Workforce Readiness & Skills Shortage Report · 15-0308 Workforce Readiness & Skills Shortage...

SHRM Research: Workforce Readiness and Skills Shortages

15-0308 Workforce Readiness & Skills Shortage Report.indd 1 6/11/15 1:38 PM

There may still be some disagreement among economists over whether skills shortages are having a signifi cant effect on hiring, but SHRM research suggests that many HR professionals are having trouble fi nding applicants with the right skills and qualifi cations for a substantial number of jobs. Defi ciencies range from basic skills, such as written communica-tion, to applied skills like problem-solving and collaborative thinking, and lack of expertise in math and science. SHRM and its members are actively working to close the skills gap, but this effort will take time and most likely additional investment by local, state and federal government as well as employers.

Executive Summary


Help Wanted, Along with Higher SkillsHR professionals say recruiting a wide variety of candidates for their job openings has become more diffi cult, with particular problems experienced in recruiting for STEM (science, technology, engineering and math) fi eld jobs.

■ SHRM’s monthly Leading Indicators of National Employ-ment® (LINE®) report shows a continuous rise in reported recruiting diffi culty for jobs of most strategic importance, recently reaching levels not seen since before the recession of 2007-2009, as shown in Figure 1.1

■ According to SHRM’s Economic Conditions Survey Series, nearly three out of four respondents (72%) had diffi culty recruiting for open positions in engineering. Employers were also having diffi culty fi lling many other STEM jobs (see Figure 2).2

■ Lack of technical skills, competition from other employers and lack of work experience are key reasons HR profes-sionals are having diffi culty fi lling jobs (see Figure 3).

■ Three out of fi ve HR professionals (60%) in the manu-facturing industry say they are having overall recruiting diffi culty for their full-time openings (see Figure 4). More than one-half of health care/social assistance respondents and HR professionals in the high-tech industry report the same diffi culty.

■ HR professionals say the most common skills that 2015 college graduates are lacking are professionalism/work ethic, writing in English and relationship building/soft skills.3

Figure 1. Recruiting Diffi culty in the Manufacturing and Service Sectors

-‐40

-‐30

-‐20

-‐10

0

10

20

30

40

Jun-‐05 Dec-‐05 Jun-‐06 Dec-‐06 Jun-‐07 Dec-‐07 Jun-‐08 Dec-‐08 Jun-‐09 Dec-‐09 Jun-‐10 Dec-‐10 Jun-‐11 Dec-‐11 Jun-‐12 Dec-‐12 Jun-‐13 Dec-‐13 Jun-‐14 Dec-‐14

HR Professionals' Recrui1ng Difficulty in the Manufacturing and Service Sectors

Manufacturing recrui:ng difficulty Service sector recrui:ng difficulty Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14

Source: SHRM Leading Indicators of National Employment (LINE) Report historical data. See shrm.org/line for more information.

Manufacturing recruiting difficulty Service-sector recruiting difficulty



Figure 2. Job Categories Organizations Have Had Diffi culty Recruiting

Engineers 72%

High-skilled medical 69%

IT/computer specialists 69%

Scientists 67%

Managers and executives 65%

High-skilled technicians 63%

Skilled trades

Sales professionals

55%

54%

Source: 2014 Economic Conditions—Recruiting and Skills Gaps (SHRM, 2014)


Figure 3. Reasons Behind Organizations’ Diffi culties in Hiring for Full-Time Regular Positions (All Industries)

Candidates do not have the right technical skills 50%

50%

50%

43%

40%

39%

37%

29%

27%

26%

16%

16%

15%

15%

12%

11%

8%

7%

Competition from other employers

Candidates do not have the needed work experience

Low number of applicantsThe local market is not producing enough work-

ready/qualified job candidatesCandidates do not have the right professional skills

Qualified candidates reject compensation package

Candidates do not have the needed credentials/certifications

Candidates do not have the right workplace (soft) skills

Qualified candidates are not interested in moving to our local area

Candidates do not have the right basic skills

Candidates do not have the needed training/basic skills

Lack of interest in type of job/training

Candidates are overqualified

Candidates do not have high enough levels of educationQualified candidates are not able to move to our

local area (due to mortgage or other issues)Our organization does not provide relocation funds

Qualified candidates reject benefits package

Other

22%

Source: 2014 Economic Conditions—Recruiting and Skills Gaps (SHRM, 2014))



The types of basic skills that are lacking among applicants cover a broad spectrum:

■ More than two out of fi ve HR professionals (42%) indicate that applicants do not possess basic computer skills.

