A significant issue is that nobody trains employees while compensating them fairly based on their aptitude. So the only option is for employees to bounce around to get new skills and better wages. Employers hate this and constantly complain about "employee loyalty", not recognizing that job hopping is the only real defense that an employee has to be fairly compensated.
Here is a fictional account that illustrates the point:
John Doe currently writes C++ and finds Company A with great benefits and excellent compensation, but they only hire experienced Python programmers. But across the street, Company B will hire C++ programmers and train them on Python. Company B doesn't pay nearly as well, and the benefits are also pretty poor in comparison to Company A.
Company B offers John a position, but at a below market salary for Python programmers. John would be taking a pay cut from what he makes as a C++ programmer, but he takes the job anyway.
Being a highly capable individual, after 1 year John is one of the top Python programmers in Company B. John meets some engineers from Company A at a local meetup, and they recruit him to come interview with Company A. John passes the interviews with flying colors and is offered 30% more salary at Company A than he currently makes at Company B. This is now more than John ever made as a C++ programmer so he gladly takes the job, after only staying at Company B for a year.
Similar events occur with many more employees from Company B as they all start getting poached by Company A. Company B creates a non-compete agreement with Company A to keep its programmers from leaving.
Company A now complains to Congress that it can't find enough workers and needs to hire more foreign workers to fill the gap. It gets more foreign workers, which it can then hire at lower salaries without having to poach talent from Company B. Over time, the executives at Company A realize the cost savings and start cutting salaries, raises, and benefits.
Engineers at both Company A and B now realize their wages are stagnating and they all start leaving for other opportunities. Executives at Company A and B start lobbying Congress more and complaining to the press about a talent shortage and their inability to find workers.
You had me with you until you used the phrase "foreign workers." It's not their foreignness that makes them cheaper, it's that (in the U.S. at least) they're not able to easily change jobs and demand fair market wages, because their visa ties them to one employer.
That's why Company B would never hire a C++ programmer and train them. Instead they would hire people who knew python (and insist of Python2.7rc2 b34 patch level 42 experience) AND pay less and rely on getting people that were either rejected from A or didn't find A.
They would then decide the problem was python, fire all the programmers and try again with magic-silver-bullet technology of the day
If you want experienced, wildly competent workers, you'll have to pay for them. If you're not willing to pay for the experienced workers, you'll have to train inexperienced workers. Also, the requirements you're listing for the job is probably ridiculous, and your screening process is probably broken.
Soon as I graduated I encountered the experience wall - it was ridiculous. "junior" level positions required 2-3 years experience and paid less then working at Walmart.
Now that I have over 5 years experience in my field, I'm rolling in offers and have my pick.
I've had managers complain about lack of loyalty in employees. I typically fired back suggesting that if you take new graduates out of school and actually invest in them, you'll have a much stronger core workforce that is likely far more invested into the company then random mercenaries you pick off the market. Apparently I don't get management theory though...
It's another facet of the short-sighted, WallStreet-induced culture where the only things that matter are quarter profits and share prices, and where a manager who remains in the same position for two years is branded a loser.
The pressure is on cutting costs now and raise profits now and to hell with tomorrow, by the time a new employee is fully trained chances are that the manager who hired him is gone, probably following the CEO.
"Most of the world"? Lets not overstate things: the past few decades have been relatively great for labor in China, India, Africa, Indonesia, and Latin America.
In the highly developed economies (particularly the USA), yeah, wages have frozen, but really good things have been happening elsewhere.
It is not really cutting the benefits and wages that affect loyalty. Seeing my parent generation, they all understood that there were good and bad time in a company and that sometimes you needed to work for the greater good (of the company). The major difference, they had their job for life.
Now you are a despised resource. If you are not in sales, you are a "cost center".
A previous boss of mine, during a company meeting QA summarized it like that: "Q: Are you thinking about outsourcing our project X dev team ? A: There is no immediate plan, however we are a development company, and we are continuously investigating outsourcing opportunities to stay competitive." That is something that the new generation know very well: you current job is only training for the next one.
The unstated counter-argument is that the employer will have to train inexperienced workers who will leave as soos as they become competent and experienced, or pay as much as you would for the experienced person in the first place.
