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Dissecting the Skills Gap

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | August 22, 2014


There’s a skills gap. At least, that’s what I keep reading in every major news outlet and business publication. The US Chamber of Commerce and several consulting firms have underscored the impact the skills gap is having on the economy. This week, however, Bloomberg Businessweek questioned the entire assumption with “It’s Not a Skills Gap: US Workers are Overqualified, Undertrained.”

The article cites 4.7 million open jobs in the United States, and 9.7 million job seekers. The skills gap argument has been presented as a means to explain the number of unemployed people compared to the number of open positions.

“Something is clearly broken in the labor market,” Matthew Philips writes. “The problem may not be the skills workers ostensibly lack. It may be that employers’ expectations are out of whack.” That’s the assertion presented by Peter Cappelli, a management professor at Wharton. In his paper, Cappelli cites 1979 data that show young workers then received an average of 2.5 weeks of training each year. By contrast, in 1991, census data show only 17 percent of employees had any training at all.

Employees change jobs more than they used to, which is a big reason employers have cut down on training. They fear they won’t recoup their investment. This means managers want new hires to have the experience necessary to do the job from the beginning.

Consider Cappelli’s contention: “Efforts to hire skills rather than build them from within would create much more specific and variable job requirements across employers that would vastly increase not only the difficulty in hiring but also the experience of having to raise wages above current levels in order to find appropriate candidates.” Cappelli’s working paper is available from the National Bureau of Economic Research.

“If employers would only do what they did 30 years ago, we wouldn’t have this problem,” Cappelli is quoted in Bloomberg Businessweek. He adds that the fear of competitors gaining from your investment in training are overblown.

Employers hold the key

The time is now for employers to take control of their workforce needs. With its internationally recognized certifications, APICS is a go-to resource for employers across many industries all around the world.

First, consider how the APICS Certified in Production and Inventory Management (CPIM) program can further your organization’s production and inventory activities. CPIM courseware helps students master concepts and strategies related to demand management, supplier planning, material requirements planning, sales and operations planning, quality control, continuous improvement, and much more. Overall, these are concepts that undeniably enhance business’s bottom lines.

Next, think about the value that can be added by extending your company’s supply chain management capabilities. The APICS Certified Supply Chain Professional (CSCP) enables participants to create consistency and foster collaboration, maximize enterprise resources planning system investment, prevent and mitigate risk, forecast demand, and more.

Through its corporate services department, APICS works with employers to build custom training programs that lead to APICS certification. These programs enable employees to anticipate and meet the challenges presented by the business world every day. Visit apics.org/about/employers to see how APICS can help your company. 

1 Comment

  1. 1 Shashank Tilak 25 Aug
    Great observations - particularly about details of formal training inputs that employees receive. 

    There are several counteracting trends and forces here. Particularly in Manufacturing there are for ever increasing pressures on costs / prices as well as quality and delivery. Costs there are extremely important. Easiest way a 'normal' manufacturing company will do that is improve utilization of a resource like labor. That means putting the resource to productive use - if it means cutting down training time - so be it. After all it improves efficiency by 4 - 5 %.

    One sure does hear a lot about job hopping by employees. But with above driver market out there will pick up a person with requisite skills - and pay a premium for it. The employee is also in a business - of selling skills. So highest bidder for his / her wares will get the commodity.

    Outsourcing and getting manufacturing done from low cost location is standard.practice. At that time no one seems to consider longevity and duration of time an employee has worked. In this situation one can hardly consider loyalty of employee to the organization.

    In spite of all these, manufacturing seems to be managing to recruit all the people (307 K filled slots against requirement of 312 K). If this is correct, what is the gap in demand and supply?

    Apparently biggest problem seems to be in services sector. There individual skills and attitudes do matter most. Number of these jobs cannot really be outsourced. Consider this video https://www.youtube.com/watch?v=qQn-_01zsT8 What works here is the individual skill and attitude. 

    I do not really see any shortcuts there.

    After all manufacturing is also about technology, matching skills and value add with costs and then farming out low cost / low value products / tasks and jobs. 

    Skills that matter in manufacturing are also related to planning, monitoring and control. Ability to connect different pieces and getting ready for short to long term future risks is possibly most critical skill. Currently that skill is not necessarily geared up for fast pace, use of IT, getting alerts and actions in place etc.

    APICS, certifications and building these cerebral skill is the real task that we should be focused on. That would solve some of the issues here.

    Hope this helps.

    Shashank

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