Academics and economists are engaged in a raging, but wrong-headed, debate about the root cause of the massive US unemployment problem. The problem is real. Roughly nine million are officially unemployed, while another 6.9 million have given up looking for a job, and we have the lowest workforce participation rate since we started measuring it. But the intelligentsia's obsession with determining whether the source of the problem is a "Skills Gap" or and "Expectations Gap" is a red herring. Neither side will win, because both gaps are real. And companies looking to succeed in this new economic reality have to address both in their hiring and training practices — or risk falling permanently into this deep Double Gap.
Why the Skills Gap is real
The evidence that we're currently in a Skills Gap is pretty clear: the number of open, unfilled jobs has been growing since 2000 and recently hit a new high at 5.4 million. And the average days-to-hire is now at a record, 22.9 days. Clearly employers are not seeing what they're looking for in the candidates coming through the door.
What's causing this mismatch? Rapid continuous innovation = large and growing skills gap. Even if educators were successful in creating curriculum relevant to current market needs, they'd need to update it at our current rate of technical change to ensure that new grads entering the workforce are ready to hit the ground running.
Even rapid adaptation in our education systems is not a fix for the whole labor pool: 60 percent of the unemployed are not freshly-minted grads. They are the Long-Term Unemployed, the Returning-to-Work Moms, and the Welcomed-Home Vets. Few of whom have the time and resources required to buy new skills training themselves – even if it were available. Their situation is dire and rapidly getting worse. According to President Obama's Council of Economic Advisors, a person who has been unemployed for five weeks or less has a 31 percent chance of landing a job. Once they've been out between 27 and 52 weeks, the odds drop to 12 percent. After a year, it's just 9 percent.
It's up to employers, therefore, to find ways to bring new grads and long-term unemployed into the workforce productively and quickly. If employers don't step up, it will fall to our government to find the means to support a large and permanent percentage of Americans with guaranteed income--an Orwellian concept which the Dutch are already trying.
Why the Expectations Gap is also real
During the recent US recession, employers dialed up their expectations of new hires and they have yet to recalibrate. When a hiring manager's new staffing and training budgets get cut simultaneously (as many did over the past five years), it’s a rational response to hold out for the perfect hire, bloating the expectations for skills and experience from day one. As a result, an increasing percentage of entry level job postings "require" a college degree, despite the fact that most employees currently doing that same job successfully don't have advanced degrees. What they do have is years of on-the-job or formal training.
The dearth of employer-provided training is just one factor driving the Expectations Gap, but it's very real. Thirty-five years ago, the average employee got 100 hours of training per year. Fifteen years later they received 10 hours; today it's less than 30 minutes. What's going on? In addition to blowing up training budgets during the Recession, average employee tenures began to plummet, particularly with the entry of the self-actualizing Millennial generation into the US workforce. Across all industries, we began to hear a common lament among hiring managers, "What if I invest in training my employees and then they all leave?" From their perspective, today's micro-tenures make investing in training a bad risk.
Lastly, there's the LinkedIn Effect. Simply because employers can specify a long and growing list of qualities, experiences and degrees as job requirements, they are. But just because you can, doesn't mean you should. Having searchable, sortable access to 350 million candidates reinforces the belief that the 'Perfect Hire' is truly out there. The result is hiring managers holding out hope…and holding out.
Don't hold out for the perfect talent. Hire for potential and train for perfection.
Playing the Expectations Gap game is a great strategy for failure. A winning strategy is to hire for attitude, and train for skill--it's proven. Just look at the '100 Best Places to Work' list. These companies generally outperform the major stock indices by 300 percent. What do they have in common? High levels of on-the-job training. My favorite retort to the Hiring Manager's Lament is an old one, "What if you don't train your employees … and they stay?!" One thing is for sure--you'll never make that Top 100 list.