Myself, I'd rather train someone up in my process without them learning bad habits, even if that means they're pairing with me for 30 hours out of 40. That said, I'm an exception.
Once upon a time, some companies hired new workers as QA, trained as QA, and those with the aptitude were moved into programming. I know that IBM still has an internship program that streams people into their system.
That's because companies don't give them raises commensurate with their new experience. Each year for the first 2-3 years or so a new employee that's any good should be receiving large raises on top of their presumably modest starting salary.
The problem is that companies think they can get away with keeping people anchored to those starting salaries. It doesn't work; morale suffers and they leave.
Finding a young employee and turning him into one of your superstars is a really gratifying feeling. Watching him leave because obstinate business owners refuse to pay him what he is now worth is infuriating.
I've experienced this several times in leadership roles and it is one of the many things that convinced me to start my own business.
If people leave after training then that's a retention problem and has nothing to do with how skilled they where when they started. And yes, giving a 22 year old tech worker a 25+% raise might seem crazy, but if you want to keep up with their increase in value you have to consider such things normal.
Alternately, companies can just have policies in place to actually promote & give raises to people as their skills increase. If your HR procedures don't allow for somebody to get a 25% raise after a year, fire the HR - they're easier to replace than technical employees that understand your produce.
This is an excellent point, and perhaps an argument against at-will employment. Even if you had a candidate who was willing to commit to staying employed long enough to justify the time and expense of their training, in many US States they lack the legal power to agree to such a contract.
Extrapolating from personal experience here as a programmer but it looks tough for a couple of reasons, one of which is pay. Employers tend to give very good starting salaries for experienced people, and very poor raises. So employees sign up inexperienced at low pay, get trained and get raises that put them below market rates, so their incentives tell them to do exactly the job hopping you describe.
Peter Cappelli: Well, it doesn’t look like that’s true. The business degrees are now, by far, the most popular major, and that’s where people are getting jobs, so that’s pretty common.
Seriously? Everyone I knew with just a business degree ended up with a crap retail job. Most of the people in engineering seemed to go into the jobs the business majors wanted.
The raw numbers may say that the numbers of business majors and the number hired is high, but the ratios might be abysmal in comparison to other fields.
"Steven Cherry: Employers can’t find workers at the going wage. True or false?
Peter Cappelli: That’s false, and that’s almost by definition the case, because we know how markets work, and markets adjust and wages adjust. I had an employer write to me the other day saying they had a skills gap, and they really did. It wasn’t wages, because they did market wage surveys, and they were paying what everybody else was paying, and all the employers, by the way, are having a skills gap, so it’s a big problem. Well, if everybody’s got the same problem, and you’re all paying the same wage, it’s probably the case that you’re not paying enough. So the way markets work isn’t you set the wage and say, “Well, this is good enough.” You pay what it takes to get the people you need, and if wages have to go up, then so be it, right? "
I think I get it except for the "and they really did".
He's basically saying that the skills gap was not due to the company, but to unnaturally low compensation levels enforced by all companies in the sector. So all companies were creating their own "skills gap", because none of them wanted to pay more than the others for this set of skills.
Let's say I run a coffee shop. I sell $3 cups of coffee, which is the market rate, but can't get any customers. I have no signage, don't advertise, and I'm rude to customers.
That's what a lot of companies are like - they don't treat recruitment as a core business, but as an annoying distraction (like doing taxes).
The best way to get a job is to cold call companies, or network. It's like if coffee shops with a customer acquisition strategy of "wait for people to find the shop by accident, then hope they invite their friends".
I landed a great programming job with no experience and no degree because I could walk in there and talk about what I had taught myself and done on my own time. I know this doesn't transfer to every situation in every industry, but I think much of the problem stems from people who haven't put in much effort to make themselves marketable and to educate themselves. If I saw that, I would make the assumption that the company could spend money training them and they wouldn't necessarily come away a harder-working, more motivated person.
Sounds like you did have experience: stuff you had done independently. More and more that's becoming a requirement to get a good job out of college, at least in certain fields. Combined with your ability to speak intelligently about that experience, it sounds like the hiring decision was pretty easy. What I've found more common, is recent graduates who expect their degree /alone/ will get them a great job out of college, and that's becoming more and more difficult.
