Filling the Gap
By Anne Freedman

For reasons of education, training and demographics, some large corporations are increasingly finding hard-to-fill gaps in their workforces, which could hamper their operations should this on-again, off-again economic recovery ever go full throttle, full-time.

The gap between the supply of skilled workers and the demand for them is caused by a combination of factors: an aging workforce, a decrease in the number of new entrants into the labor pool, a slowdown in the number of college graduates, the lack of interest in some occupations and an ever-increasing demand for more skills.

According to a survey by the Center for Workforce Preparation of the U.S. Chamber of Commerce in Washington, about half of employers (51 percent) say qualified applicants are hard or very hard to find. One-third of employers (33 percent) say such applicants are not too hard to find and 5 percent say they are easy to find.

"I think there's always been a skills gap, " says Kathleen S. Barclay, vice president of global HR and General Motors University for Detroit-based General Motors Corp. "It's all about supply and demand.

"The need of companies worldwide changes all the time and I think it's changing more dramatically and more quickly in today's global business environment than ever before. If you have constantly changing demand, then your supply needs are always changing as well."

Barclay says it's not a war for talent yet, but "we might get there."

Many executives surveyed by Accenture, the consulting and outsourcing company headquartered in New York, seem to agree. The High-Performance Workforce Study of 2004 found that 41 percent of business executives believe there will be a moderate or severe impact of the war for talent in the future, compared to 23 percent who believe there is a moderate or severe impact today.

Not everyone agrees there is a skills gap and even those who do see it as a problem acknowledge it's not a universal problem. It doesn't affect all occupations, in all industries, in all areas. Instead, it might be mechanics in one geographic area or assembly-line workers in another; it might be scientists or engineers in some industries and mid- to upper-level managers in others.

That's why human resource executives need to analyze and manage the talent assets most important to their company's success, experts in the field say. HR needs to stay ahead of the business if it hopes to help the business grow and prosper.

That requires a more proactive and tactical talent-management role, they say. HR leaders must work with internal business executives to forecast needed skill sets, and then decide how to fill those skill sets. Should new employees be hired? Current employees retrained? Should the work be outsourced or contracted out? Should the company partner with educational or vocational organizations to develop new talent?

Above all, in this constantly changing global-business environment, HR executives must stay nimble and adaptable, especially among the nation's largest employers. "If you work in a company the size of General Motors," Barclay says, "which has a dramatic global footprint, the nature of our work is always changing - and in that regard, your skills needs are always going to change."

Traditional HR
The skills gap presents a problem for some HR leaders, says Randall MacDonald, senior vice president of human resources at International Business Machines Corp. in Armonk, N.Y., because they are reactive instead of proactive.

"There is a skills gap [or shortage] in HR of out-of-the-box thinkers," he says.

That means too many HR professionals wait for a skills-gap crisis to develop full-fledged before they prepare a solution or even understand there might be a problem, he says.

At IBM, HR does not idly wait for a job requisition to come through before dealing with a hiring issue, he says. "What I am asking [of] my people is [that] by the time the requisition comes in - I want to know we have identified where we are going to get [the new employees]," MacDonald says. "A good HR person should be able to be proactive and get out in front [of] front-line manager needs."

As part of its HR strategy, IBM attempts to forecast the "hot skills" the company needs - both now and in the future - based on its business strategy. That requires an "integrated supply chain for talent," encompassing constant communication and involvement in annual business strategy reviews, forecasting of skill gaps, training, reskilling and resupply, he says.

As a part of that effort, IBM recently created a system of Web-based HR tools, known as the "On-Demand Workplace," one of which profiles every single employee along with his or her particular skills, abilities and work projects. The system integrates personal data, employee benefits, skills-development plans and performance assessments for employees - to allow them to match up with their "ideal" job at IBM - while offering managers critical information on the workforce such as skill gaps or surpluses within departments or divisions. The system automatically matches a skilled employee with the needs of a hiring manager.

The company also emphasizes employee referrals and tries "to get a jump on the very best talent the universities will go after," says MacDonald. That means building partnerships with universities and beginning to identify students, as early as in the freshman year, as company targets for employment. "Quite often," MacDonald says, "before their senior year, they have an offer in hand from IBM."

A similar employee database has been created by Electronic Data Systems Corp., the Plano, Texas-based company that pioneered the computer-outsourcing business.

HR professionals at EDS have collected information on 84,000 of the organization's technical employees, their work histories and skills, with plans to include 120,000 employees eventually, says Tina Sivinski, executive vice president of HR.

Employees use a Web-based system - which offers pull-down menus as well as opportunities to input unique information - to enter data about themselves, including their primary and secondary skills, education, languages, industry certifications and work assignments.