■ Thirty-one percent say applicants have insuffi cient skills in writing in English.

■ Twenty-six percent say applicants lack basic skills in spoken English (see Figure 5).

HR professionals also have concerns with gaps in applied skills:

■ Forty percent say applicants have gaps in critical thinking/problem-solving.

■ Thirty-eight percent say there are gaps in professionalism/work ethic (38%) among applicants.

■ Thirty-four percent are fi nding skills gaps in applicants’ leadership skills (see Figure 6).

SHRM’s Aging Workforce Research Initiative, conducted in collabora-tion with the SHRM Foundation and underwritten by a grant from the Alfred P. Sloan Foundation, suggests that some organizations may look to retain their 55-and-older segment of the workforce as a way to deal with skills shortages. HR professionals were asked about the strongest basic skills held by employees age 55 and older compared with other workers. Forty-fi ve percent of respondents cited “writing in English” (e.g., grammar,

ADDRESSING THE BASIC SKILLS GAPSHRM member Eileen Shue, VP of corporate resources at Sterling Group in Mishawaka, Indiana, is focused on combating skills gaps in the construction and real estate industries in her region. Her approach: hiring people who may not meet every qualifi cation for a job, but who have the right disposition and willingness to learn. Shue manages the skills levels of work-forces across numerous locations. During the Great Recession, her job became incredibly di� cult, with approximately 2,000 applications submitted each month for only about 20 open positions. Most job seekers could not pass the company’s basic maintenance exam, and countless others failed the drug test. At that point, Shue convinced company o� cials to conduct a “corporate values inventory.” Members of Sterling’s executive leadership group came up with a list of items, ranked them by importance and started to hire people who most closely matched those values and skill sets. The company also uses a learning management system that involves a mix of training options. Although there were concerns regarding the costs associated with the extra training, the alternative was high turnover rates and damage to the performance of the business.

“We won’t fi nd perfect people any more—those days are gone. But if you fi nd the best possible candidates and you train them internally, that is your best approach.”

Eileen Shue, VP of corporate resources at Sterling Group, Mishawaka, Indiana

Figure 4. Employers Experiencing Recruiting Diffi culty for Full-Time Openings

Manufacturing

60%

Health care and social assistance

56%

High-tech

56%


Figure 5. Basic Skills Gaps Among Job Applicants Across Industries

Basic computer skills 42%

Writing in English (e.g., grammar, spelling) 31%

English language (spoken) 26%

Reading comprehension in English 17%

Mathematics (computation) 15%

Source: 2014 Economic Conditions—Recruiting and Skills Gaps (SHRM, 2014))



Figure 8. Employers Off ering Educational Assistance Benefi ts

2014 2015

Undergraduate educational assistance

54% 56%

Graduate educational assistance

50%52%

Source: 2015 Employee Benefi ts: An overview of employee benefi ts o� erings in the U.S. (SHRM, 2015)

Figure 6. Applied Skills Gaps Among Job Applicants Across Industries

Critical thinking/problem-solving 40%

Professionalism/work ethic 38%

Leadership 34%

Written communications 27%

Teamwork/collaboration

Oral communications

25%

22%


spelling).4 When asked about the strongest applied skills possessed by the 55-and-older demographic, nearly three out of fi ve (58%) said “profes-sionalism/work ethic,” and another 28% cited “critical thinking/problem-solving.”

The Need for TrainingTraining is a critical component to addressing skills gaps. There was a downturn in company investments into many forms of workforce devel-opment and job training between 2013 and 2014, but that trend reversed for some benefi ts from 2014 to 2015.

■ Employers’ participation in a variety of professional and career development benefi ts rose slightly from 2014 to 2015 (see Figure 7).