Edit: After reading my comment, I don't think I made it clear enough that I'm agreeing with your point about people not marketing or educating themselves adequately. After spending 4 years in college, I think a lot of people expect to show up at a job interview, show the interviewer their degree, and get a job. The reality is obviously quite different.
The issue with most people is that "you don't know what you don't know", coupled with the fact that most still have the idea that college/on the job training will suffice, while many companies are no longer providing training.
It takes a specific mentality to take the time to learn a craft with little to no immediate benefit in sight--you see this in other fields too, but they're not the norm.
The question is, do we try to change our culture to generate more self-starters, or do we change the institutions that need skilled labor?
It seems that getting a programming job that way only works if you know someone at the company, or the company is small. Unfortunately, in my experience with both sides of the process, you won't even be considered for a job at a big tech company without the right degree--your application doesn't make it through their first filter.
Publicly complaining you can't find staff seems like a terrible idea.
It's an obvious selling point for the competition. "It looks to me like they're one illness away from missing shipments" is an easy fear to plant in someones mind.
Couple that with hiring away one or two solid staff members, and you're going to fail publicly.
The more committed you are to the fiction free markets don't work, the more you're going to suffer.
"[I]t’s kind of bizarre if you think about it: if you were, say, a computer company,
and you had a product that was all based on this particular chip. You didn’t build
the chip yourself. You were expecting to buy it on the outside, and your expectation
was just that you’ll be able... to buy this chip on the outside in the quantity you
want at the price you want to pay... The software engineers, the systems architects,
are often the key component in these companies, expecting to hire them right
out of college, and they don’t really have much relationships with the colleges...
They don’t get close to their suppliers; they’re just hoping it will come up.
If you did that with a chip, your board of directors would probably fire you for
terrible risk management, but when it comes to skills and employees, it seems to be
kind of a standard practice."
If you go to India, for example, where the IT companies are booming, those folks are growing all their talent from within. They’re doing it because they have to, but it’s not rocket science as to how you can do it
I don't think this is true - everything I've read about outsourcing companies is that they have a very high turnover of staff.
Prisoner's Dilemma emerging with Employees and Employers being pit up against each other. Employers fear that training won't lead to added retention and employees don't trust the company to be around or take care of them if they stay.
People always dismissed it, when I told them - if only I was born x years earlier I would have graduated at the start of the boom cycle. I would have landed a high paying role out of college/Uni and earned enough cash by the end of the cycle to see me through the bust years. With the work experience I would have a better chance competing against new grads. Considering the value of money etc, benefiting from a 2/3 boom cycle could put you well ahead financially.
While this is rather simplistic and exceptions to the rule, timing can make one hell of a difference.
That's also the reason why the job-hop to get a raise is so common.
Pay rises are multipliers on your current salary - which is based on when in the boom/bust cycle you got hired. If you were hired in a bust you can get the maximum raise every year but at the end you will still be getting less than someone hired in a boom.
<blockquote>
Peter Cappelli: Well, the employers, if you look at what the hiring managers are saying and what they’re looking for, they’re not, for the most part, hiring people out of college anyway or out of high school. What they want is three to five years’ experience. So the shortages that they report, the difficulty hiring, are for people who have quite specific skills, and those skills are work-experience based.
</blockquote>
Workers without three to five years' experience will never get three to five years' experience. The only way for a young worker to be hired is through corruption, by knowing somebody or lying about their experience. The employers have designed a system to create the shortage that they complain about, and they perpetuate it because everybody's doing it that way.
In any workplace, the grunt workers should outnumber management. It is no different in software. For every software engineer there need to be testers, bug fixers, and doc writers. Yet in the want ads for programmers, it is the other way around. Senior this. Senior that.
The way to fix this situation is easy, but like anything else it will require time and effort. Next to the routine 3-5 year want ad, also post something like this:
Job title: Computer Programmer.
Requirements: can program a computer.
Compensation: $14/hr or DOE.
You will get plenty of applicants because the economy is that bad right now. Use interviews to determine the best fits for your company. Hire two or three for every Project Manager or Senior anything that you have. Give them raises if they are any good, treat them with respect, and they'll stick around. Three to five years later, you will not only have coders with three to five years of programming experience. The coders will have three to five years of domain knowledge of your company's operations. That might be just as valuable as their coding ability.