Based on learnings from nearly five million courses delivered on my company’s Learning Management System (LMS), successful training programs for these three unique groups, and for our multi-generation workforce in general, have five best practices in common:
High Frequency: The speed of innovation, shortened employee tenures and our natural "forgetting curve" increasingly make training in "batch-mode" a losing strategy. Imagine if Amazon, with an average employee tenure of just one year, waited to train employees via old-school, quarterly live training sessions that lasted over a month? Sure, there are messages that are best delivered live--the company mission and culture, some salesmanship skills, etc. But training in new systems, day-to-day tasks, basic processes and the like can and should be offered online and on-demand- allowing employees to get training in small, frequent bursts, often “just-in-time”, driving higher productivity and mitigating the cost of high staff turnover, especially among Millennials.
Self-paced Learning: While always a positive, offering self-paced online training is an absolute necessity in an organization staffed by such a diverse generational and experiential workforce. Imagine the frustration felt by a Millennial sitting through the same course on "Leveraging Social Media” that a Returning Mom is also taking or that a Veteran Sergeant might experience sitting through "Your First Management Role" with a Millennial. It’s critical to pre-test and place individuals in the right course level, and provide trainees the option to demonstrate proficiency by "placing out” of some skills training. This is particularly effective when hiring from non-traditional sources. For example, fully 80 percent of military jobs have a civilian equivalent, but the challenge is often understanding and demonstrating the skills that vets have already acquired. The answer: pre-test and “place out” by articulating skills in civilian terms. It's more efficient and more motivating--both keys to retention across all of these populations.
Blended Learning: The best training programs allow the message to drive the medium: live training accompanying online training to create a blended learning environment. The undeniable success of the Khan Academy demonstrates this. Learning environments feel more productive--even enjoyable--when we provide self-paced instructional materials online that are easy to access and review, and restrict the expensive face-to-face time for coaching or broader concepts and strategies. Shrewd trainers, facing a large and diverse set of trainees, should examine the nature of the content and tailor the delivery mechanisms accordingly.
Rapid Deployment and Refreshment: Back in the day, companies might have had the luxury of months to produce a training course on a new product, competitive strategy or pricing changes. They might even get away with updating hard skills training only every few years. That's no longer realistic. How can trainers produce and deliver courses three times faster? Using new rapid content creation tools like Wirewax or HaikuDeck will help significantly. Caveat to this route: Let it go. Trainers must make the same transition as Hollywood and Madison Avenue and accept that sometimes the less polished, more authentic user-generated content engages and persuades better than big budget, professionally produced material.
Leveraged Worker Preferences and Talent: Companies including Zappos and GE are using job rotation as a training tool. The rotation mimics the job-hopping tendencies of Millennials, keeping them engaged and continually exposing them to new learning opportunities. Some very modern employers are taking a lesson from history, and creating apprenticeships within their organizations. This can be an especially powerful tactic within multi-generational and diverse workforces. Imagine pairing a Vet with a Millennial to coach on strategy and leadership skills; pairing a Millennial with a Returning Mom to mentor on webpage design. By leveraging the diverse skills of trainees, trainers deliver exponentially more personalized training at a fraction of cost. There's a retention payoff too: a recent study reveals that millennials prefer mentoring more than the generations before them with 67 percent reporting that having a "great mentor" at work is very important.
Bottom line: this is going to come down to simple math. The Millennial generation is the largest since the Baby Boomers. By 2020, when they comprise the majority of the US workforce, hiring managers will have even fewer experienced and skilled candidates to choose from than they do today. Plus, competition for the small and declining pool of skilled workers (older than Millennials) will be fierce. Employers unwilling or unable to pay top dollar will eventually hire from the pool of long-term unemployed, like those Moms, and from populations they haven’t typically tapped, such as Veterans, and then play catch up to design efficient and effective training for them.
The silver lining around hiring for attitude? Employee engagement, satisfaction and retention will actually rise. That’s right: even our highly-educated Millennials, 79 percent of whom hold at least a bachelor's degree, place a huge priority on growing and learning new things with an astonishing 88 percent willing to pay for training out of their own pocket . As more companies take this Hire for Attitude/Train for Skill approach, we will inevitably end up with a higher average skill level and a more current set of skills across the US talent pool. Which is something academics and economists can and should actually agree is a good thing.