Employer Experience and Expectations: Finding, Training, and ... - AARP

Employer Experiences and Expectations:

Finding, Training, and Keeping Qualified Workers

D19555

COPYRIGHT © 2011 AARP Research & Strategic Analysis All Rights Reserved 601 E Street, NW Washington, DC 20049 www.aarp.org/research

Report Prepared by: Rebecca Perron, PhD May 2011

AARP Foundation is AARP’s affiliated charity. The Foundation is dedicated to serving vulnerable people 50+ by creating solutions that help them secure the essentials and achieve their best life. AARP Foundation focuses on: hunger, housing, income and isolation as our key mission areas. The Foundation envisions: ‘a country free of poverty where no older person feels vulnerable.’ Foundation programs are funded by grants, tax-deductible contributions and AARP. For more information about AARP Foundation, please log on to www.aarp.org/foundation.

This research was funded by a grant from The Bill and Melinda Gates Foundation.

The author would like to acknowledge the following AARP staff for their input: Deborah Russell, Sara Rix, David Whitehead, Jennifer Leslie, Jeff Love, and S. Kathi Brown. All media inquiries about this project should be directed to AARP’s Media Relations at (202) 434-2560. Inquiries about the survey instrument or additional information about the report should be directed to Rebecca Perron at (202) 434-6324 or [email protected].

Employer Experiences and Expectations:

Finding, Training, and Keeping Qualified Workers Report Prepared by: Rebecca Perron, PhD May 2011

COPYRIGHT © 2011 AARP Research & Strategic Analysis All Rights Reserved 601 E Street, NW Washington, DC 20049 www.aarp.org/research D19555

Table of Contents

Executive Summary

3

Key Findings

4

Finding Qualified Workers: Past, Present…

6

…and Future

9

Employee Skill Sets

12

Employee Degree Requirements

16

Training and Recruiting Workers

20

The Effect of Baby Boom Retirees

28

Conclusion

32

Appendix 1: Survey Methodology

33

Appendix 2: Annotated Survey

35

Executive Summary and Key Findings The graying of the labor force, together with the recession of 2008-2010, has forced employers and prognosticators to take a hard look at workforce preparation, training, and planning. This employer research survey is one component of a larger project that explores the workforce, labor force projections, and employer views on training, preparedness, and recruiting workers. Survey questions were developed after qualitative research with employers. An in-depth employer bulletin board was conducted in early 2010 to determine what employer experiences were in relation to these issues, which then guided us to the survey items on this questionnaire.1 The bulletin board, together with this survey, aimed to put the objective data on labor force projections in a “real world” context, highlighting what human resource managers say they experience. Given that previous studies related to labor force projections indicate potential for workforce shortages and that education projections showed a potential shortage of educated persons by degrees, we expected that employers would indicate a difficulty finding well-prepared workers. Further, we expected that some of the effects of the recession would lead to fewer training opportunities for incumbent workers. Results from the survey, however, using the day-to-day experience of human resources managers, do not support these hypotheses. The questionnaire covers a number of areas related to workforce planning, qualifications, recruitment, and maintenance of a skilled labor force. Results show that employers are not overly concerned about finding qualified workers. They have not had a great deal of difficulty in the past and do not foresee a problem in the future. Although they place an emphasis on basic and industryspecific skills, they have not seen a large drop in the quality of workers with these skills in the past 5-10 years. Employers are cognizant of and concerned about the institutional knowledge loss that may happen when their older workers retire, but they appear to be prepared to offset this loss with knowledge transfer programs and by retaining older workers. Training opportunities for incumbent workers are at levels similar or greater than five years ago, yet these trainings are more related to legal requirements, certification, and licensure than 5-10 years prior. In order to develop and recruit a qualified workforce, employers are turning to traditional and community colleges, as well as vocational schools. Smaller employers (fewer than 500 employees) indicate less difficulty in finding skilled workers, more dissatisfaction with current new hires, fewer training opportunities, and fewer relationships with outside schools to train and recruit workers. This survey of 1003 human resource directors was fielded from May through July 2010. Responses were equally distributed across four company sizes: 20-99 employees, 100-499 employees, 500-999 employees, and 1000+ employees and results were weighted to national data by size of company. Respondents were asked about their company’s hiring practices, training, skill needs, and quality of job applicants, both before and since the recession. We also explored their expectations for the future. 1

A bulletin board is designed with a small group of employers (approximately 30) and allows them to answer general questions in-depth and to respond to other bulletin board discussants. 3

