Employers Say They Struggle With a “Skills Shortage,” Yet They Cut the Training Budget. What Gives?

by Stacey Lett, Director of Operations – Eastern U.S. – Proactive Technologies, Inc.

Everywhere you read these days, you find commentary on the “skills gap” that employers seem to face when trying to find the workers they need for their critical job classifications. Either there is a skills gap or there isn’t, and more and more economists are challenging that premise. Some, like Nobel prize winning economist Paul Krugman, say that if there is such a skills gap creating a shortage of skilled labor, then wages should be skyrocketing for those positions in a capitalistic, free market model.

Some point to the exploitation of loop-holes in the U.S. H-1B visa program, recently highlighted in a CBS 60 Minutes episode entitled “You’re Fired” that allows employers to replace long-time, experienced employees with lower-wage temporary workers (with no benefits) from countries such as India – even requiring the laid off worker to train their replacement or forego severance pay.

Yet other companies, genuinely experiencing a shortage of skilled workers in their region, seem to either accept the skills gap theory as the norm or have made assumptions that the right skilled workers already came through the front door. Some surprise everyone by redirecting training dollars that should be used to make sure each employee can perform the tasks for which they were hired to programs that are meant to improve performance – skipping the obvious. Trying to improve the performance of employees before being certain they can perform each task exactly seems incredibly counter-intuitive. Focusing dollars on LEAN, Kaisan, Six Sigma, etc. before being certain that employees have mastered each required task may be not only be a waste of money but probably will need to be repeated if the employees finally do master each task, since by then they will have forgotten any improvement techniques or how to apply them to the processes they are performing.

Some wonder why companies have not added to, or are even cutting, their training budgets in response to the challenge. Many of these companies seem to be forgoing structured on-the-job training that only they can deliver, hoping the local educational system, with all they federal funding they have received, will somehow wave a wand and all the skilled labor needed will appear. In a January, 2017 issue of the Proactive Technologies Report entitled “An Anniversary That You Won’t Want to Celebrate: 30 Years Later and The Skill Gap Grows – Is it Finally Time to Rethink The Nation’s Approach?” the point was made that employers having been waiting on solutions from other than their own operation for decades, but to no avail. It is also significant to note that the U.S. is currently in a new presidential administration that seems to be set on cutting the funding for many of the Departments of Education and Labor workforce training programs these employers have come to rely upon. 

It is important to accept the reality that the national workforce was being challenged before the Crash of 2008, with reports of skill shortages and retiring workers leaving with all of the technical expertise in their head and hands. Very few employers prepared for either challenge, though warned for years. This reality was exacerbated by the Crash and its aftermath. Experienced workforce development staffs at community colleges were forced into early retirement or just laid off, employer’s training budgets and staff were eliminated as employees were laid off, skilled workers were sidelined only to watch their skills and expertise developed over decades erode day by day and those workers near retirement were let go and that value lost. Now, before the sidelined and retired (but employable) worker’s core skills can be improved, the system and its clients all need to be repaired themselves.

This challenge will not be addressed on its own, and relying on the same institutions that didn’t seem to be closing the skills gap before the Crash to be better able to do anything about it now seems to be folly.

Employers must take an active, serious role in providing the structured on-the-job training, Without it in place, there is no guarantee that each new-hire, no matter how well armed with core skills taught by educational institutions, will be able to learn and master the tasks that will meet the employer’s performance needs and expectation of return of worker investment (“ROWI”). Incumbents, who fell through the cracks of neglectful or non-existent company training programs, must now be deliberately driven the rest of the way to full job mastery along with new-hires. Then, and only then, can a company think about driving collective worker performance higher.

Yes, money will have to be invested. But that money doesn’t need to be invested without measures, controls and accountability. The approach taken needs to be able to provide those measures and controls or the outcome cannot be assured. And if the worker’s critical role in a capitalist economy is to be secure, employers haven’t any time to waste.

Learn more about the Proactive Technologies’ PROTECH© system of managed human resource development for the accelerated transfer of expertise™. Find out why this approach makes economic and practical sense.