Expert Series

Professor Peter Cappelli Takes On the Skills Gap

Man highlining at Taft Point in Yosemite National Park with El Capitan in the background.
Written by Lenny DeFranco

The world looked a lot different in 2012. President Obama was fighting for a second term on the strength of spotty economic progress. Recession was still on the nation’s mind. The specter of a “jobless recovery” loomed after of the crisis of 2008.

It was in that environment that Peter Cappelli, a professor of management at Wharton, published a book taking on one of the chief explanations given for poor hiring numbers. Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It offered a compelling deconstruction of the “myth of the skills gap.” The stubbornly high unemployment of 2012 wasn’t due to an unqualified labor pool, Cappelli argued, but by businesses themselves using ill-advised hiring practices.

Here at Grovo, we spend a lot of time thinking about the digital skills gap: what causes it, how it manifests in organizations, and most of all, how to fix it. This book caught my attention because it seemed like Professor Cappelli was attempting to cast doubt on one of the fundamental tenets of our research and product. It turns out that he makes a persuasive case the other way; according to this book, the need for modern training has never been more acute. Here’s a summary of the argument, and how it ties into what we do every day at Grovo.

The hole in the skills gap

Cappelli proposes that what the media calls the “skills gap” is actually one symptom of a systemic failure on the part of businesses to evolve hiring practices into the digital era. The skills gap narrative arises from a lazy conclusion: when businesses see their vacant positions unfilled amid historic unemployment (remember, this book was written in 2012) they conclude that no one looking for employment can do the jobs they need.

In reality, companies have become picky and cheap hirers. With so much talent jobless in the aftermath of a recession, companies not only feel that they can hold out for unicorns, but that the unicorns will come flocking even at salaries below market rate. When applicants either don’t qualify or don’t accept jobs that undervalue their skills, employers assume that their empty positions indicate a deficiency on the part of the workers.

The result is that jobs stay open while the people who could do them struggle to work—especially young candidates, who are filtered out of contention by clumsy hiring software that searches only for the kind of experience that shows up on a resume.

The “skills gap” comes from slow, expensive, and ineffective training

According to Cappelli, the issue isn’t a skills gap, but a “training gap.”

The data we have suggests a distinct decline in employer investment in workers. In 1979, young workers received on average about 2.5 weeks of training per year. By 1991, census data found that only 17% of employees reporting had received any formal training over the past year… Additionally, much of this learning was not job-specific.

…In other words, nearly 80% of today’s workforce is doing jobs with no recent instruction, if any at all, in five years. (p. 69 – 70)

The problem is that traditional training is too expensive and slow to be cost-effective in an environment when the pace of skills change is speeding up. Companies can no longer invest in employees knowing that they’ll be trained for years. Now, it’s more like a few months.

There’s evidence from all quarters that traditional training is simply too inefficient to benefit companies in the digital age. Look at the most traditional form of training that exists: college. Cappelli shoots down the familiar complaint that graduates aren’t majoring in marketable studies. Data indicates that students are studying what they forecast to be useful degrees, but like everyone else, they’re just not able to predict what skills the future will require.

Business is now by far the most popular college major, and the number of business degrees granted has tripled since 1970… There are also 15 times the number of computer and IT degrees awarded… [But] the the turnaround time for new graduates (four years) is a lifetime in IT years, often leaving supply out of sync with demand… To assume that there will be the right number of graduates coming out of college with the right skills when you want them and at the wage you want to pay is folly. (p. 50-52)

In summary, businesses have abandoned traditional training because it’s too slow and ineffective to provide any predictable value. Yet the pace of technological evolution has never been faster, and the need for skills never higher. So hirers look to candidates to provide their own skills when they walk into the interview.

That’s an unrealistic expectation. Candidates are able to project the future skills requirements of a job even less than companies. Plus, even job seekers are put off of training because it moves too slowly. Cappelli cites a Business Roundtable study of employees that found that “81% were willing to get training even outside the workplace, presumably on their own time. However, like employers, 41% reported that they were uncertain as to the payoff. Why? Because they did not know what skills would be relevant in the future.”

According to Cappelli, employers and employees alike aren’t able to stomach the idea of training because it is too costly and too quickly obsolete. Hence, no one can fill or get a job.

How to fix training

This book explains why a fast, effective training solution has never been more urgently needed. People aren’t learning the skills they need because traditional training isn’t up to the task. Companies are cynical about their ability to get people up to speed with modern technology, so they try to rely on candidates to supply their own skills. That’s not how it works, though. Only a continuous learning solution can keep employees skilled these days. In order to fix hiring, we need to fix training.

At Grovo, we’re confident that we’ve built a learning platform that solves many of the problems Cappelli recognized a few years ago. By rewiring learning for the 21st century workforce—through microlearning content and training technology—we’re giving companies a better way to educate and develop their people.

If companies had access to more efficient training, they would feel comfortable hiring people that had the drive and intelligence to fill a position, but who lacked some of the specific skills. As Professor Cappelli illustrates, it’s easier to teach good people what they need to know to perform better than to scramble to find good performers today and expect that they’ll stay that way forever. In the digital age, being skilled in anything is a fleeting proposition.

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Photo credit: “Man highlining at Taft Point in Yosemite National Park with El Capitan in the background.” by LiAnna Davis is licensed under CC BY 2.0

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