Skills Shortages Causing Recruiting Difficulties

February 20, 2019 – The U.S. is facing a growing skills gap that threatens the nation’s long-term economic prosperity.

The workforce simply lacks enough workers and skilled candidates to fill an ever-increasing number of high-skilled jobs.

Seven million jobs were open in January, but only 6.3 million unemployed people were looking for work. As the country nears full employment, businesses face an even greater talent shortage that will have a stifling impact on the economy and global innovation. The effects on recruiters will be profound.

Several factors contribute to the skills gap: low unemployment, new technologies and competition in the global landscape. The fastest growing sectors of the economy — healthcare and technology — require workers with some of the most highly specialized skills. The talent gap is also visible in the trades, middle-skilled jobs and high-skilled STEM jobs. The skills businesses say are most lacking include data analysis, science, engineering, medical and trade skills such as carpentry, plumbing, welding and machining.

Business and HR leaders view the skills shortage as a top concern that needs to be addressed. Among HR professionals, 83 percent of HR professionals said they had difficulty recruiting suitable candidates in the past 12 months, according to new research from the Society for Human Resource Management (SHRM). The findings highlight the urgent need to address the training of workers and improve public-policy governing work.

“A majority of Americans (63 percent) believe what employers facing difficulty in recruiting have known for some time — there is a skills shortage in the workforce,” said Johnny C. Taylor Jr., president and chief executive officer of SHRM. “What is now clear is that innovative thinking and resolute action are needed, and public policy must change.”

Widening Skills Gap

According to the SHRM report, 52 percent of HR professionals said that the skills gap has worsened or greatly worsened in the past two years. Additionally, 83 percent said they have noticed a decrease in the quality of job applicants, with one-third citing a lack of needed technical skills.

The gap is evident in the trades, middle-skilled positions and highly skilled STEM positions.

• Carpentry, plumbing, welding and machining are the technical abilities most lacking in the workforce.
• Data analysis, science, engineering, medical and finance are other areas in short supply.

The survey found a contrast between the most common remedies used by employers to address the talent shortage — expanding advertising and outsourcing recruiting, among them — and those that HR professionals say are the most effective:

• Providing onsite training to employees (seminars and training programs).
• Starting or expanding training programs to help improve skills of new hires.
• Providing offsite training to employees (workshops and development programs).
• Increasing compensation.

Building a Pipeline

Other remedies identified by SHRM include better preparing the youngest workers through collaboration with educational institutions and recruiting from nontraditional sources such as people with criminal backgrounds and military veterans.

Talent Shortage or Just Short-Sighted Recruiting?
Articles about today’s talent shortage seem to be popping up everywhere, which is not surprising when unemployment in the U.S. is at its lowest since 1969. And with over six million jobs remaining vacant each month, the looming retirement of Baby Boomers will undoubtedly escalate the war for talent.

More than one-quarter of HR respondents said their businesses collaborate with schools to build a pipeline of job candidates. But almost one-half believe that the education system has done very little to help address the issue.

For some jobs with labor shortages, employment-based immigration is the right remedy. A majority (85 percent) of HR respondents to the SHRM Employment-Based Immigration Survey said it was very important to recruit workers regardless of their national origin.

As the U.S. workforce continues to age, and the skills gap continues to widen, employment-based immigration becomes increasingly relevant. “Our research shows that while it is not the only solution to bridge the skills gap and help employers staff difficult-to-fill positions, hiring foreign-born workers can be extremely effective and may be the right choice for highly specialized positions that can take months or years to fill with domestic candidates,” SHRM said.

Related: This Recruiter’s Top Five Secrets for Landing Candidates

While about three-quarters of survey respondents said foreign-born workers contribute positively to U.S. economic growth and help drive innovation, more than one-third said their businesses were challenged by an insufficient number of employment-based visas, such as H-1Bs, to recruit these workers. Additionally, one-third said the employment-based immigration process was lengthy and complex with unpredictable results.

Respondents also called for the removal of roadblocks to ensuring a legal workforce. What is needed now, according to HR professionals:

• More employment visas: 33 percent of those who use work visas in recruiting said that more are needed to recruit, hire, transfer and retain talented employees.
• Mandatory E-Verify: 81 percent said they support a national, entirely electronic system that accurately confirms identity for employment and combats identity theft.

• Trusted Employer Program: 56 percent said they approve its creation for low-risk, immigration-compliant employers.

What Executive Recruiters Are Saying

“Obviously the talent shortage is real, but an outdated approach to acquiring talent may be a root cause behind the large discrepancy between available jobs and employees to fill them,” says a new report by J. James O’Malley, managing director at Stanton Chase International. “I would argue that building a talent pipeline in response to today’s tight market requires companies to create a more contemporary candidate experience,” Mr. O’Malley said. “But contemporary does not mean simply developing a faster hiring process or using automated tools to assess applicants.”

“Instead, I would encourage hiring managers to closely focus on the candidate throughout the hiring process and develop methods that will help identify the best candidates and lead to smarter hiring decisions,” he said.

Related: Getting the Right Senior-Level Candidates on the Radar

“Over the next five years, an array of issues will test the mettle of companies and executive recruiters,” said Frank Schelstraete, chairman of InterSearch. “Key challenges will definitely be related to demographic change.” Increasingly, he said, the retirement of Baby Boomers will cause “a leadership and legacy knowledge gap in a number of industries in mature markets” – and a lack of suitable candidates for such positions.

“Such changes will demand increased collaboration between research centers, and industry will be required to ensure the candidate pool with the rights skills and experience is available for evolving business needs,” said Mr. Schelstraete.

Seven Tips to Find Great CEO Candidates
When determining a CEO’s suitability, companies should remind themselves that no candidate is perfect. The goal is to understand the trade-offs among the candidates’ strengths and weaknesses, and to ensure that prospects’ are not in areas that are especially critical for company performance.

Given that the war for talent has no boundaries, he said, globalization and technology disruption will no doubt have a significant effect on candidate mobility. “The percentage of global executive searches has increased across many regions and a collaborative approach to global talent provides a competitive advantage to any search firm,” said Mr. Schelstraete.

A recent report from McKinsey Global Institute found that 35 percent of the 247 million people who live outside their country of birth are highly skilled migrants with at least a tertiary education. “What’s more, migrants are typically significantly more qualified than the native population,” said Mr. Schelstraete.

Related: 7 Savvy Recruiting Tips for Uncertain Times

“Finding, engaging, and retaining the right people is the biggest differentiator and challenge today in the marketplace,” said Simon Wan, CEO of Cornerstone International Group. “At Cornerstone, we put special emphasis at business and coaching experience of the lead consultants and partners at Cornerstone, backed by technology and shared best practices. We provide personal attention and the clout of a global organization.”

He also doesn’t believe that the work is done when the candidate is hired. “Past research has shown as many as 40 percent of executive hires fail within 18 months,” said Mr. Wan. “To overcome that, we provide services through two gateways: Our executive search professionals use a five star search approach and our leadership development team supports new hires and builds leaders through assessment, reinforcement and ongoing executive coaching.”

This, he said, backs up the recruiting challenges in a powerful way, before the search, during the search, and after the engagement. “Onboarding the new hire is essential to getting a rapid contribution to the bottom line,” said Mr. Wan. “But it doesn’t stop there. The speed with which technologies, processes and strategies evolve calls for a constant updating of leadership skills and expectations.”

Related: Close the Book on Searches and Hire the Best Candidates Quickly

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media