"It allows us to be able to access our entire population, literally, on a dashboard," Sivinski says.

The skills gap is particularly hard on high-tech companies such as EDS, she says. Because technology changes so rapidly, there is a "constant need for replenishment." The database helps strengthen strategic HR planning because, when linked with the company's five-year plan, it offers up a total vision of what skill sets exist today and what are most apt to be needed tomorrow.

That's why EDS has embarked on a massive reskilling effort aimed at more than 22,000 COBOL computer programmers on staff.

"We know, based on our multiyear plan and working with our clients, that we don't necessarily need as many dedicated COBOL programmers," Sivinski says. "We need to reskill them, in advance, in multi-skills, multi-dimensions, to something like MS .net."

That reskilling takes 18 weeks, says Dave Arcemont, EDS' vice president of global learning and development training. It begins with programmers enrolling themselves - with the support of their supervisors - into a self-paced prerequisite program that includes online and computer-based training, books and periodicals.

When that portion of the program is completed, the programmer attends a two-week workshop. Afterward, the employee begins to apply on the job what he or she learned in the classroom. Six weeks later, there's a graduation ceremony and, depending on the program track, the awarding of an industry certification.

The impact of technological changes on all jobs cannot be underestimated, says Theresa Brown, director for immigration policy at the U.S. Chamber of Commerce. In the past, manufacturing employees once needed the most basic of skills; now, many need to operate robots or know computer programming. Receptionists used to have to know how to answer phones and be pleasant; now, they are expected to know a variety of software programs.

Beth Buehlmann, vice president and executive director of the chamber's Center for Workforce Preparation, says 75 percent of today's workforce will need additional training "just to keep the jobs they have today."

"In 1950, 80 percent of all jobs were classified as 'unskilled'; now, an estimated 85 percent of all jobs are classified as 'skilled,' " Buehlmann testified before the U.S. Senate's Committee on Health, Education, Labor and Pensions in March. "Looking forward, it is estimated that 60 percent of tomorrow's jobs, while involving variations of current business operations and practices, will continue to reflect the rapid advance of technology, requiring skills that are only possessed by 20 percent of today's workers."

Targeting Skill Sets
Auto repair is certainly one of those jobs that once required little in the way of formal education. No more. "The fact is that you can no longer diagnose a car's problem simply by pulling the car under a shade tree, listening to the engine and tinkering. Tinkering won't fix a sensor that leads to a processor. If you walk into a good modern service bay, the chances are that the technician's eyes will be on a computer screen, not the car," John F. Smith Jr., GM's former chairman and CEO, told a gathering of the New York State Association for Career and Technical Education in 2000.

It was Smith who, seeing a looming skills gap, spearheaded the creation of AYES - Automotive Youth Educational Systems - a nonprofit organization involving GM and more than a dozen top automobile manufacturers, numerous auto dealers and more than 400 high schools in 45 states. The organization's aim is to encourage and train students in careers of automotive service technology or repair.

Based on a European-style apprenticeship program, AYES has trained and placed 7,300 students in internships since 1996. That foresight - in beginning the program in 1995 - has allowed GM and other automakers to fill positions that might have gone empty otherwise.

"Good things don't just turn around in a year or two," Barclay says. "You have to invest in that talent."

And for GM, that also means investing in talents involving manufacturing, engineering and design - deemed the most necessary skill sets for her corporation, Barclay says. Thus, the PACE program - Partners for the Advancement of Collaborative Engineering Education-was formed in 1999. It is headquartered in Warren, Mich.

In conjunction with Sun Microsystems, EDS and UGS (whose software is primarily used in the program), the PACE program has donated about $2.4 billion in computer-aided design, computer-aided manufacturing, computer-aided engineering, three-D plant layout, product-data management, supply-chain management and digital collaboration hardware and software to 29 "strategically selected" universities in the United States, Canada, Mexico, Sweden, Germany, China and Australia. Another 12 universities have been identified for future involvement in PACE, says Elaine Chapman-Moore, manager of PACE Partnerships.

The software and hardware are the same as those used by GM engineers, she says. And the existence of such "game-changing" software not only prepares students for the real-life work needed by GM, but illustrates the constantly evolving skill sets and continual education required in today's competitive economy.

The software is known as "game changing," Chapman-Moore says, because it expands the realm of engineers. Now, in addition to designing products, engineers and students are involved in the testing and analysis of their designs. Previously, such testing and analysis was done by others, and the product was later returned to the engineers so they could address problems and concerns.

"Now, with this technology, an individual is able to have multi-capabilities and, as a result, we can do far more of the testing right up-front when we are actually creating the product," she says. "We reduce the time and we increase the quality."