■ Although many of these benefi ts are still offered at a high rate among employers, offerings in several categories have remained fl at or dropped slightly compared with fi ve years ago, including on-site and off-site professional development opportunities and cross-training to develop skills not directly related to the job.5

■ Slightly more than one-half (56%) of companies offered undergraduate educational assistance for employees in 2015, about the same as in 2014 (54%).

■ Slightly more than one-half (52%) of organizations said they offered employees graduate educational assistance in 2015, about the same as in 2014 (50%), as shown in Figure 8.

Figure 7. Employers Off ering Professional and Career Development Benefi ts

Professional memberships 75%67%

On-site professional development

78%72%

Off-site professional development 78%

81%

Certification/recertification fees 61%

67%

Professional license application or renewal fees

91%85%

2015 2014

Source: 2015 Employee Benefi ts: An overview of employee benefi ts o� erings in the U.S. (SHRM, 2015)


The Drive for Higher Skills Is Set to ContinueMost HR professionals do not expect the skills shortages issue to go away in the foreseeable future:

■ Nearly three out of four respondents (73%) said skills shortages will “have a major impact” on the workplace during the next fi ve years, according to the SHRM Workplace Forecast.6

■ Meanwhile, expectations for the needed education and credentials across job categories are expected to rise, with HR professionals saying they expect their organization’s needs for employ-ees at higher educational levels to either increase or stay the same in the next three to fi ve years (see Figure 9).

■ This fi nding indicates that not only will the next generations of workers need to meet the educational levels of the exiting Baby Boomers, but in many jobs they will actually have to surpass them (see Figure 9).7


Figure 9. Expected Changes in Organizations’ Needs for Employees’ Education Levels

Advanced degree (e.g., master’s, MBA, Ph.D., M.D., J.D.)

56%3%

41%

Bachelor’s degree

Associate’s degree

Specific postsecondary certificate/credential(s) only

High school diploma or equivalent only

43%

67%

62%

68%

2%

7%

5%

16%

55%

25%

32%

16%

Decrease Stay the same Increase

Source: Changing employee skills and education requirements—Changes in the workforce (SHRM in collaboration with Achieve, 2012)

It took a renewed emphasis on in-house training, community partnerships and an overhaul of its recruiting strategy, but Midwest manufacturer Kaman Composite Structures, based in Wichita, Kansas, appears to be winning its battle against the skills gap. According to Kathy Jewett, the company’s human resources and safety manager and SHRM member, the company needed a new approach during the economic downturn in 2008. Although Kaman was not conducting large-scale hiring at that time, candidates who applied for open positions frequently fell short of the jobs’ requirements. To address these gaps, the company met with members of the Wichita Work-force Center, part of the national network of “one-stop” career development and job placement services (also known as the American Job Center system). Jewett learned about a number of training programs in the Wichita region, and then joined a local manufacturing technical education council. From there, the company partnered with Wichita Area Technical College, which o� ers 75 programs of study, including the aerospace manufacturing technol-ogy degree that is frequently sought by companies like Kaman. Through that collaboration, Jewett and others are personally involved in forming the curriculum so that students will be prepared to address the private sector’s needs when they graduate. Kaman o� cials also established the ACT Work-Keys program to act as an assessment system that measures employees’ basic skill levels with three testing areas that workers are required to pass:

reading for information, locating information and applied mathematics. Since the company began using WorkKeys in 2008, the vast majority of its workers have passed the test and have remained with the organization. The company maintains a “skills matrix” with every employee’s level of expertise and conducts cross-training to make sure that workers in di� erent departments can handle their colleagues’ jobs in an emergency.

“We do lose people to the bigger companies from time to time because those big fi rms know we do an excellent job with training. But we have retained the majority of our employees. We place a heavy emphasis on training, not just when you’re hired. We feel that it’s a lifelong exercise. You really never stop learning.”

Kathy Jewett, human resources and safety manager,

Kaman Composite Structures, Wichita, Kansas

LEVERAGING COMMUNITY PARTNERSHIPS TO BRIDGE SKILLS GAPS



How HR Professionals Are Getting Involved It will take a multipronged approach to solve the current skills gaps that HR professionals have identified. Stronger internal training programs may address the skills shortage, and these initiatives may result in promo-tions from within, as well as allow exist-ing employees to land those hard-to-fill positions. But tighter training and educa-tion budgets combined with higher and new skills requirements for jobs may also drive a greater need for collaboration with local, state and federal training programs to reduce training and skills development costs and to build stronger local skills develop-ment systems that benefit both job seekers and employers.

