so bad. I've been following this topic since I worked on a U.S. Department of Labor commission in the 1980s, and in fact employers on average were not then and are not now complaining about the lack of academic skills among job applicants. It's mainly other things that they see as important, in particular the lack of work experience. One can't get work experience in school, and that's where training comes in. Further, almost none of the candidates employers are looking for are recent graduates. They want experienced workers.
A few employers said the amount of money they had to pay to get the talent they needed was outrageous. Indeed, many of the employers who report that there is a shortage of qualified candidates go on to say that qualified candidates won't take the jobs at the wages they are offering them. At this point, it may be uncomfortable but still necessary to bring up how markets work. There is a difference between saying we can't find anyone to hire and saying that we can't or don't want to pay the wages needed to hire. Just as there is no shortage of diamonds even though they are expensive—you can buy all you want at the market price—not being able or willing to pay the market price for talent is not a shortage.

The Problem of Lead Time

One of the most interesting comments came from a former student, fortunately employed and running a Silicon Valley company. Silicon Valley pretty much invented the "free agent" model of hiring for new skills rather than training and letting workers go once those skills aren't needed. He reports sharply rising salaries for software engineers who have hot skills in mobile devices and data mining, because there are not enough graduates with those skills and with the requisite work experience to be useful, and too many employers are chasing them
Why aren't more of those students coming onto that market? Because it takes four years at least to produce a B.S. engineering graduate, and four years ago, IT was not as hot a field. All the talk was of programming jobs being outsourced to India. Two years ago when the students were choosing majors, mobile device and data mining weren't the hot topics. Students really do try to figure out what's hot, but they can't predict the future years in advance.
Still, this is probably the strongest case for a real skill shortage. Who do we blame here?
Imagine a car manufacturer that decided to buy a key engine component for its cars rather than make them. The requirements for that component change every year, and if you can't get one that fits, the car won't run. What would we say about that manufacturer if it just assumed the market would deliver the new component with the specifications it needed when it needed it and at the price it needed? It would certainly flunk risk management. Yet that's what these IT companies are doing.
We'd expect the manufacturer to keep its suppliers informed about its needs, working with them as far in advance as possible to ensure that they could supply exactly what the manufacturer needed when it needed it. We should also expect employers to work with schools, to be involved in co-op programs and support students pursuing the needed courses, and to train and develop current employees for skills that are emerging. We cannot expect schools and students to guess what skills employers will need. Employers have to do more.
Dr. Cappelli is the George W. Taylor professor of management at the University of Pennsylvania's Wharton School and director of Wharton's Center for Human Resources. He can be reached at reports@wsj.com.