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Book Review: Why Good People Can't Get Jobs

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Each day, whether we want to hear it or not, we learn of more colleagues who are being laid off from investment banks, brokers, and even advisors. State unemployment rates in New Jersey and New York are again at or approaching 10 percent. While the climate for employment in our industry has selectively stabilized since 2008, many are being severed as their companies simultaneously search for the “purple squirrel”: the perfectly skilled employee who can fit right into the precise specifications of the company’s posting. “Perfect” skills may betray an “imperfect” age, job title, or current employment situation.

In his new book, Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It, Peter Capelli, the George W. Taylor Professor of Management at The Wharton School and also director of Wharton’s Center for Human Resources, not only asks questions related to this dilemma, but also provides answers. At the onset, Prof. Capelli powerfully addresses the worker–employer disconnect. Is there really a skills gap? How can the employee/employer standoff be resolved? Can employers that hold off on hiring really improve their return on investment (ROI)?

The reader comes to attention when Prof. Capelli dissects the true rate of unemployment, identifies its components and causes, and suggests remedies to lower it. While many consider it to be the sum of those collecting unemployment benefits, and possibly those who have given up looking for work, it also takes into account a factor having a major, long-term impact: productivity. He leads us through examples of this transformational element that captivate those who are currently or have recently been “in transition” and jolts the reader (and possibly hiring managers) into a bleaker, though more realistic, understanding. He clearly shows that employers need fewer employees than they did in 2008.

What about the significant mismatch of skills? A good percentage of the unemployed in declining industries could be channeled into expanding sectors. Of course, those sectors must be identified nationally and regionally. Employers tend to address short-term budgetary requirements rather than long-term human capital issues. The software-driven hiring process is called into question as well. Openings go unfilled for months, if not years, because candidates fail to match perfectly. Software often deep-sixes candidates who have the requisite skills and credentials because it does not recognize them. Admittedly, few companies know how much it really costs them to keep job vacancies open.

Little attention has been paid to the sagging investment in employee training. Additionally, according to Organisation for Economic Co-operation and Development (OECD) data (somewhat stale at a 2006 observation point as published in 2008), the US is at the very bottom in conducting vocational educational education and training as a share of the upper secondary sector at 0 percent, compared with the leader, the Czech Republic at 80 percent, the UK just over 40 percent, and Greece just under 40 percent. US employees who want to gain skills are often inhibited owing to the sheer cost of doing it, especially considering that the for-profit training industry provides 50 percent of all skills credentials in the US.

How can employer training pay off in such an environment? Employers, schools, and trade associations should consider the not-so-novel idea of training for and on the job, accomplished through workforce partnerships such as:

In-house training programs;
Employer/employee shared training programs where both bear a portion of the cost;
Public-sector/private-sector shared undertakings (companies drawn to localities where public education and community colleges support employer training needs);
Broader based alliances; and
Apprenticeship (or internship or co-op) programs.

These solutions match the best interests of both employee and employer. Investing in the employee could perhaps provide greater cost savings than executing mass layoffs. Prof. Capelli concludes that the time has come for employers to develop a more realistic sense of what their interests are with respect to workforce issues—and also to what best serves both their interests and the well-being of society as a whole.

How do Prof. Capelli’s solutions relate to us and our industry? Our business has long sought pre-trained and vetted candidates, ready to start on the first day. More recently, it has created internships so that employers can screen employees, and vice versa, as well as provide opportunities for interns to learn and make an immediate contribution to their employers.

Problems associated with software make face-to-face contact all the more important. And as careers have become so specialized, when demand declines for the specialty, so many are left to flounder rather than to utilize their skills in a different area. Prof. Capelli’s thoughts will inspire investment professionals to be aware of industry megatrends in hiring (and firing) and alert to opportunities for professional transformation.

–Janet J. Mangano
Formerly Senior Portfolio Manager, PNC Wealth

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