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Mansur Hasib

Underpaying Workers Is Not a 'Skills Gap'

Written by Mansur Hasib
12/17/2012 34 comments
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Since 2009, I have observed organizations seeking incredibly precise and sophisticated skills for their many IT positions, but not paying the appropriate compensation to go along with them. At first, I chalked it up to the state of the economy: Perhaps, due to the increased supply of highly skilled-workers, wages had dropped. But as the economy improves, I see this trend continuing.

Organizations often want IT workers with high-level certifications such as CISSP, ITIL, Six Sigma, PMP, and others -- but these organizations also want to pay salaries that are well below market value. When asked to explain, the usual response is: “This is what we can afford.” Asked if they are having trouble filling the positions, the response is: “Yes, we have interviewed several people within the range and found them to be unqualified. We have been unable to fill the position for several months.”

And then you see articles discussing the so-called “skills gap."

Multiply this scenario across hundreds of organizations, and what we have is actually an artificial skills gap. I was fascinated by discussions about this on LinkedIn and The New York Times.

Yes, in some cases, organizations may have a true skills gap, and must invest in training workers to solve this problem. But at salaries of $10 to $18 an hour, it appears unlikely that a skilled IT employee will have a decent living wage in most major cities in the United States.

On the other hand, the spiraling cost of education -- despite technological advances to fix this -- is putting higher education out of reach for many families. (See: Web Eliminates Classrooms, but Learning Improves.)

Some organizations recognize their compensation is under-market, but cannot adjust due to budget issues. So, they hire someone they will need to educate. Unfortunately, organizations frequently lack the people needed to train this person, and think the new hire will learn on the job.

Who will train a chief information officer (CIO) or a chief information security officer (CISO)? How is someone supposed to learn this role on the job, particularly in a highly-complex organization?

Sometimes, organizations hire someone unqualified without realizing it. About a year later, they decide they're not getting the right value from the role. So, they make organizational changes; sometimes they alter the reporting relationships, and sometimes they even get rid of the role.

This phenomenon appears to be happening in a wide range of industries, since IT is a business driver in basically every industry (almost every worker needs some level of IT skills to get anything done). Yet, some organizations appear to be reluctant to train people.

Failure to hire the right candidate simply because of money is a major mistake. Hiring the wrong candidate will cost the organization much more, and may cause good workers to leave. Quality employees want fair market compensation, and in return, they will give value back to the organization. This is simple management.

Artificial budget reasons are leading to an artificial skills gap -- the modern equivalent of “penny wise, pound foolish.”

This needs to stop. I believe it's hurting the organizations, it's hurting the work force, and it's hurting the economy. Long-term, it may even create challenges in global competition. Organizational leaders must get rid of the artificial skills gap. It's the ethical and patriotic thing to do. If you cannot find quality employees at a particular salary range, you must adjust your range.

Analyze every position's salary and ensure compensation is fair and market-based. Without such a basis, the problem will continue to exacerbate.

If you do manage to hire someone below market, you will be unable to retain the person for long. When a good employee leaves an organization, there is significant cost -– knowledge loss, training costs, interviewing and recruiting costs, as well as productivity loss for all the positions that the person was connected to within the organization.

Underpaying workers does not equate a skills gap.

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DHagar
Thinkernetter
Tuesday December 18, 2012 9:09:58 PM
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Good points, Ariella.  And then mediocre managers do not know how to manage "skilled workers".  So they would rather hire underskilled people who will not demand good leadership and/or will accept low wages.

I agree that underpaying may be the problem.  I see it that well trained premium workers create greater value for business.  Those who effectively hire and utilize skilled workers get good value in return.

We need to start recognizing the value of workers, not just the cost.

DHagar

chuckgregory
IQ Crew
Tuesday December 18, 2012 7:57:30 PM
no ratings

Ariella, I remembered that after posting my original comment... thank you for pointing it out.

