The Skills Gap Costs Companies Nearly $1 Million Annually

Careers
Posted By Terri Williams on July 12, 2017 at 1:20 pm
The Skills Gap Costs Companies Nearly $1 Million Annually

Millions of people are looking for a job, and yet, there are millions of unfilled job openings. So, what’s the problem? Why aren’t companies and job seekers connecting? Obviously, not every job candidate is qualified to do every job. But even among those who would appear to meet the requirements for a particular job, there’s a skills gap issue.

According to a recent CareerBuilder survey,

  • 68 percent of employers have open positions for which they cannot find qualified candidates.
  • Nearly 60 percent of employers have job openings that stay vacant for 12 weeks or longer.
  • $800,000 is the average cost HR managers say they incur for having extended job vacancies.

The survey also reveals that only a portion of the jobs posted last year were filled:

Occupation 2016 Avg Monthly Hires 2016 Avg Job Postings
General internists 1,588 49,466
Heavy & tractor-trailer truck drivers 106,780 1,495,132
Marketing managers 8,628 80,498
Information security analysts 3,929 32,103
Web developers 6,955 46,950
Industrial engineers 8,156 48,749
Demonstrators and product promoters 6,375 31,221
Sales managers 17,745 65,161
Human resources managers 6,183 22,040
Financial managers 23,180 53,775

 

Causes of the skills gap

Rachel Nauen, a career adviser at CareerBuilder, tells GoodCall®, “Today, jobs are more technical than we have seen in years past, and degree completions aren’t keeping pace.” Nauen doesn’t believe there is just one cause for the skills gap. “There are contributing factors, including our education system, a lack of investment in training by employers, et cetera, and, unfortunately, the gap between the number of jobs available and the number of hires being made isn’t going away anytime soon,” she says.

The skills gap also affects companies in unexpected industries. For example, Judy Marks, U.S. CEO of global energy and automation powerhouse Siemens, tells GoodCall® that software has transformed manufacturing as well as the energy and utilities industry.

“Computers and micro-processors are present everywhere on today’s manufacturing floors,” Marks says. “Engineers and manufacturing technicians are using software programs to create virtual designs and then have the ability to reduce those designs via additive manufacturing and 3-D printing to physical materials.”

In the energy and utilities industry, Marks explains, “The growth of renewables has created the need for operators to understand how to balance intermittent resources while maintaining reliability.”

As a result, she believes that workers need the type of technical skills that weren’t required before and says they’re going to have to gain more knowledge than they would receive in high school. “However, the nation’s training and education systems weren’t initially ready for this advanced manufacturing environment – and the skills gap is the result.”

Effects of the skills gap

The survey also reveals that 67 percent of respondents are concerned about the growing skills gap, and 55 percent believe they’ve experienced a negative impact on their businesses due to extended job vacancies:

  • Productivity loss: 45 percent
  • Higher employee turnover: 40 percent
  • Lower morale: 39 percent
  • Lower quality work: 37 percent
  • Inability to grow business: 29 percent
  • Revenue loss: 26 percent

Closing the gap

Just as there isn’t one cause, Nauen believes there isn’t one solution to the skills gap. “Employers need to work with local universities to develop curricula that actually put people into jobs that are in-demand,” Nauen says. “Our government needs to invest in re-skilling so that people have access to resources to get them to the next level.” She says that workers also have a part to play. “They should use labor market data to identify which industries need workers and plot a path to get more skills so they can fill an in-demand job.”

Siemens is one company working to close the gap through industrial re-skilling. “As part of this, Siemens recently granted $628 million worth of advanced manufacturing software to the University of South Carolina to give students hands-on experience with the exact software used by thousands of companies around the world, preparing them to be the next generation of highly-skilled manufacturers,” Marks says.

According to the Department of Energy, the U.S. will need to fill 1.5 million new energy jobs by 2030 – and isn’t on track to meet this goal. However, Siemens has partnered with the University of Central Florida to create a state-of-the-art digital grid lab to help students gain the skills necessary to work in the energy sector.

The company also has granted more than $3 billion worth of its industrial software to community colleges and universities, and it has hired more than 2,500 veterans and trained them to work in the organization.

“In addition, we are adapting the proven German-style apprenticeship model to the U.S. market, where we provide on-the-job training work with community college partners to train workers,” Marks says.

Siemens also wants to encourage other companies to follow its example. “So, we worked with Alcoa, Dow, the National Association of Manufacturers, and the Department of Labor to develop a playbook for other manufacturers seeking to launch similar programs –  this playbook is available for companies of any size to tailor and use.”

Terri Williams
Terri Williams graduated with a B.A. in English from the University of Alabama at Birmingham. Her education, career, and business articles have been featured on Yahoo! Education, U.S. News & World Report, The Houston Chronicle, and in the print edition of USA Today Special Edition. Terri is also a contributing author to "A Practical Guide to Digital Journalism Ethics," a book published by the Center for Digital Ethics and Policy at Loyola University Chicago.

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