Execs battle skills gap in hiring despite high unemployment

For the past six years, VASCO Data Security has dealt with a chronic problem: It hasn’t been able to easily recruit qualified workers for its software and internet security operations in Europe. And the plight hasn’t gotten easier – even as a global economic crisis has led to high unemployment throughout the continent.

“It seems like in Brussels and in Zurich, both, we have a hard time when a spot opens up, filling it,” VASCO CFO Gary Robisch said. “A lot of times we have to settle for somebody that doesn’t exactly match the qualifications that we want.”

The economics don’t seem to make sense. High unemployment, one would presume, would make it easier to fill jobs. The 17-country euro currency bloc hit a record in May when unemployment rose to 11.1%, while the rate across the EU was 10.1%, according to Eurostat, the EU’s statistics office. US unemployment has hovered between 8.1% and 8.3% for the past six months.

Yet employers worldwide are still struggling to find workers with the skills to fill a wide variety of jobs. The situation is fuelling a human resources conundrum as employers ponder whether they should hold out and pony up for candidates with key skills or look to on-the-job training for promising candidates.

Companies report difficulty locating IT professionals, engineers, accountants and specialised workers such as tugboat captains and MRI technicians. The conundrum is particularly glaring in pockets of relative prosperity, as VASCO is learning; the unemployment rates in Belgium and Switzerland are lower than European averages. A similar scenario has emerged in the United States, where companies have been clamouring to grow after years of cuts.

“It just astounds me,” said Tom Kennedy, vice president and CFO of marine construction and environmental remediation company J.F. Brennan, which is having trouble recruiting a safety director, tugboat pilots and project manager-level engineers who are willing to travel for a company that does business in 18 US states.

“After doing this for 35 years, I’ve never seen it like this,” Kennedy said. “You could run an ad any place [in years past] and get 30 or 40 applicants. Now you get five to 10.”

The American Institute of CPAs’ Business and Industry Economic Outlook Survey for the second quarter of 2012 demonstrated the recruitment difficulties that management accountants are facing. Half of the 1,250 respondents said they have had difficulty filling open positions because their organisations haven’t been able to find individuals with the appropriate qualifications.

Worldwide problem

Other reports indicate a similar problem worldwide. In the PwC Global CEO survey for 2012, 43% of global respondents said that, in general, it has become more difficult to hire workers in their industry. Just 12% said it has become easier to hire. In addition, 29% of CEOs said they were unable to pursue a market opportunity because of talent constraints.

A recent World Economic Forum report said there is a worldwide talent shortage with 10 million manufacturing jobs unfilled across the globe. Craig Giffi, chairman of the Global Manufacturing Industry practice of Deloitte Touche Tohmatsu, called the problem “a pretty daunting challenge” that’s unlikely to abate soon.

Manufacturing is providing a path forward for emerging economies, but the jobs it creates often aren’t menial labour positions. “Even when there’s a high use of labour versus capital-intensive technology, the skills that are required are much more sophisticated than they’ve been in the past,” Giffi said.

The long-term solution for manufacturing could involve changes in educational systems. India’s government has engaged private industry to create a new National Skill Development Corporation to identify and fund vocational education businesses, according to the World Economic Forum report.

In the United States, the Manufacturing Institute launched a Manufacturing Skills Certificate System to work with high schools and community colleges to train future employees, the report says.

“I think we’re just going to see more of those types of collaborative development of the workforce outside of the school systems, and collaborative work between companies, community colleges and school systems, to turn out the workforce they need,” Giffi said.

Hire and train

Short-term solutions to the skills gap are more elusive.

Companies worldwide are trying to combat the skills gap by integrating human resources with high-level business planning, according to the PwC report. But CEOs are frustrated with the issue of talent, the report says, because productivity and labour cost metrics do not isolate skills gaps or identify the pivotal jobs that drive value.

“Close to 15% of energy-related investments around the world fail or are lost because a suitable workforce is not available,” Zsolt Hernádi, chairman and CEO of Hungarian oil and gas company MOL Plc., said in the PwC report.

Baba Kalyani, chairman and managing director of India-based auto component manufacturer Bharat Forge Ltd., said in the report that talent is the most strategic issue for India. Kalyani said there is a gap between the skills of technical institute graduates and those needed by industry.

Some companies are hiring and then training workers who are missing one or two skills. Ryan Sutton, a senior vice president at staffing firm Robert Half, said a hire-and-train model can be an answer.

“At some point you need to drop back and really come up with a development programme that allows you to pay the right wages according to your guidelines as an organisation,” Sutton said. “If you need a staff accountant and you can’t find them with Oracle experience, really look at finding someone who doesn’t have that, and then through a training and development process, get them the right skills internally and really work on developing those people.”

‘The needle-in-the-haystack search’

Robert Lawson, assistant controller for government accounting compliance for US defence contractor ITT Exelis, is using a version of that tactic. He struggles to find accountants with enough working knowledge of governmental compliance accounting to do a job that deals heavily with regulatory issues.
But he is taking junior-level employees with some working knowledge of the regulations and training them internally for more advanced positions.

A rural US hospital, meanwhile, stopped providing MRIs and other high-end scans on weekends because it couldn’t find enough technicians to run the machines.

“If you come in with a trauma injury, we’re going to life-flight you out [to another hospital], and it’s going to cost you a lot of money for the air ambulance to go someplace,” said Coshocton County (Ohio) Memorial Hospital CFO Robin Nichols. “Unfortunately, that’s where we are. We can’t provide the service.”

Concern over the economy obviously is another big factor for employers who are reluctant to hire. But the shortage of available, skilled talent also is a significant hurdle in a wide variety of industries.

“We hear horror story after horror story about the needle-in-the-haystack search when they’re looking for skilled employees, and the frustration that companies have when they hire somebody and they don’t get the skills they thought they had,” Giffi said. “At the same time, when you talk to the executives of the C-suite, when you talk to the CEO, they know that they have to change the way they’re [hiring].”

—Ken Tysiac (ktysiac@aicpa.org) is a CGMA Magazine senior editor.