Wow. This interview is SPOT ON. So applicable to pretty much every industry. Thanks for posting. Worth resharing through other networks. Hopefully more people will read stuff like this that actually explains the hiring problems employers face.
I learned that the cat you let out of the bag is the same animal as the pig in a poke
Nope, the cat is the cat o' nine tails, when it was taken out of its bag, it was because someone was about to be punished. No idea what he means by this comment.
Note that "letting the cat out of the bag" is used in cases where the truth comes out, not when someone is about to be punished. Consider the following two sentences.
After the jury returned a guilty verdict, the judge let the cat out of the bag that the defendant would serve fifteen years.
At the conference, the Microsoft employee let the cat out of the bag that that Windows 9 wouldn't run on x86.
I would argue that the second feels far more natural than the first. That's because it's about uncovering the truth, like the fact that the pig in your poke is really just a cat, and not about punishment, like pulling out the cat o' nine tails.
Erm, when you take a cat of a bag, you ain't putting it back in without more than a few scratches to yourself.
Usually this is described in relation to a secret or a hidden truth: when it's out, you can't kill the truth, you have to live with the release of the information.
[+] [-] hkarthik|13 years ago|reply
Here is a fictional account that illustrates the point:
John Doe currently writes C++ and finds Company A with great benefits and excellent compensation, but they only hire experienced Python programmers. But across the street, Company B will hire C++ programmers and train them on Python. Company B doesn't pay nearly as well, and the benefits are also pretty poor in comparison to Company A.
Company B offers John a position, but at a below market salary for Python programmers. John would be taking a pay cut from what he makes as a C++ programmer, but he takes the job anyway.
Being a highly capable individual, after 1 year John is one of the top Python programmers in Company B. John meets some engineers from Company A at a local meetup, and they recruit him to come interview with Company A. John passes the interviews with flying colors and is offered 30% more salary at Company A than he currently makes at Company B. This is now more than John ever made as a C++ programmer so he gladly takes the job, after only staying at Company B for a year.
Similar events occur with many more employees from Company B as they all start getting poached by Company A. Company B creates a non-compete agreement with Company A to keep its programmers from leaving.
Company A now complains to Congress that it can't find enough workers and needs to hire more foreign workers to fill the gap. It gets more foreign workers, which it can then hire at lower salaries without having to poach talent from Company B. Over time, the executives at Company A realize the cost savings and start cutting salaries, raises, and benefits.
Engineers at both Company A and B now realize their wages are stagnating and they all start leaving for other opportunities. Executives at Company A and B start lobbying Congress more and complaining to the press about a talent shortage and their inability to find workers.
[+] [-] jt2190|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] excuse-me|13 years ago|reply
They would then decide the problem was python, fire all the programmers and try again with magic-silver-bullet technology of the day
[+] [-] TheCount|13 years ago|reply
[deleted]
[+] [-] fiatmoney|13 years ago|reply
If you want experienced, wildly competent workers, you'll have to pay for them. If you're not willing to pay for the experienced workers, you'll have to train inexperienced workers. Also, the requirements you're listing for the job is probably ridiculous, and your screening process is probably broken.
[+] [-] blindhippo|13 years ago|reply
Now that I have over 5 years experience in my field, I'm rolling in offers and have my pick.
I've had managers complain about lack of loyalty in employees. I typically fired back suggesting that if you take new graduates out of school and actually invest in them, you'll have a much stronger core workforce that is likely far more invested into the company then random mercenaries you pick off the market. Apparently I don't get management theory though...
[+] [-] tokenizer|13 years ago|reply
You need to cultivate experience in workers sometimes, especially if you have a complex system in place.
Employees have no loyalty anymore, because of the cutting of benefits and wages.
Employers have no loyal employees anymore, which means they require 3 to 5 years experience to give them some return on hiring said employee.
Students are having a hard time finding work, because Employers are requiring this experience.
Employers have a skills gap, because they can't hire Students to fill the gap, because they'd just quit before giving some return (loyalty).
I think I'm starting to see the clusterfuck caused by limiting compensation and benefits...