Key Findings nn Finding skilled workers is not a problem for the majority of employers. Approximately one-fifth of the respondents have had difficulty finding sufficient numbers of skilled workers both before and after the start of the recession (21 percent and 17 percent, respectively). Although slightly more employers had difficulty before the recession started, this difference is not significant. Further, it appears that smaller employers (20-99 employees) had less trouble than larger employers finding skilled workers before the recession started (19 percent versus 30 percent for employers of both 500-999 and 1000+ employees). Since the start of the recession, employers of 500-999 employees have had the most trouble finding skilled workers (25 percent versus 17 percent for employers of 20-99, 100-499, and 1000+ employees). nn Among the skills most important to employers are communication; people skills; basic reading, writing, and arithmetic; and industry-specific skills. In fact, more than nine in ten respondents indicate that the above-mentioned skills are very or somewhat important to their organization. Moreover, employers also say that they do not have great difficulty finding applicants with these important skills. Larger businesses (those with more than 500 employees) are more likely to say that these skills are very or somewhat important to their companies than smaller businesses (20499 employees) and more likely to say it is very or somewhat difficult to find applicants with these skills. nn As might be expected, across all industries there is not one particular level of degree that is most preferred or required for positions (high school diploma, bachelor’s degree, master’s degree, etc), though 81 percent say that a high school diploma or GED is required for all or most positions. Employers do indicate, however, that they are still likely to hire workers who may lack the level of degrees typically required for the position, provided their experience or other training makes them suitable for the job. Only 21 percent indicate that the applicant must have the required level or type of degree. Smaller companies (20-99 employees) are most likely to say that they sometimes or often waive the required level of degree. nn Seven in ten of the employers surveyed have “no preference” between traditional and online college degrees, while 27 percent say that their organizations prefer traditional college degrees, and none say online degrees are preferred. For those who do prefer traditional degrees, reasons include that requirements and standards for traditional degrees are well-known, traditional colleges require interaction, and traditional colleges produce students with needed qualifications. Larger companies (500-999 and 1000+ employees) were more likely to state a preference for traditional degrees. nn Employers do not expect to have much difficulty finding qualified workers in the future. More than half say that they expect it will be not very or not at all difficult. Those employers who expect to have difficulty finding qualified workers attribute it to inability to offer competitive salaries, difficulty luring qualified applicants from their current jobs, and competition from other employers when the economy fully rebounds. Larger employers (500-999 and 1000+ employees) expect more difficulty finding qualified workers over the next 5-10 years (versus smaller employers of 20-99 and 100-499 employees).

4

AARP Foundation

nn When asked to compare new hires today versus those from five years ago, employers primarily say that new hires are similar in turnover, qualifications, preparation, and communication skills. New hires are more technologically savvy, but 40 percent of employers say they have a worse work ethic than their counterparts from five years ago. Small employers (20-99 employees) are more likely to say that current new hires are less qualified, less prepared, and have a worse work ethic than new hires from five years ago. nn Almost two-thirds of employers are very or somewhat concerned about losing critical knowledge and experience as older workers retire. Smaller companies (20-99 employees) are less concerned (41 percent) than companies with more than 100 employees. Businesses plan to mitigate this loss by employing several tactics, including keeping retirement-aged workers on staff in a part-time or consulting capacity, using a knowledge transfer program, having a formal succession plan for critical positions, and enticing older workers to remain longer as full-time employees. Larger companies (500+ employees) are more likely to use a knowledge transfer program or formal succession program than companies with fewer than 500 employees. nn Employers continue to offer training to employees at levels at least similar to, if not greater, than they did in the past. However, this training is more likely to be needed for required professional training, occupational safety, and certifications than for basic skills. Approximately seven in ten businesses offer specific technical or professional skills training and supervisory skills training and eight in ten offer occupational safety training. nn Where training has decreased in the past 5-10 years, the primary reason has been due to a decrease in funding (77 percent). The primary reasons given for increased training have been regulatory and compliance requirements, rapid technological change, and as a benefit to retain employees. Smaller companies (20-99 employees) are less likely to offer any on-the-job or other training to their workers. nn Employers are using relationships with various entities to help train and recruit qualified workers. Businesses are most likely to have relationships with traditional colleges, community colleges, and vocational schools in order to help train workers or develop courses that produce skilled workers. Similarly, more than three in ten businesses also use these sources to recruit qualified workers, although employers are most likely to have relationships with job-listing websites for recruiting workers (61 percent). The smallest employers (20-99 employees) are less likely to have any relationships for training and recruiting qualified workers.

Employer Experiences and Expectations

5

Finding Qualified Workers: Past, Present, and Future This survey explores how employers define qualified workers as well as their level of difficulty finding and hiring these qualified workers. Is their level of difficulty higher or lower now than it was before the recession? What qualities are most important to employers? Further, in light of the recession and potential retirements in their workforce, do they suspect that finding qualified workers will be a problem in the future and, if so, why? Past, Present,… Approximately one in five employers had trouble finding sufficient numbers of workers with the skills they needed both before and during the recession. Although slightly lower numbers of employers had trouble finding workers since the recession started (17 percent since versus 21 percent before), this difference is not significant (see Chart 1). Smaller employers with 20-99 employees had fewer troubles finding skilled workers before the recession started (19 percent versus 30 percent for employers of both 500-999 and 1000+ employees). Since the start of the recession, employers of 500-999 employees had the most trouble finding skilled workers: 25 percent versus 17 percent for employers of 20-99, 100-499, and 1000+ employees (not shown). Chart 1: Difficulty finding sufficient numbers of skilled workers pre- and post-recession (In percent; n=1003) 90

81

77

80 70 60 50

Before recession

40 30

Since recession 21

17

20 10 0

Yes

No

Source question: “Before/Since the recession started, had/has your organization been having trouble finding sufficient numbers of workers with the skills you need to do your business?”

