Labor Shortage Strategy: Rethink Job Requirements

The labor market will not return to the “good old days” when job applicants were abundant. The demographics just don’t work. Baby Boomers are retiring, and the young people entering their working-age years are not larger in number. Foreign immigration is very low and unlikely to increase. Companies should be certain that their job requirements are necessary for high productivity, or try abandoning those rules.

The employee retention expert Dick Finnegan wrote, “Stop posting higher-level, impractical job requirements that screen out applicants who can do your job…and that also invite over-qualified applicants who will become bored with your job and quit.” The first half of that sentence aims at recruiting, and the second half highlights that good employee retention starts with good hiring.”

The first common job requirement to be reconsidered is education. Certainly you want your brain surgeon to have an M.D. degree, but do your sales manager, IT tech and purchasing manager need undergraduate degrees? Does your shipping clerk need a high school diploma?

The Case Against Education argues that education does not teach skills so much as signal to employers that the graduate has some combination of brains, persistence and conformity to rules. The author, Bryan Caplan, cites recent data and studies, but his 2018 book continues a hypothesis that is at least 50 years old. A competitive advantage will accrue to any employer who can find undervalued assets: people who lack the credential but can do the work.

Note that the simple correlations between college education and career success do not control for intelligence, persistence and conformity. And that conformity factor did not seem to be an issue in the success of famous dropouts such as Bill Gates, Steve Jobs and Mark Zuckerberg.

A business owner read Caplan’s book and abandoned the college requirement for software coders. According to a recent letter to Caplan, the company explicitly welcomed non-degreed applicants, substituting tests for diplomas. Passing a job-specific test shows the applicant has the necessary brains. Persistence or “grit” is harder to measure in tests, but a candidate’s history provide evidence. A person who dropped out of school to sit on a beach may not be a good hire. But a person who pursued a goal, even if unsuccessfully, may show the needed persistence. As for willingness to put up with stupid rules, a college diploma ensures that personality trait—but the employer should eliminate the stupid rules rather than hire people who won’t object to them.

Experience requirements should also be reconsidered. Rather than years in a similar type of job, list the essential skills needed. Then consider how to evaluate applicants for those specific skills. Some people with experience do not have all the skills assumed, and others with less experience will have the necessary skills. Even if applicants were available in abundance, testing for specifics will be more successful than assuming that experience equates to skill.

For positions where the company really needs to hire experienced people, it’s worth asking how much experience. An old saw states that 20 years of experience might be one year of experience repeated 20 times. Given the uncertainty, an experiment could help. A business that has always had a requirement for two years’ experience for a certain position might experiment with a few applicants with only one year.

Covid has brought remote work into great attention. The hiring manager must determine how important physical presence is to a particular position. We don’t want fire fighters to phone it in, but when a business cannot find people willing to work alone in a cubicle, maybe it’s time to allow remote work.

To evaluate remote work rules, the manager needs to estimate the productivity from work performed in the office in relation to the ability to hire people for remote work. Although that is hard to quantify in many cases, rules that limit the pool of job applicants but do not improve productivity will send a company into a downward spiral.

Drug testing is another rule that should be reconsidered. Quest Diagnostics recently reported, “The rate of positive drug test results among America’s workforce reached its highest rate last year since 2001.” Although nobody wants a stoned employee operating heavy equipment, a positive test for marijuana does not at all imply impairment. A person who tokes pot on Saturday night may be fully alert on Monday morning but still flunk a drug test.

Some companies decided years ago to test all employees. They may have worried about testing some employees, because they operated machinery, but not others who work in the office. Or perhaps they preferred to avoid drug users in all roles. However, the current high incidence of marijuana usage means that such rules will screen out many competent job applicants.

Recruiting is a difficult task in the tight labor market. Business leaders can make their jobs easier by reviewing job requirements and eliminating unnecessary ones.