Following overwhelming bipartisan support in the Senate and House, the Workforce Innovation and Opportunity Act (WIOA) was signed into law by President Obama on July 22, 2014. SHRM supported this legislation to reform the federal job train-ing system and sent a joint support letter

to Congress with its affiliate, the Council for Global Immigration. The new law is designed to modernize the federal work-force development system, with its expansive network of American Job Centers (also known as one-stop centers). The American Job Centers located across the country can help employers address talent management needs by posting job openings, screening applicants onsite and working to develop local training programs to meet the needs of employers in the region.

In addition, the WIOA provides the opportunity for HR professionals to partner with state and local workforce investment boards, which oversee much of the strategic direction and prioritization of federal employment and training dollars in the local community. HR profession-als continue to get involved in their local investment boards, become members of these important boards, and work in their local chapters to uncover and highlight local skills shortages.

SHRM will continue to increase member awareness regarding the WIOA implementa-tion and how HR professionals can benefit from the new law. The U.S. Department of Labor’s Employment and Training Admin-istration (ETA) WIOA resource page (www.doleta.gov/WIOA) is a helpful resource for SHRM members who would like to learn more. In addition, official ETA guidance on the WIOA will be posted on ETA’s advisory website (http://wdr.doleta.gov/directives).

SHRM will remain engaged in the imple-mentation of the WIOA and will submit comments on proposed regulations to make sure the needs of HR professionals are rep-resented throughout the regulatory process.

Keeping members aware of the latest resources that help them become more involved in building workforce readiness in their communities is central to these efforts as well as learning from our members’ suc-

cesses and sharing their stories.

Endnotes1 Society for Human Resource Management. Leading indicators of national employment (LINE) monthly employment report (historical data). Retrieved from www.shrm.org/line

2 Society for Human Resource Management. (2014, October). 2014 economic conditions survey series. Retrieved from www.shrm.org/research/surveyfindings/ articles/pages/shrmpolltheongoingimpactoftherecession.aspx

3 Society for Human Resource Management. (2015, April). The hiring of 2015 college graduates. Retrieved from www.shrm.org/research/surveyfindings/articles/pages/shrm-hiring-college-graduates-2015.aspx

4 Society for Human Resource Management. (2015, January). The aging workforce research initiative. Retrieved from www.shrm.org/research/surveyfindings/pages/aging-workforce-research-initiative.aspx

5 Society for Human Resource Management. (2015). 2015 employee benefits: An overview of employee benefits offerings in the U.S. Retrieved from www.shrm.org6 Society for Human Resource Management. (2013, May). SHRM workplace forecast. Retrieved from www.shrm.org/research/futureworkplacetrends/pages/ topworkplacetrends2013.aspx

7 Society for Human Resource Management in collaboration with Achieve. (2012, October). Changing employee skills and education requirements—Changes in the workforce. Retrieved from www.shrm.org/Research/SurveyFindings/Articles/Pages/SHRM-Achieve-Future-Changes-Workforce.aspx


About SHRMFounded in 1948, SHRM is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 a� liated chapters within the United States and subsidiary o� ces in China, India and United Arab Emirates. SHRM is an active member of the North American Human Resource Management Association and the current secretariat for the World Federation of People Management Associations.

About SHRM ResearchSHRM Research, as part of the Knowledge Development division supporting SHRM and its members, produces high-quality, leading-edge research on human resource management issues and trends, the economy and the workplace for the purpose of advancing the HR profession. SHRM Research acts as an advisor to SHRM and generates and publishes research used by human resource professionals and other business leaders to develop their knowledge and to provide strategic direction to their organizations.

This report is published by the Society for Human Resource Management (SHRM). All content is for informational purposes only and is not to be construed as a guaranteed outcome. The Society for Human Resource Management cannot accept responsibility for any errors or omissions or any liability resulting from the use or misuse of any such information.

© 2015 Society for Human Resource Management. All rights reserved.

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Workforce Readiness & Skills Shortage Report · 15-0308 Workforce Readiness & Skills Shortage...

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