6

AARP Foundation

Some comments from the respondent bulletin boards include:2

“We have actually been overwhelmed with candidates that were working in a different industry and because of their current work situation are forced to fall back on skills that they have not used in years.” “Due to the current economic climate we have too many prospective employees with the skills that meet and at times exceed our needs.” “There is no shortage of applicants when we open a position, but you still have to work to find the more qualified candidates with the appropriate skills and experience.” As seen in Chart 2, employers also indicated that, when they were having difficulty finding sufficient numbers of employees, the problem did not apply to all positions in the business. In fact, both before and after the recession, employers overwhelmingly indicated (68 percent before the recession; 70 percent since the recession) that the problem only applied to some positions. Chart 2: Positions affected by difficulty finding sufficient numbers of workers pre- and postrecession (In percent)* 80 70

68 70

60 50 40

Before recession (N=214)

30

Since recession (N=174)

20

14

11

13 12

10 0

Some positions

Many positions

Most positions

5 6 All positions

Source question: “And would you say that your organization has/had experienced these troubles for…” *Base: Those who indicate difficulty finding skilled workers in previous question.

“It really depends on the position. For our more technical positions – engineering positions that are specific to our industry – then yes. For more ‘run of the mill’ positions – HR, Accounting, Finance, Customer Management, Materials, etc – we have not had issues.” 2

All quotes contained in the report are derived from the employer bulletin boards that were conducted in advance of the employer survey.


7

Employers for whom finding sufficient numbers of workers has not been a problem indicate that the recession has impacted their need for new workers in general. Specifically, these employers cite the following reasons for the lack of difficulty finding workers: the company has not been doing much hiring due to slow business or for budgetary reasons (40 percent major reason; 20 percent minor reason), the poor economy has resulted in a large applicant pool (39 percent major reason; 27 percent minor reason), and the business has fewer job openings because the poor economy has resulted in less turnover (39 percent major reason; 27 percent minor reason)(see Chart 3). Chart 3:

Reasons why employers have not had difficulty finding sufficient numbers of workers since the recession began (In percent; n=813)* Organization has not been doing much hiring

39

20

40

Organization has fewer job openings

27

The poor economy has resulted in a large applicant pool

27

Organization has used more contract or temporary workers

4

34 39 Not a reason

33

14

6 0.5

Organization has decided to offshore jobs 0

Minor reason

39

10 20 30 40 50 60

Major reason

82 94

70 80 90 100

Source question: “For each of the following, please indicate whether it is a major reason, a minor reason, or not a reason at all that your organization has not had trouble finding qualified workers?” *Base: Respondents who indicate they have not had trouble finding qualified workers since the recession started

“With all the people looking for jobs, I am finding that everyone and anyone is applying for the positions that we have opened. It is difficult to go through each and every application; it slows the process down.” “In our business, finding a sufficient number of workers hasn’t been a problem. In our organization, top management has put restraints on hiring because of the state of the economy, but still wants production to outperform with less.”

8

AARP Foundation

…and Future Employers do not anticipate having great difficulty finding qualified workers in the near future (5-10 years) (see Chart 4). Only six percent indicate that they think it will be very difficult to find qualified workers, while 37 percent think it will be somewhat difficult. More than half of the sample (55 percent) think that it will be not very (29 percent) or not at all difficult (26 percent). Larger employers (500+ employees) expect more difficulty finding qualified workers over the next 5-10 years than smaller employers (20-499 employees) (not shown). Those who thought they would have some difficulty expected it for both supervisory/management positions (50 percent) and non-supervisory/management (59 percent) positions (Chart 5). Chart 4:

Anticipated difficulty finding qualified workers over the next 5-10 years (In percent; n=1003) 37

40 35

29

30

26

25 20 15 10

6

5 0

Very difficult

Somewhat difficult

Not very difficult

Not at all difficult

Source question: “Would you say that it will be very difficult, somewhat difficult, not very difficult, or not at all difficult to find qualified workers over the next 5 to 10 years?”

Chart 5: Difficulty finding qualified workers in the next 5-10 years by type of position (In percent; n=430)* 60 58 56 54 52 50 48 46 44

59

50

Supervisory or management positions

Non-supervisory and nonmanagement positions

Source question: “For which of the following types of positions do you anticipate problems?” *Base: Respondents who indicate that it will be very or somewhat difficult to find qualified workers in the next 5-10 years in the previous question.


9

Although most employers do not anticipate having difficulty finding qualified workers over the next 5 to 10 years, Chart 6 shows that employers who foresee difficulty in finding qualified workers over the next 5-10 years say it will be due to highly qualified employed persons not wanting to leave stable jobs (38 percent major reason; 39 percent minor reason), difficulty offering competitive salaries (37 percent major reason; 40 percent minor reason), and competition from other employers when the economy improves (34 percent major reason; 39 percent minor reason). Chart 6:

Reasons that employers anticipate difficulty finding qualified workers in the next 5-10 years (In percent; n=1003)

50 45 40

42

40

38 39

39

37

36

34

35

35

31

30 25

Major reason

45

44

27 23

Not a reason at all

26

23 18

20

Minor reason

18

15 10 5 0 Qualified workers do not want to leave stable jobs

Difficult to offer Competition for Qualified Insufficent competetive workers with workers are not applicant pool salaries better economy interested in the due to jobs that your retirements organization offers

Applicant pool is not very qualified

Source question: “I’m going to read a list of possible reasons why it might be difficult to find qualified workers over the next 5 to 10 years, for each, please indicate if you think it will be a major reason, a minor reason, or not a reason for finding qualified workers.”

