Havre Job Service Employers' Committee                                        Employer Resource Guide                            

DEEPENING THE APPLICANT POOL:

HIRING POTENTIAL INSTEAD OF CREDENTIALS

By Eric Johnson , Montana Economy at a Glance-September 2007,

Research & Analysis Bureau, Workforce Service Division,

 Montana Department of Labor & Industry

In Montana , a complaint being voiced among employers is that they cannot find enough workers. In the words of one employer, Montana is experiencing “a draining of the applicant pool.” There are indica­tions this situation may be a long-term trend. It has been suggested that by 2013, the annual increases in Montana ’s population will fall below the level needed to supply a sufficient number of workers to the labor force, given current growth within the economy.¹

 As the unemployment rate in Montana contin­ues to linger near historically low levels, more and more attention is being paid to the difficulty of recruiting new or replacement workers. However, within this problem lies another: finding workers with the requisite skills.

 As shown in Table One, all jobs require skills in addition to knowledge and abilities. It is the complexity level of the skills that separates jobs into low-skilled or high-skilled, and usually sep­arates jobs into low pay or high pay. Low-skills or high, employers prefer to hire employees who have already acquired skills. This preference can contribute to the perceived severity of the “draining” of the applicant pool.

 Table One

 Regardless of the true level of the applicant pool, employers have reported having difficulty finding skilled workers, whether the jobs re­quire low complexity or high complexity skill levels. In conducting research for her book, Nan L. Maxwell found that nearly 60 percent of firms reported having great difficulty in recruiting qualified workers for low-skilled jobs even when the unemployment rate exceeded 7.0 percent. Montana ’s unemployment rate has been below 7.0 percent since 1988 and below 5.0 percent for the last seven years. Given the historically low unemployment rates currently being experienced, Montana may be facing the challenge of not just finding workers, but of finding skilled workers.

However, several studies have shown that more than one applicant pool exists in Montana . These other pools are made up of individuals who do not currently participate in the Montana workforce. For example, about half of all high school dropouts are not working. Also included are retirees, stay-at-home parents, and American Indians. In the current situation, more employers should be willing to look to those other pools for employees as advertising, employee retention policies, and other strategies have failed to ensure full staffing. However, these segments of the population may lack required or up-to-date skills.

 If a shortage of labor persists, employers may want to consider reviewing their hiring process. One approach that can be successful is hiring based upon potential rather than credentials. The traditional approach to hiring it to find an exact match in a applicant to the skills required by the job. This leads to a rejection of any applicant that doesn’t fully match up.

 One example of a different approach comes from a successful church – the executive pastor was a school teacher before assuming that position and the director of volunteers was recruited from a doctor’s office. Another employer that rethought the traditional approach is the Army National Guard. The National Guard instituted the GED Plus Program, a program that allows non-GED holders to enlist. The National Guard sends those enlistees to school to complete their GED before sending them off to basic training. Reports indicate that the program has been successful and has contributed to the National Guard achieving enlistment quotas. In both examples, a different approach has allowed employers to deepen their applicant pool.

 Deepening the pool does not come without a price. Federal and stste programs such as Job Corps and Adult Basic Education are focused on helping people acquire skills, but they may be unable to serve all the potential applicants. Often enough, the employer has to be prepared to actively ensure the skills are acquired, investing both time and money. Many organizations have training programs, while others (such as McDonald’s, Boeing, Walt Disney, and more than 2,000 others) operate “corporate universities,” some of which are degree-granting institutions.

 For training purposes, the apprenticeship system is one of the oldest known forms of instilling occupation-specific skills. Historically, apprenticeship programs have been seen as the territory of construction business and labor unions. Approximately 180 occupations are registered with the State of Montana ’s apprenticeship program. About 50 of these occupations have apprentices currently enrolled and enrollment is largely concentrated in construction occupations.³ However, more recent additions to the national apprenticeship program include non-construction related occupations such as Hotel Associate, Internetworking Technician, Office Manager/Administrative Services, and Phar­macy Technician.⁴ Indicative of this change, a 2005 survey in North Carolina revealed that 28 percent of apprentices in the state were working in State Government, 27 percent were working in Manufac­turing, 12 percent working in Construction, and 10 percent working in Local Government.⁵ Examples of occupations in the apprenticeship program with high demand in Montana are shown in Table Two.

 Table Two

 The biggest benefit to employers is that a training program can expand the number of workers con­sidered for employment.  The presence of a training program shifts the focus away from hiring workers with acquired skills to hiring workers capable of ac­quiring skills. While employers worry that training and education may make workers more mobile, a large percentage of workers remain in Montana after completing their training. Of the 214 apprentice­ship program graduates in 2002, 83 percent had reportable wages in Montana in 2006. Graduates of apprenticeship programs have high retention rates.  Also, using apprentice­ship program graduates, several studies in Europe have indicated that employees completing training programs tend to remain longer with current em­ployers than do other employees.⁷

  Montana is facing both opportunities and chal­lenges with its economy.  Considering the current and future labor force pool, employers may need to change their approach to recruiting workers in order to deepen the applicant pool. One means of doing this is to hire for potential.  Drawing formerly un­considered persons into the labor force will provide opportunities to both workers and businesses, which will help sustain Montana ’s economic growth.

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