[+] [-] toyg|13 years ago|reply
The pressure is on cutting costs now and raise profits now and to hell with tomorrow, by the time a new employee is fully trained chances are that the manager who hired him is gone, probably following the CEO.
[+] [-] scarmig|13 years ago|reply
In the highly developed economies (particularly the USA), yeah, wages have frozen, but really good things have been happening elsewhere.
[+] [-] gutnor|13 years ago|reply
Now you are a despised resource. If you are not in sales, you are a "cost center". A previous boss of mine, during a company meeting QA summarized it like that: "Q: Are you thinking about outsourcing our project X dev team ? A: There is no immediate plan, however we are a development company, and we are continuously investigating outsourcing opportunities to stay competitive." That is something that the new generation know very well: you current job is only training for the next one.
[+] [-] ep103|13 years ago|reply
[+] [-] ebiester|13 years ago|reply
Myself, I'd rather train someone up in my process without them learning bad habits, even if that means they're pairing with me for 30 hours out of 40. That said, I'm an exception.
Once upon a time, some companies hired new workers as QA, trained as QA, and those with the aptitude were moved into programming. I know that IBM still has an internship program that streams people into their system.
[+] [-] mratzloff|13 years ago|reply
The problem is that companies think they can get away with keeping people anchored to those starting salaries. It doesn't work; morale suffers and they leave.
Finding a young employee and turning him into one of your superstars is a really gratifying feeling. Watching him leave because obstinate business owners refuse to pay him what he is now worth is infuriating.
I've experienced this several times in leadership roles and it is one of the many things that convinced me to start my own business.
[+] [-] Retric|13 years ago|reply
[+] [-] juan_juarez|13 years ago|reply
[+] [-] tomjen3|13 years ago|reply
[+] [-] graysnorf|13 years ago|reply
Extrapolating from personal experience here as a programmer but it looks tough for a couple of reasons, one of which is pay. Employers tend to give very good starting salaries for experienced people, and very poor raises. So employees sign up inexperienced at low pay, get trained and get raises that put them below market rates, so their incentives tell them to do exactly the job hopping you describe.
[+] [-] base698|13 years ago|reply
Seriously? Everyone I knew with just a business degree ended up with a crap retail job. Most of the people in engineering seemed to go into the jobs the business majors wanted.
[+] [-] JamesLeonis|13 years ago|reply
[+] [-] kpennell|13 years ago|reply
[+] [-] cafard|13 years ago|reply
Peter Cappelli: That’s false, and that’s almost by definition the case, because we know how markets work, and markets adjust and wages adjust. I had an employer write to me the other day saying they had a skills gap, and they really did. It wasn’t wages, because they did market wage surveys, and they were paying what everybody else was paying, and all the employers, by the way, are having a skills gap, so it’s a big problem. Well, if everybody’s got the same problem, and you’re all paying the same wage, it’s probably the case that you’re not paying enough. So the way markets work isn’t you set the wage and say, “Well, this is good enough.” You pay what it takes to get the people you need, and if wages have to go up, then so be it, right? "
I think I get it except for the "and they really did".
[+] [-] toyg|13 years ago|reply
[+] [-] wisty|13 years ago|reply
Let's say I run a coffee shop. I sell $3 cups of coffee, which is the market rate, but can't get any customers. I have no signage, don't advertise, and I'm rude to customers.
That's what a lot of companies are like - they don't treat recruitment as a core business, but as an annoying distraction (like doing taxes).
The best way to get a job is to cold call companies, or network. It's like if coffee shops with a customer acquisition strategy of "wait for people to find the shop by accident, then hope they invite their friends".
[+] [-] TallGuyShort|13 years ago|reply
[+] [-] wbrendel|13 years ago|reply
Edit: After reading my comment, I don't think I made it clear enough that I'm agreeing with your point about people not marketing or educating themselves adequately. After spending 4 years in college, I think a lot of people expect to show up at a job interview, show the interviewer their degree, and get a job. The reality is obviously quite different.
[+] [-] devoidfury|13 years ago|reply
The issue with most people is that "you don't know what you don't know", coupled with the fact that most still have the idea that college/on the job training will suffice, while many companies are no longer providing training.