“Although we have a flood of applications, the employees we want are still working and don’t want to leave a stable job for an unknown when the market is struggling.” “I think in the very near future the issue we will have – as the market improves and jobs become available – is not only multiple openings in our organization due to growth, but also due to turnover from employees leaving for other opportunities.” “…Not being able to offer new recruits a better salary in these tough economic times. This is a current problem and it looks to be this way for the next couple of years.”

10

AARP Foundation

When considering future workforce needs, employers say that they plan to find the workers they need through the traditional methods, such as retaining current employees (96 percent) and word-ofmouth (93 percent) (see Chart 7). At least two-thirds of the respondents also say that they would use job websites (79 percent); recruit from colleges, universities, and vocational schools (68 percent); and tap into professional associations (66 percent). The smallest employers (20-99 employees) most commonly use the informal methods, such as wordof-mouth (93%) and retaining current employees (96%). Larger employers are much more likely than the smallest employers to use more formal approaches, such as using professional associations, recruiting from schools, and job websites (not shown). Chart 7:

Plans to get needed workers (In percent; n=1003) Attempt to retain current employees

96

Word-of-mouth

93

Job websites

79

Recruit from colleges, universities, and vocational schools

68

Professional associations

66

Newspapers and magazines

63

Social media and networking sites

59

Offer better benefits

41

Look internationally for talent

13

Offshore work

6 0

20

40

60

80

100

Source question: “What do you plan to do to get the workers you need?”

“We will continue to source from various resources: online boards, job fairs, networking sites, professional groups, internal job postings, and industry recruiting websites.” “Position the company as an attractive employer with competetive compensation.” “We will continue our current recruiting from the local high schools and the vocational schools.” “We are already placing more emphasis in ensuring employee engagement in an effort to retain employees.”


11

Employee Skill Sets Employers indicate that communication skills (81 percent); basic skills such as reading, writing, or arithmetic skills (78 percent); and people skills (78 percent) are very important to their organizations (see Chart 8). Almost seven in ten (68 percent) indicated that industry-specific skills are very important, followed by computer/information technology skills (43 percent), and analytical skills (38 percent). Larger businesses with more than 500 employees are more likely to say that these skills very or somewhat important than smaller businesses (20-499 employees) and are more likely to say that it is very or somewhat difficult to find applicants with these skills (not shown). Chart 8: Importance of selected skills (In percent; n=1003) 90

Very important

81

78

80

78

Somewhat important Not very important

68

70

Not at all important

60

51 50

46

43 41

39

38

40

33

30 20

18

16

10

18

3

1 1

3

1

26 22 18

22

7 1

9 3

32

29

23 12

11 6

7

5

5

ge ua ng la n

ei g

en cy Fl u

en ag em M

an

in

to

a

rs

fo r

up er

fic er ti or c re

ns u ce Li

ills y or vis

io at

ic yt al An

sk

ills sk n

sk al

Ts /I pu te r m

st ry du In

ills

lls ki

ills

ills sk le Pe op

ills sk Ba sic

sk Co

Co m

m

un

ic

at

io

n

sk

ills

0

Source question: “How important are the following skills to your organization?”

“A mixture of an operation skill set along with people skills…” “People with everyday common sense…” “We are all looking for life skills that enable employees to have tact, discernment, and understanding of how to react to different situations and people. And we are also looking for adaptability.” 12

AARP Foundation

Chart 9 (below) shows that most employers find it difficult to find applicants with specialized industry skills. More than half of the respondents (52 percent) say it is very or somewhat difficult to find these applicants. The chart also shows that more than two in five find it very or somewhat difficult to find applicants with people skills (43 percent), analytical skills (43 percent), and management or supervisory skills (41 percent). Chart 9:

Difficulty finding applicants with selected skills (In percent; n=1003)

45 39

40

37

38

36 33

35 29 26

30 25

25

41 40

41 38

36 35

33

30

30

29 25

27

25

23

21

23

21

20

17 13

15

13

Very difficult Somewhat difficult Not very difficult

10

6

5

5

5

5

4

4

3

Not at all difficult

3

sk sic Ba

te r pu m Co

ic un m Co

m

ills

lls ki Ts /I

n io at

la gn ei fo r a

in

M

an

Fl u

en

cy

ills sk

ua ng

sk e pl Pe o

er up rs to

en ag em

ge

ills

ills y or vis

at fic rti ce or

e ur ns ce Li

sk

ills sk n io

al ic yt al An

In

du

st

ry

sk

sk

ills

ills

0

Source question: “Would you say that it has been very difficult, somewhat difficult, not very difficult, or not at all difficult to find job applicants with…”

“The most difficult thing for our company has been that we would like them to have skills in all phases of mechanical contracting. Most of our recruits are proficient in some areas, but need to train in other phases.” “Some don’t have what it takes to do even a simple task such as keeping a security log for their hours worked – a diary of their shift, if you will.”