Ariella
Thinkernetter
Tuesday December 18, 2012 7:41:36 PM
no ratings

Actually the Peter Principle is not that incompetent people will be promoted but that people who are doing well will continue to be promoted until they hit a job that they do not handle competently. In the word of the book,The Peter Principle: Why Things Always Go Wrong  "In a hierarchy every employee tends to rise to his level of incompetence." The idea there is that a good engineer may be promoted to become a mediocore middle manager.

chuckgregory
IQ Crew
Tuesday December 18, 2012 6:23:57 PM
no ratings

That's a great story about Sanders. I was fortunate enough to work for Computer Products Inc., which made I/O equipment that interfaced to folks like Modcomp, Harris, SEL, DEC, and DG. CPI was pretty good about letting people switch back and forth between managment and engineering tracks if they found they (or the company) had made poor choices, and so they held on to a lot of really good people. But in client companies and places where my friends worked I often saw the 'kicking upstairs' phenomenon in action. Unfortunately a couple of places I worked later were not so interested in performance as was CPI, and I never felt as much at home as I had in those years from '77 to '88.

mfidelman
Rank: Cave Painter
Tuesday December 18, 2012 5:52:48 PM
no ratings

I recall my days at Sanders, before they were purchased by Lockheed (and later by BAE).  Sanders had the bad habit of "kicking people upstairs" - but not telling them.  We ended up with a huge number of VPs who felt that they had to sign off on everything, and every one of them had their own opinion.  It became impossible to purchase any kind of computer equipment in less than a year.  As soon as Lockheed bought the company, a lot of those folks got fired, and productivity went way up (at least so I'm told, I'd left by then).  Supposedly the same thing happened to Sanders' graphics division - kept losing money until it was sold to Harris, at which point a lot of folks were kicked out and it became wildly successful.

Mansur Hasib
Thinkernetter
Tuesday December 18, 2012 5:44:49 PM
no ratings

Ha ha good point Chuck -- sometimes they do promote as well.

Mansur Hasib
Thinkernetter
Tuesday December 18, 2012 5:43:22 PM
no ratings

Yes unfortunately sometimes certifications are used incorrectly as a screening tool.

chuckgregory
IQ Crew
Tuesday December 18, 2012 2:41:27 PM
no ratings

You point out, "Sometimes, organizations hire someone unqualified without realizing it. About a year later, they decide they're not getting the right value from the role. So, they make organizational changes; sometimes they alter the reporting relationships, and sometimes they even get rid of the role."

Yes. And sometimes, they promote the employee...

mfidelman
Rank: Cave Painter
Tuesday December 18, 2012 2:37:48 PM
no ratings

As you rightly point out, a lot of the "skills gap" is really a "we want it cheap" problem. But you also bring up another issue, when you point out that employers want "high-level certifications such as CISSP, ITIL, Six Sigma, PMP."

An awful lot of senior people came through when such certifications were non-existent.  And I might add that an awful lot of us thing that most of these certifications are malarky - it's not like they're professional engineer or medical licensure.  I expect that most of the people with the desired skills don't have such certification, can't be bothered to get it, and perhaps its the case that many with those certifications don't have the depth of skills or experience as those who don't.


But... it sure seems like HR departments have come to like very long laundry lists of skills and certifications - and they use software packages to screen out resumes that don't line up exactly with the laundry lists.  (Personally, I prefer to hire programmers who find it easy to learn a new language as need be, not those who can check off dozens of languages that they've written "hello, world" in.)

Jason Adams
IQ Crew
Tuesday December 18, 2012 1:47:06 PM
no ratings

Good point. I too have seen where managers get praise for things that will inevitibly turn around and bite their successor in the butt. The tricky part about IT is that, we typically know what costs the most up front, may be what saves the most in the end. But, executives want to see the opposite... they want costs down up front and don't pay as much attention to the end. It then becomes a case of "told you so" when that end comes to fruition and it's time to pay up.

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