Peter Cappelli released a book this month that began as an article in the Wall Street Journal: Why Companies Aren't Getting the Employees They Need. The article argues employers have become too picky, wanting employees who are inexpensive and can hit the ground running on day one. In the data he cites from Manpower on hardest jobs to fill, engineers rank #2 and #3 respectively for 2006 and 2011.
Cappelli’s solution is for employers to provide more training and to work with educational institutions to tailor their programs to employers’ needs. He offers the case of IT jobs during the tech boom of the 90s: Only 10% of people in IT jobs had IT degrees. Companies trained smart people to do the jobs they needed done.
Engineers like Sam Feller and Chris Gammel of Engineer Blogs frequently hit upon the ideas that they learn more on the job than at school and that the requirement of formal education to work in tech job is often a relic of a time when work was more systematized.
Cappelli and the people of Engineer Blogs are completely correct in identifying problem and some solutions. There is an unspoken issue, though, underlying all their observations: Some market participants have a perception of the labor market that no longer agrees with modern realities.
1. The changing nature of the employment relationship - I began working in the late 90s, but I am told that jobs used to be much more stable. The idea was the employer took care of the employees, providing stability, some insurance benefits, and some training. In return, the employees would be loyal to employer and not mind if they were creating much more value for their employer than they were receiving in cash and benefits. There was an intangible component of their pay in the form of job security and being part of a group.
Now it feels like engineering employees are more analogous to employers’ phone company or data services provider. They might change now and again if they want to try something different or they make keep their current provider if it’s working for them and they’re focused on other things. It’s just a business decision. There are many advantages to this relationship. It’s the only one I have ever worked under. It creates difficulty, though, for employers and employees who mistakenly think the old system still holds sway.
2. Recession pricing is over - At the moment the economy is recovering vigorously from a major recession. Politicians and talking heads, though, seem to find it advantageous to carry on as if the economy were still a major problem. Someone looking to hire engineers and buy or rent engineering space and equipment may expect to find a lot of bargains based on watching the news. From what I personally observe, though, the economy is just where it was in 1996: A few years past the recession of ‘91 and heading into a great expansion. Buyers expecting great bargains will be frustrated.
3. Work has become less systematized - As Seth Godin rightly repeats in all his writing, the nature of where value is created in our economy is moving from activities that involve following procedures to more creative endeavors. Yet we still bill by the hour and want to see our employees in the office, as if the value of their work came from their physical presence and appearance of not slacking off.
4. Labor is an imperfect market - In economic terms, a perfect market is one where the product is not differentiable. An imperfect market is one where buyers unique needs and the thing being sold has unique features. An imperfect market lends itself to intermediaries who help match up unique needs and traits. The intermediaries, in this case headhunters and HR professionals, have an incentive to encourage market participants to look for just the right fit.
The “old” more stable labor market was not always the norm. Edison did not run his Menlo Park laboratory in the late 19th century as a factory. He worked there when he felt like he was onto something without regard to mealtimes or day and night, which was more difficult before widespread use of lightbulbs. Edison provided no job stability or titles. He worked out arrangements where people could earn money for the value they created.
The economy has room for all types of jobs. People looking for jobs and candidates need be clear on which type of arrangement they are looking for.
Note: Graphic is from the original WSJ article and is a link to it.