13

As seen in Charts 10 and 11, employers feel that the new hires today are more technologically savvy (71 percent) than their counterparts from 5 years ago, yet most employers say new hires are about the same in turnover (48 percent), qualifications (69 percent), preparation (51 percent), and communication skills (61 percent). While 48 percent of employers feel that new hires have about the same work ethic as five years ago, still 40 percent feel that their work ethic is worse than those hired five years ago. Compared to the larger employers (with more than 100 employees), small employers (20-99 employees) are more likely to say that current new hires were less qualified (10 percent), less prepared (25 percent), and have a worse work ethic (41 percent) than new hires from 5-10 years prior (not shown). Chart 10: How new hires compare to hires from five years ago in selected characteristics (In percent; n=1003) 80 71

69

70 60 51

48

50

More Less

40 30

24

22

About the same

26 21

24

20 10

0

19 8

2

Techonological savvy

Turnover

Preparation

Qualified

Source question: “In general, how do your organization’s new hires today compare to those five years ago?”

14

AARP Foundation

Chart 11: How new hires compare to hires from five years ago in selected characteristics (In percent; n=1003) 70 61 60 48

50 40

40

Better Worse

30 20

About the same 17

19 9

10

0

Communication skills

Work ethic

Source question: “In general, how do your organization’s new hires today compare to those five years ago?”

“I think today’s workers are savvier than they have been in the past. They seem to possess more than technical skills. I have found this new crop of workers to be, for the most part, prepared.” “(Some) new hires come in with a sense that the company should be constructed around their interests. What a lot of them have not learned is a good work ethic.” “People who were hired 5 to 10 years ago are more seasoned and experienced employees. The skills and aptitudes of new hires today are mediocre – most are still growing, living at home, and have not had a lot of work experience.” “The skill set is definitely more technologically inclined than in past years but I feel that the grammar aptitude was much higher 5 years ago than the new hires of today.”


15

Employee Degree Requirements Although it is understood that the level of degree (meaning high school diploma or GED, associate’s degree, bachelor’s degree, etc.), would not be uniform across all job types and industries, we did want to see what share of positions required certain degrees. Further, while a certain degree may be required from a training and education perspective, we also wanted to determine if concessions are made by substituting experience for those degrees. With the proliferation of computer and internet use, online learning opportunities have become more prevalent. We wanted the employers’ view on the value that they may place on a traditional college or university degree versus an online degree. Chart 12: Requirement of degrees or certifications for positions (In percent; n=1003) 70

65 59

60

57

56 50

50 38

40

31 30 20 10 0

24 16

12

8

High school diploma/GED

23

6

5

Associate's Bachelor's degree/2-year degree/4-year

Most positions Some positions

15

11

All positions

14 1

4

Advanced degree (JD, PhD,MA)

No positions

5 Certification program

Source question: “As I read each of the following degrees or certifications, please indicate whether your organization requires it for all, most, some or no positions.”

The most common level of degree required for most positions in an organization is a high school diploma or GED (65 percent for all positions and 16 percent for most positions)(see Chart 12). Results did show that, although certain levels of degrees are required for positions, employers are willing to forego these requirements in favor of experience or other training. As seen in Chart 13 (below), only 21 percent of employers say that applicants must have the degree. As shown in Chart 13, more than three-quarters of employers allow substitution of training or experience, rarely (27 percent), sometimes (40 percent), or often (9 percent). Smaller companies (2099 employees) were most likely to say that they sometimes or often waived the degree requirement (not shown).

16

AARP Foundation

Chart 13: Substitution of experience and training for required degrees (In percent; n=1003) 50

40

40 30

27 21

20

9

10 0

No, they must have Yes, but it is rare degrees

Yes, sometimes

Yes, often

Source question: “Has your organization ever hired workers who lack the degrees you typically require but whose experience or other training appears to make them well suited for the job?”

“Yes and no, because we are an academic environment, higher education is favored. Many of our administrative positions require a degree or an equivalent of work-related experience.” “Yes, we have different licenses that set individuals apart from each other and in different fields. Our industry has a lot of different certifications that are needed…” We are all hung up on degrees, but relevant experience, intelligence, and the ability to play nice matter much more.” “If I have 2 or 3 candidates with the same skills and aptitude, the one with the degree is getting the position.”


17

Although more than one-quarter (27 percent) of employers prefer that applicant and employee degrees come from a traditional college or university, 71 percent have no preference between traditional and online programs (see Chart 14). While no employers say they would prefer an online to a traditional degree, it is encouraging for non-traditional learners that 71 percent show no bias between the two. Not shown in our chart is that smaller companies are more likely to state that they had no preference between online and traditional degrees. Although 76 percent and 67 percent of smaller companies (20-99 and 100-499 employees, respectively) state no preference, 51 percent and 58 percent of larger companies (500-999 and 1000+ employees, respectively) have no preference. Conversely, 22 percent and 30 percent of smaller companies prefer a traditional degree, while 46 and 38 percent of larger companies prefer a traditional degree. Chart 14: Preferred traditional college or university degree (In percent; n=1003) 80

71

70 60 50 40 30

27

20 10 0

2

0 Traditional colleges Online colleges and and universities universities

No preference

It depends

Source question: “And now, thinking only about college degrees, in general, which of the following types of institutions does your organization prefer that job candidates have college degrees from?”

