Eliminate Skills Gaps with Talent Management

Posted by Dr. Robert A. Chamberlain, Jr.

Feb 29, 2012 3:29:00 PM

eliminate skills gaps with talent management

A recent (17 February 2012) CNN.com opinion post by Jeffrey Bergstrand—"Nostalgia for factory jobs that will never come back"—accurately alludes to some of the issues facing those organizations attempting to attract and retain talented employees even though Bergstrand's main thesis has less to do with talent management than with a broader range of cultural concerns.

Bergstrand argues that a type of cultural nostalgia currently exists for the period from 1950 to 1973, a period of great economic growth in the United States, certainly, but, perhaps more important, a period in which vast numbers of the population—essentially everyone—appeared to be contributing to this economic growth and earning rewards commensurate with that contribution as wages and salaries increased. In other words, people worked hard, but they were paid well enough to advance economically—to purchase homes, to enjoy some leisure activities, and to educate more fully their children. But this economic advancement was built on manufacturing, and, as heavy industries—such as automotive manufacturing—have declined, so have the individual economic benefits enjoyed by participants of that economy. The economy, and the culture, is different now. To reduce expenses, companies are perceived to have shipped manufacturing jobs overseas to developing economies where labor costs are cheaper and corporate profits are higher.

Of course, in the wake of General Motors having earned record profits for 2011, manufacturing industries appear to have rebounded to an extent. But, as Bergstrand notes, the rebound is less an upswing than a slowing of manufacturing's decline. As China has moved from the category of "developing" to "developed" nation, costs of doing business within that vast country have increased, a fact that makes home-grown American production far more attractive, for the moment. Ultimately, though, it is just a matter of time before manufacturing corporations that are able to do so find a way to locate facilities where operating costs are cheaper, a list of places that may include Latin America, other parts of Asia, and Africa.

Lost amid Bergstrand's ultimately excellent analysis, however, is the clause "able to do so."

A lot of organizations have and continue to shift all or certain parts of their operations out of the United States when doing so enables a competitive advantage, but, for whatever reason—supply chain management, political stability, favorable tax structures—many manufacturing concerns—even in heavy industries—continue at least partial operations in the United States. In "Heavy Metal Is Back: The Best Cities for Industrial Manufacturing," Joel Kotkin notes that the industrial base in the United States has not only seen recent growth but maintains a global market share equivalent to what it had in "the 1970s." But, like Bergstrand, Kotkin acknowledges that the heavy metal industries of today are not our father's heavy industries, where unskilled laborers working on an assembly line earning high wages every year. Rather, industries such as textiles, professional equipment manufacturers, chemical producers, and printing and publishing services require mid- to high-skilled workers in, for example, precision production, craft, and repair operations. And the problem is that these industries can usually not find sufficiently qualified personnel to perform these duties.

In a recent (26 November 2011) Wall Street Journal article—"Help Wanted: In Unexpected Twist, Some Skilled Jobs Go Begging"— Ben Casselman cites a Deloitte Touche survey reporting that "83% of manufacturers reported a moderate or severe shortage of skilled production workers to hire" and details the problems in recruiting personnel experienced by Union Pacific Corporation and AAR Corporation. The origin of this problem, Casselman's article notes, lies in several factors that include the decline of vocational training programs in high school (an apparent affirmation of Matthew B. Crawford's book Shop Class as Soulcraft: An Inquiry into the Value of Work) but also a reduction of training programs offered by both companies and unions. Casselman describes in almost sadistic detail the palpable anxiety of company recruiters panicking as they visualize their own unmet quotas.

We should supposedly feel some sympathy for these headhunter types.

We do feel sympathy for them, but only as human beings whose own organizations have placed them in an untenable position. If they fail, the fault for their failure lies not with them but with those upper-level managers who have ignored a developing issue until that issue became a serious problem. Casselman notes that demographics are working against companies. Railroads last hired persons in large numbers in the late 1970s; did they think those people were going to work forever? Union Pacific apparently expected very nearly 10% of its workforce to retire in 2011. Even those organizations successfully able to retain workers nearing retirement for a while are merely delaying the inevitable and may be intensifying the effect of labor loss by concentrating it into a shorter time span.

The problems these organizations face have a simple solution. The solution may not be easy, but it is simple. Faced with a talent shortage, businesses have essentially three options. First, they can buy the talent, beating the bushes for skilled personnel who are apparently—according to Casselman—not always available. The problem with purchasing talent, as such firms as Union Pacific and AAR have apparently discovered, is that these businesses become dependent on other organizations, such as high school or technical and community college programs, to produce workers with needed skills; if those sources are inadequate, then the talent the businesses seek may not be available, at least at an affordable cost. The second option businesses have is to rent the talent they need, usually by outsourcing their needs through another organization. The problem with renting, or outsourcing, is similar to that of purchasing talent: it makes the firm that needs the talent depend on sources that may or may not be available, at least at an affordable cost. Additionally, if the organization has not already outsourced its needs, it likely has discovered that renting talent is not an option. For all the concern generated about outsourcing and the loss of American jobs, the simple fact is that not all labor is exportable. The final, third option businesses have to locate talent is to make it, to train or re-train associates already within the organization to perform additional or new duties, perhaps as the organization phases out old operations. The problem with making talent is that a company has to be aware of what skills it needs or will need, what skills it has, and who can be most cost effectively retrained to assume new, presumably more complex roles. With the more complex roles fulfilled, recruiters can then focus on hiring personnel to replace those associates who have moved to new positions. In other words, making talent requires organizational personnel responsible for staffing positions—presumably individuals in human resources management—to do their jobs, preferably before the staffing situation becomes critical. These jobs have likely changed over the past generation, becoming in some ways more difficult and in some ways easier, but so has virtually ever other organizational role of any complexity. The problem is that persons responsible for staffing have not recognized the changes or, at least, have chosen not to deal with them.

Jeffrey Bergstrand's CNN.com opinion post closes with the observation that improving the American educational system is the key to restoring this nation's economic future, and Bergstrand is correct. But one way of improving the educational system is for the American culture to realize that education does not stop after high school or college or even graduate school. Education is a life-long endeavor both inside and outside the classroom. Part of that education now involves the need for everyone to learn new skills in a constantly changing business environment.

Learning Management

Topics: Learning Management