A couple of weeks ago I served on a panel for the Federal Reserve Bank of Atlanta discussing some issues surrounding the impact of the recent recession on the chronically under-employed and unemployed. The following is a summary of what I shared.
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First, we need to understand the concept of full employment and why a 6% to 6.5% unemployment rate is considered full employment. When our working population reaches these levels, while there are some people who are in transition (family member transferred, finishing school, etc), the majority of this group are people who do not possess the kinds of skills that are necessary to hold a job. These skills fall into two categories, the first being Technical skills These are skills ranging from low-tech, such as welding and heavy equipment operations, to mid-tech, such as machining and manufacturing machinery operations, to high-tech, such as computer software development, medical, and bio-science. These skills can be acquired on the job, but in a labor market where there are plenty of employees looking for work, most employers aren’t willing to make this kind of investment.
The second type of skills provides a potential employee with the ability to acquire the technical skills. These are Fundamental Skills, and include: basic reading, writing and math skills; interpersonal skills; and basic safety awareness skills. Research by McBassi & Associates reveals that those organizations investing in these types of training see the biggest return on their training dollar investment. This isn’t surprising, especially when according to the National Adult Literacy Survey (NALS) conducted by Educational Testing Service indicated that 40% of the workforce population have literacy skills that are at or below high school levels. There is no surprise that this corresponds to our national graduation rate of roughly 30%. Furthermore, the NALS research found that those who were unemployed were more than 7 times more likely to have lower literacy levels than those who were employed.
So given some of these numbers it isn’t surprising that we would have a population that would tend to experience long-term unemployment. As our work world becomes increasingly complicated, with even simple jobs requiring rudimentary computer skills, menial labor jobs become increasingly scarce. When people lack the basic skills needed to acquire the technical skills needed to do a job, then even on the job training isn’t an option.
Now let’s take a look at some of the labor history that led up to the recession and beyond. As I shared in a previous post (see The War for Talent Continues), in the mid-2000’s we were looking at a looming shortage of employees by the time we would get to 2010. The War for Talent was at full tilt, as employers were scrambling to fill positions with good employees. Unemployment dipped down to 5% and stayed there, and in some states it even dropped down into the 4% ranges. Given the theory of full employment, this meant that many people who simply did not have the skills necessary to hold and keep a job were employed. But with a hot economy, employers needed people to fill positions, often not being picky about whom they hired. But as employees struggled in their jobs they often just moved on, moving from job to job as employers continued to hire unskilled labor and was unsuccessful at training them. These workers simply moved on to the next employer. That is, until the recession hit.
As economic conditions worsened in 2007 and 2008, employers began shedding positions and workers. At first, it was indiscriminate, as skilled and unskilled employees alike were let go. As the situation began to stabilize, employers realized that they still needed skilled employees to keep their operations going. They began to scramble to find those key employees, and even with the unemployment rates hitting above 10% around 2010, employers still could not find the skilled employees that they sought. The prediction that we had made about 2010 was coming true, but for entirely different reasons. It wasn’t because there were more positions than employees to fill, but rather that there were too few skilled employees to fill the positions that were available. As a result, the War for Talent really never stopped, and is still raging.
With an unemployment rate today of about 7.5%, we continue to edge closer and closer to that full employment rate, which may be at a higher level now that most jobs require some level of technical skills. But as researchers from SHRM suggest, as the millennial generation increases its numbers in the workforce we see this generation having a much greater number of minorities in this age group. Unfortunately, minorities have a far lower graduation rate, leading to a larger proportion of workers having lower levels of Fundamental Skills. While some school systems are attempting to increase interpersonal skills, until we also increase literacy skills employers will still be scrambling to find good employees who they can provide on the job training for the technical skills.
So what can an employer do to find and keep the highly skilled workers that it needs? First, it needs to realize that recruiting doesn’t start when a position becomes vacant. No matter what size you are, you should constantly be looking for good people that you might like to ask to join your organization in the future. Don’t just look for those who are currently in the workforce. Get creative. Look for those who might be physically challenged (see the Business Leadership Network for help in this area; www.usbln.org). Look for those who are just starting college by networking with college career centers.
Get involved with your local school districts. Look way out into the future of your organization and share your concerns, along with other employers with your school district. Go to career days at high schools and middle schools and encourage students to take the classes that will allow them to work for you. Maybe even higher some students part-time and insure that they actually do learn those skills by teaching them to them yourself. I know that I learned a great amount from my experience working part-time as a student from the time that I was 14 until I graduated from college, with some of that experience even still helping me today.
Finally, create a workplace that is a place where employees want to come to work and stay with you. Pay them well, but don’t use pay as a method to attract employees. Higher pay and benefits aren’t what attract the best employees, although you do need to be competitive. If you compete on these areas alone, then you must be the best, and you will only keep your talent for as long as you pay the best. What’s worse is that they won’t be performing at their best all the time, because pay is their only motivator. The best organizations do pay well, but typically in the 60th percentile of all employers
Instead of relying on pay to attract great employees, the best organizations engage employees by offering them great work in a great work environment. What do you have to do to accomplish this? Put People, not profits, first in your organization. When you put People first it is amazing how much more profits you will receive. Build Trust with your employees. Provide challenging work. Make a connection from what people do to what matters to them and what they do best. Knowing that their work is important and makes a difference is critical for getting employees engaged. Give them an opportunity to grow, and allow them to make the important decisions about their jobs.
These approaches leverage the Diamond of Engaged Performance™, a sub-set of elements from the Seven Elements of High Performance™. It allows you to find the employees you need today while also focusing on the future employees you will need for tomorrow. You must get involved and take an active, intentional approach to dealing with the War for Talent, as I don’t see it diminishing any time soon. As the unemployment rate continues to drop, this is going to be the only way to compete in an economically viable way.
Make a Great Day!