“…Online degrees cause me to pause because of the lack of face-to-face contact and the inability for a student to work in a team environment.” “In our line of work, it has to be hands on. Online degrees are not going to work; they do not have the hands-on experience.” “I do not have a preference over one or the other. People have different learning styles and as long as they have the education and can communicate that, I am satisfied.”

18

AARP Foundation

When they did prefer traditional colleges or universities, employers indicated that the most common reasons were that traditional colleges and universities produce students with the qualifications that the business needs (93 percent), they require interaction and communication (92 percent), they have requirements and standards that are well known (91 percent), and that individuals gain people skills at traditional institutions (90 percent) (see Chart 15). Small companies with 20-99 employees that prefer traditional colleges (not shown) are far more likely to attribute this preference to the higher admission standards relative to online programs (91 percent versus 67 percent for companies of size 100-499; 65 percent for companies of size 500-999; and 68 percent for companies of size 1000+) (not shown). Chart 15: Reasons why employers prefer traditional colleges or university degrees to online degrees (In percent: n=266)* 95

93

92

91

90

90

85 80

78

75 70

Produce students with the qualifications you need

Require interaction and communication

Requirements and standards are well-known

Individuals gain people skills

Admission standards are higher

Source question: “Why does your organization prefer degrees from traditional colleges/universities?” *Base: Respondents who indicate that their business prefers traditional college degrees in previous question.

“There is no interaction in person with others. Verbal communications are shared and therefore are an attribute when dealing with customers. In addition, answers may be easily checked online versus traditional college, [where] you have to think on your feet.” “Degrees from traditional colleges have a much higher perceived value because they are known entities. We want achievers in our company and achievers successfully attend traditional colleges.” “Because colleges and universities offer good educations and off-campus people skills.” “…There are a lot of fly-by-night programs out there where the curriculum is less than rigorous and you’re essentially paying a fee in exchange for the granting of a degree.”


19

Training and Recruiting Workers Workers may be offered a myriad of training opportunities that range from full-semester college courses to regulated safety training in-house. This section explores the types of training offered to workers and poses some questions: Has it increased or decreased from past levels and why? Also, what motivates a company to offer a certain type of training? Do companies have relationships with learning centers to train or recruit well-qualified employees? Employers still offer various types of training to their workers, both for basic skills and professional development. The most common types of training for workers are occupational safety training (80 percent), technical or professional skills (72 percent), and supervisory or management training skills (69 percent)(see Chart 16). Still, more than half of those employers surveyed also offer computer or IT training (62 percent), required professional training (58 percent), formal courses toward a degree or certification (55 percent), and communication skills training (51 percent). Chart 16: Job training offered to workers (In percent; n=1003) 80

Occupational safety training 72

Technical or professional skills Supervisory or management skills training

69 62

Computer or IT training 58

Required professional training

55

Formal courses toward a degree or certification 51

Communication skills training 38

Project management training

37

Basic skills (arithmetic, reading, etc.) 23

Career counseling

20

Negotiation skills training 11

English as a second language (ESL) classes 7

Foreign language training 0

10

20

30

40

50

60

70

80

90

Source question: “Does your organization provide the following on-the-job or other training to your workers?”

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AARP Foundation

“We do much of our training in-house. We have provided funding for more specific training, such as supervisory workshops. We are open to funding training that applies to the individual’s job.” “We have an internal learning and development organization that has put together a great catalog of courses, ranging from management and leadership development to specific product training, as well as training to prepare our reps for their licensing exams.” “Some of the training cannot be done in-house because it is state mandated. These classes are paid for by the company.”


21

Most companies indicate that they had either increased training (46 percent) or kept about the same amount of training (41 percent) as in years past (Chart 17). For those employers whose organization had decreased training, the most common reason is that funding had been decreased or completely cut (77 percent major reason; 18 percent minor reason), followed by the expectation that newly hired employees were expected to have most of the skills needed (44 percent major reason; 32 percent minor reason) (Chart 18). Chart 17: Change in number of training opportunities over the past 5-10 years (In percent; n=1003) 50

41

46

40 30 20

11

10 0

Has not changed

Has increased

Has decreased

Source question: “Have the number of training opportunities your organization provides to workers changed over the past 5-10 years?

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AARP Foundation

Chart 18: Reasons why training has decreased in the past 5-10 years (In percent; n=105)*

5 18

Funding has decreased

77 25 32

New hires are expected to have most skills

44

Not a reason at all Minor reason

61

Organization does not see a need for training

Major reason

22 17 68 25

Employees are not interested in training 7 0

10 20 30 40 50 60 70 80 90

Source question: “For each of the following, please indicate if it is a major reason, a minor reason, or not a reason at all that the number of training opportunities your organization provides has decreased.” *Base: Respondents who indicate that their training opportunities have decreased in the previous question.

“For the most part, it hasn’t changed nor will it change. I was always big on training and continued training to maintain focus and get better.” “Our training and funding has decreased over the last three years. We were putting a lot of resources into it, but unfortunately it was one of the first things that was cut.”