GM and its corporate partners also provide classroom speakers, judges for projects or competitions, and grants for faculty to integrate the technology into the curriculum. Judges from GM and its partners get a look at some of the promising students, and that link increases the company's competitive capability for recruiting promising talent, she says.

As Barclay notes, "We have them and they have us."

In 2003, about 56 percent of GM's interns and co-ops were students in the PACE program, says Tanya N. Jordan, PACE marketing and communications coordinator.

For GM, diverse candidates with the necessary education and skills are particularly difficult to find, Barclay says. "The pipeline is not nearly as flush as we would like it to be."

To increase that flow, the automaker offers about $2.5 million annually in scholarships to universities and minority organizations to encourage students to attend college and select engineering and other appropriate courses of study.

Partnering with universities - and sometimes even high schools or middle schools-is a common tactic of companies hoping to increase the number of skilled job applicants, whether or not they are minorities.

Demographic Challenges
Finding highly educated job applicants will be getting tougher in the future, according to the Aspen Institute, a Washington-based nonprofit think tank that seeks to create "enlightened leadership and open-minded dialogue." The portion of workers in the labor force with college degrees will rise much more slowly in the future than it has in the past, according to the group's study, Grow Faster Together. Or Grow Slowly Apart.

In 1980, almost 22 percent of the labor force had college degrees. By 2000, that percentage grew to 30 percent, but it is projected to rise only to about 34 percent by 2020. The factors contributing to this are the overall decline in the growth of the labor force, the leveling off of women entering the labor force and the leveling off of workers with more education than in previous generations.

The same trend holds true for science and engineering students, according to biennial surveys by the National Science Foundation. The number of S&E students increased by 5 percent between 1997 and 1999, but by only 2 percent between 1999 and 2001.

"Certainly," says Nimmi Kannankutty, a senior analyst for the human resource statistics program at the National Science Foundation in Washington, "there is a lot of concern in the science and engineering community right now that there aren't enough people coming through universities being trained as scientists and engineers."

Immigration also affects the availability of high-tech or skilled workers. In light of the terrorist attacks of Sept. 11, the recession and the political desire to make sure Americans get first crack at U.S. jobs, immigration rules have tightened. New regulations make it more difficult for foreign students - who often fill high-tech job vacancies - to come to this country to study while, at the same time, the applications for such visas have decreased. In addition, lawmakers have not, as yet, expanded the number of H-1B visas provided to immigrants allowing them to be employed here.

In fiscal 2005, the allotment of 65,000 H-1B visas was filled within hours of being available. In the past, lawmakers expanded the number of H-1B visas permitted to be issued.

In addition, says Mark Regets, an NSF senior analyst in science resource statistics, U.S. companies are facing additional competition from foreign countries, specifically those in the European Union, which have set up English-only laboratories. In the past, E.U. countries did little about trying to halt the "brain drain" of their own nationals, who often came to the United States to work, but now they are not only working harder to keep their own residents, but are welcoming other nationalities, he says.

Scarcity of skills is not relegated to the highly educated. At Sears Roebuck & Co., headquartered in Hoffman Estates, Ill., there's a major demand for workers in its home-services business, which every day sends about 13,000 technicians into residences to fix appliances, says Greg Lee, senior vice president of human resources. (It's unclear whether the merger of Kmart Corp. and Sears, expected to be finalized by the end of March, will affect this segment of the retailer's business.)

"Here, we are a little demographically challenged because the technicians' group tends to be an older group and is increasingly getting closer to retirement age," he says. "We have got to make sure we have people in place to replace these people."

That requires training and development of employees and partnering with educational institutions around the country to provide targeted education and on-the-job training for interested newcomers to the field, he says. It's an "ongoing process," Lee says. "It's not a program."

In addition to the aging of the workforce, Sears is well aware of the continuing population increase of the Hispanic community. That necessitates an increase in the number of bilingual home-appliance technicians, he says.

One diversity-targeted initiative created in response to that is partnering with the Los Angeles arm of the National Council of La Raza, a Washington-based Hispanic civil rights and advocacy organization, to find potential employees.

Through the partnership, Sears developed relationships with several nonprofit agencies and area schools so the retailer can find and train students to become qualified technicians, he says.

"In that way, we leverage the community itself, not just the schools," Lee says. Maintaining a pipeline of qualified technicians is today's problem, he says. Tomorrow, it will probably be something else.

"I do think there is a skills gap for any company that is growing and trying to continually improve," he says. "The standards are going to go higher and higher to perform at higher levels in an increasingly competitive world."

Reprinted from HRE and Workindex.com