The alleged “talent shortage” that is draining companies of manpower can be attributed in part to companies’ lack of interest in paying for vocational training programs and to automated recruitment systems that overlook potential new hires, argues a research paper.
In a report [PDF] The book “Hidden Workers: Untapped Talent” published over the weekend, authors Joseph Fuller and Manjari Raman of Harvard Business School and Eva Sage-Gavin and Kristen Hines of Accenture examine the gap between companies that supposedly cannot find talent and “hid it.” “Workers” who are not considered for vacancies.
“Hidden” in this context refers to those who work less than full time, those who want to work full time, those who have long been unemployed, and those who are out of work and not currently looking for work but could be lured back into the work pool.
The authors estimate that there are around 27 million hidden workers in the United States alone. And they cite several reasons why these people fail to satisfy employers’ thirst for talent.
One reason is training. The rapid pace of technological change affecting many occupations has made it difficult for workers to learn the skills they want and education systems are unprepared to respond. As a result, workers must already be employed in order to acquire the skills employers want.
A recent report from the Brookings Institution suggests that this is a problem primarily due to cost reductions in college funding and employer-paid and government-funded worker training, as well as dwindling union membership, which is affecting on-the-job training and worker protection.
Author Andrew Yamakawa Elrod highlighted this point in his recent analysis of labor shortages in the construction industry.
“As a result, there is the erosion of job-specific training programs – funded by employers and jointly managed with unions – that once renewed the industry’s skilled pool,” he wrote in an online article published last month. “As an industry veteran [Mark] Erlich explains, ‘The non-union sector has never found a pipeline for training to get people into the industry.’ “
And as Elrod further notes, the gig economy has succeeded in ensuring that “there is no need for companies to internalize the costs of wages or social security – let alone education and training”.
The curse of HR software
The second reason is that automated recruitment and resume filtering systems exclude too many workers.
Applicant Tracking Systems (ATS), which manage the application pipeline, and Recruiting Management / Marketing Systems (RMS), which support and automate recruiters, are widely used in companies. More than 90 percent of employers surveyed for the report said they use their RMS to filter or rank potential candidates with intermediate or high qualifications.
However, these systems use certain data points inefficiently – by treating a college degree as a proxy for a desired trait like work ethic, for example, or by using an employment gap to automatically reject potential workers – unnecessarily reducing the pool of applicants.
“As a result, [these systems] Candidates whose curriculum vitae does not meet the criteria, but who could achieve a high level through training, are excluded from consideration, “says the report.
“A large majority (88 percent) of employers agree and tell us that qualified, highly qualified candidates will be excluded from the process because they do not exactly meet the criteria set out in the job description. That number rose to 94 percent in the case of middle-skilled workers. “
… qualified, highly qualified candidates are excluded from the process because they do not exactly meet the criteria set out in the job description
In other words, these systems appear to be designed to minimize the workload of recruiters and hiring managers by excluding slightly less skilled job seekers rather than maximizing the supply of potential job applicants.
A third reason hidden workers are overlooked is that companies consider this group because they tend to do so halfheartedly through corporate social responsibility programs, as if it were an “act of charity or social responsibility.” “Acted, and not a source of competitive advantage.”
The authors argue that hidden workers represent untapped capital. They say companies that are open to hiring overlooked and arbitrarily disqualified job seekers are 36 percent less likely to face talent shortages than companies that ignore hidden workers. In addition, these companies say that hidden workers “significantly outperform their peers on six key assessment criteria – attitude and morale, productivity, quality of work, engagement, attendance and innovation”.
The report suggests several ways to make hidden workers more visible: Regular reassessment of job descriptions instead of piling new skills and requirements on existing qualifications; Change from “negative” filters in ATS / RMS systems, which are supposed to thin out the pool of applicants, to “affirmative” filters, which bring in a broader range of experiences; and creating new hiring metrics that focus on time to productivity, allocation rate, and advancement rate rather than minimizing costs.
The report does not mention whether a lack of wage increases for non-executive employees has deterred potential job applicants from entering the labor market. According to the Economic Policy Institute, a progressive think tank, CEO compensation rose 1,322 percent between 1978 and 2019, while employee compensation rose only 18 percent between 1978 and 2020.
As McSweeney’s, a satirical literary publication recently put it, “We will do everything we can to get you to work for us except pay you enough.” ®