23

Although more employers indicate that training has increased rather than decreased in the past 5-10 years, their reasons for increasing training relate to the needs associated with legal requirements and technology (Chart 19) rather than a fringe benefit to employees. Almost two-thirds of employers (65 percent) state that a major reason their training increased was that regulatory and compliance requirements have resulted in training on more topics, such as sexual harassment, occupational safety, and/or age discrimination. An additional 23 percent say it was a minor reason. Fifty-four percent indicate that a major reason was that rapid technological change requires more frequent training (an additional 28 percent selected this as a minor reason). Employers have also increased training as another benefit to retain employees (46 percent major reason; 30 percent minor reason). Finally, 44 percent of employers say a major reason for more training was that there are more requirements for certifications and qualifications than in the past (31 percent minor reason). Smaller companies (20-99 employees) are less likely to offer any on-the-job or other training to their workers, relative to businesses with more than 100 employees (not shown). Chart 19: Reasons why training has increased in the past 5-10 years (In percent; n=463)*

11

Regulatory and compliance requirements result in more training

23 65 18

Rapid technological change requires more frequent training

28 54 24

Organization uses it as another benefit to retain workers

30 46

Not a reason at all Minor reason

25

More requirements for certifications/ qualifications

Major reason

31 44 51 31

Training is less expensive now 18

53

New hires are not as skilled as they were in the past

30 16 0

10

20

30

40

50

60

70

Source question: “ For each of the following, please indicate if it is a major reason, a minor reason, or not a reason at all that the number of training opportunities your organization provides has increased.” *Base: Respondents who indicate that their training opportunities have increased in the previous question.

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AARP Foundation

”Our training will change depending on the new technology that we are presented within our industry.” “For the most part, the proliferation of technology has caused us to increase the amount of training.” “The increase in training has been mostly in the compliance area. This is due to the many new government regulations, federal and state.” “…We may have to provide more individuals with time off and funds to get all appropriate licenses and certifications.” The past 5-10 years have changed the way in which businesses conduct and offer training (see Chart 20). Three in five employers say that technology has led to more self-paced training opportunities, such as computer-based training programs that individuals complete at their own pace. A similar percent indicate that more training is offered on the internet (59 percent). Chart 20: Ways in which training has changed in the past 5-10 years (In percent; n=1003) 100 90 80 70 60 50 40 30 20 10 0

60

59

Technology has led to more self-paced training opportunities

More training offered on the internet

Source question: “In which of the following ways, if any, has the training offered by your organization changed in the past 5 to 10 years?”

“In the past, meetings were held which took valuable time away from both management and lower-level personnel. Nowadays, online training is a must as it offers the opporutnity for the employees to work at their own pace.” “We’ve added some web-based training for some of the ongoing training that we do [related to] safety, quality, etc.”


25

The focus of the training that organizations offer has changed in the past 5-10 years (see Chart 21). Employers say that training has become more focused on specific professional skills (71 percent); more focused on regulatory and compliance requirements, such as age discrimination, sexual harassment, and occupational safety (71 percent); more focused on new technologies (67 percent); and more focused on skills related to certification (54 percent). Only 19 percent indicate that training today is more focused on the basic arithmetic, reading, and writing, skills. This could mean that the employees are less in need of these trainings, or that businesses no longer have the time and resources to train for these basic skills. Chart 21: How the focus of training opportunities has changed in the past 5-10 years (In percent; n=1003) More focused on regulatory and compliance requirements

71

More focused on specific professional skills

71

More focused on new technologies

67

More focused on skills related to certification

How focus of training has changed in the past 5 to 10 years

54

More focused on basic skills, such as arithmetic, reading, and writing

19 0

10 20 30 40 50 60 70 80

Source question: “In which of the following ways has the focus of your organization’s training opportunities changed in the past 5 to 10 years?”

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AARP Foundation

Employers indicate that they have relationships with various schools for the purposes of training and recruiting qualified employees (see Chart 22). Most commonly, organizations have training relationships with traditional colleges or universities (36 percent), community colleges (32 percent), and vocational schools or centers (30 percent). In order to recruit qualified workers, employers most commonly utilize relationships with job websites (61 percent). They also rely on their relationships with traditional colleges and universities (45 percent), community colleges (34 percent), and vocational schools (32 percent) to recruit qualified workers. Smaller employers (20-99 employees) were less likely to have any of these relationships for training and recruiting qualified workers (not shown). Chart 22: Relationships with training centers or schools for purposes of training or recruiting workers (In percent; n=1003) 70 61 60 50

45 Online colleges or universities

40

36 30

30 20

18

32

32

34

24

21

Local high schools Vocational schools or centers Community colleges Traditional colleges or universities Websites that list job openings

11 10 0

For training

For recruiting

Source questions: “Does your organization have relationships with any of the following training centers or schools to help train workers or develop courses that produce workers with the skills your organization needs?” “Does your organization have relationships with any of the following training centers or schools to help recruit workers?”