It takes a specific mentality to take the time to learn a craft with little to no immediate benefit in sight--you see this in other fields too, but they're not the norm.
The question is, do we try to change our culture to generate more self-starters, or do we change the institutions that need skilled labor?
[+] [-] techx2501|13 years ago|reply
[+] [-] jfoutz|13 years ago|reply
It's an obvious selling point for the competition. "It looks to me like they're one illness away from missing shipments" is an easy fear to plant in someones mind.
Couple that with hiring away one or two solid staff members, and you're going to fail publicly.
The more committed you are to the fiction free markets don't work, the more you're going to suffer.
[+] [-] jt2190|13 years ago|reply
[+] [-] gaius|13 years ago|reply
I don't think this is true - everything I've read about outsourcing companies is that they have a very high turnover of staff.
[+] [-] aridiculous|13 years ago|reply
Anyone know how to crack this trust game?
[+] [-] sparknlaunch|13 years ago|reply
People always dismissed it, when I told them - if only I was born x years earlier I would have graduated at the start of the boom cycle. I would have landed a high paying role out of college/Uni and earned enough cash by the end of the cycle to see me through the bust years. With the work experience I would have a better chance competing against new grads. Considering the value of money etc, benefiting from a 2/3 boom cycle could put you well ahead financially.
While this is rather simplistic and exceptions to the rule, timing can make one hell of a difference.
[+] [-] excuse-me|13 years ago|reply
Pay rises are multipliers on your current salary - which is based on when in the boom/bust cycle you got hired. If you were hired in a bust you can get the maximum raise every year but at the end you will still be getting less than someone hired in a boom.
[+] [-] TheCount|13 years ago|reply
[deleted]
[+] [-] Tangaroa|13 years ago|reply
<blockquote> Peter Cappelli: Well, the employers, if you look at what the hiring managers are saying and what they’re looking for, they’re not, for the most part, hiring people out of college anyway or out of high school. What they want is three to five years’ experience. So the shortages that they report, the difficulty hiring, are for people who have quite specific skills, and those skills are work-experience based. </blockquote>
Workers without three to five years' experience will never get three to five years' experience. The only way for a young worker to be hired is through corruption, by knowing somebody or lying about their experience. The employers have designed a system to create the shortage that they complain about, and they perpetuate it because everybody's doing it that way.
In any workplace, the grunt workers should outnumber management. It is no different in software. For every software engineer there need to be testers, bug fixers, and doc writers. Yet in the want ads for programmers, it is the other way around. Senior this. Senior that.
The way to fix this situation is easy, but like anything else it will require time and effort. Next to the routine 3-5 year want ad, also post something like this:
Job title: Computer Programmer. Requirements: can program a computer. Compensation: $14/hr or DOE.
You will get plenty of applicants because the economy is that bad right now. Use interviews to determine the best fits for your company. Hire two or three for every Project Manager or Senior anything that you have. Give them raises if they are any good, treat them with respect, and they'll stick around. Three to five years later, you will not only have coders with three to five years of programming experience. The coders will have three to five years of domain knowledge of your company's operations. That might be just as valuable as their coding ability.
[+] [-] horsehead|13 years ago|reply
[+] [-] losethos|13 years ago|reply
[deleted]
[+] [-] gaius|13 years ago|reply
Nope, the cat is the cat o' nine tails, when it was taken out of its bag, it was because someone was about to be punished. No idea what he means by this comment.
[+] [-] rprospero|13 years ago|reply
http://en.wikipedia.org/wiki/Letting_the_cat_out_of_the_bag
Note that "letting the cat out of the bag" is used in cases where the truth comes out, not when someone is about to be punished. Consider the following two sentences.
After the jury returned a guilty verdict, the judge let the cat out of the bag that the defendant would serve fifteen years.
At the conference, the Microsoft employee let the cat out of the bag that that Windows 9 wouldn't run on x86.
I would argue that the second feels far more natural than the first. That's because it's about uncovering the truth, like the fact that the pig in your poke is really just a cat, and not about punishment, like pulling out the cat o' nine tails.
[+] [-] pnathan|13 years ago|reply
Usually this is described in relation to a secret or a hidden truth: when it's out, you can't kill the truth, you have to live with the release of the information.