“We do not anticipate any problems with finding the right people with the right skills as we have a great source from the local vocational schools, which has really created a good beginning for those who want to try our industry.” “We work with a lot of the local colleges to recruit graduates. We have also partnered with local community colleges to provide trainers for the courses we offer.”


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The Effect of Baby Boom Retirees As baby boomers reach age 60 and beyond and traditional sources of retirement income become available to them, will they create a knowledge vacuum in their wake? This section explores how concerned employers are with the impending retirement of the baby boomers. What plans do they have in place for when the older worker retires? As shown in Chart 23, employers appear to be concerned about losing knowledge and critical experience as their organization’s older workers retire. In fact, 24 percent said they are very concerned and an additional 39 percent said they are somewhat concerned. Smaller companies with 20-99 employees are less concerned (41 percent not very concerned or not at all concerned) than companies with more than 100 employees (versus 33 percent for companies with 100-499 employees; 28 percent for companies with 500-999 employees; and 25 percent for companies with 1000+ employees) (not shown). Chart 23: Concern about losing knowledge and critical experience as older workers retire (In percent; n=1003) 45 39

40 35 30 25

24

22

20

15

15 10 5

0

Very concerned

Somewhat concerned

Not very concerned

Not at all concerned

Source question: “How concerned are you about losing knowledge and critical experience as your organization’s older workers retire?”

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AARP Foundation

“As older workers retire there is real concern about losing a great deal of knowledge. But what concerns me (as much) is finding the right individual who has the same work ethic as the older person.” “This is definitely a concern for us. We have many older workers who have great institutional knowledge and we are looking for ways to transition this knowledge.” “This is a huge concern. The aging workforce and the potential hemorrhaging of knowledge as a result will pose a significant challenge to our business.” “We generally have a young workforce. Our senior management team are mostly in their 40s so this is not a major issue for us.”


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In considering how to mitigate this potential loss of knowledge, employers plan to take certain steps to stem the loss of critical experience (see Chart 24). More than half of the employers in this survey say that they will try to keep older workers on as part-time workers or consultants (69 percent), they will use a knowledge transfer program to allow workers who are approaching retirement age to mentor or transfer knowledge to younger workers (53 percent), and they will use a succession plan for critical positions (51 percent). Larger companies with 500 or more employees are more likely to use a knowledge transfer or formal succession program versus smaller companies (not shown). Chart 24: Plans to address the knowledge and experience gap created by retiring workers (In percent; n=1003) 80 69

70 60 50

53

51

Training or knowledge transfer program

A succession plan for critical positions

46

40 30 20 10 0

Try to entice older workers Keep older workers on as to remain as full-time part-time employees or employees consultants

Source question: “How do you plan to address the knowledge and experience gap that your organization may face as older workers retire?”

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AARP Foundation

“My idea is to keep some of the older workers around for consulting on a part-time basis as needed.” “We have a succession plan in place so that a transfer of knowledge can take place…” “…I am hoping that there will be enough around through consultancy work that they can quickly mentor the younger workers enough so that the large exodus doesn’t reduce business effectiveness.” “We have introduced a part-time status for those who want semiretirement that is flexible to their needs and wants, but still provides us with access to their skills and knowledge.”


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Conclusion At the outset of this research, we expected that employers would have some concerns about finding skilled workers, now and in the future, and that most would indicate cuts in training. Most employers report that they have not had a high level of difficulty finding skilled applicants and do not expect a problem in the future. They are somewhat concerned that they will lose critical knowledge when workers retire but plan to mitigate that loss by keeping older workers on as part-time employees or consultants and by developing knowledge transfer programs. Despite recent problems in the economy, most employers have not cut training for their employees, but this may be in part due to the need for training to satisfy the high level of regulatory and licensing requirements. Although most employers do not express anxiety about finding qualified workers in the future, this may be because they are seeing the issue through the lens of the recession, where workers are applying for open positions in droves and may be willing to make concessions in accepting a job. It is possible that employers are being somewhat short-sighted, both in their relatively low concern at finding skilled workers and in judging the impact of the retirement of a generation of workers.

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AARP Foundation

Appendix 1: Survey Methodology The AARP Human Resource Survey involved telephone interviews with a random sample of 1003 human resource directors of companies with 20 or more employees. The telephone interviews were conducted in English by Woelfel Research, Inc. (WRI) from May 17 to July 7, 2010. The results from the study were weighted by company size. The margin of sampling error for the sample was ±3.1 percent. Details on the design and execution of the survey are discussed below.

Design and Data Collection Procedures Sample Design Woelfel Research, Inc. acquired a random sample of businesses drawn from the Dun & Bradstreet population of all companies in the United States with 20 or more employees. Respondents from the businesses were screened for the following characteristics: nn nn nn nn nn

Head, manager, or high level human resources executive Been with the organization at least six months Respondent worked at headquarters, a subsidiary headquarters, or the company’s sole location Had a high degree of influence over recruiting and workforce planning Had a high degree of knowledge and/or decision-making responsibility for training and development programs for employees

The sampling plan was to conduct an even number of interviews in each of four size segments: nn nn nn nn

20-99 employees (n=251) 100-499 employees (n=250) 500-999 employees (n=250) 1000+ employees (n=252)

Questionnaire Development and Testing The questionnaire was developed by AARP staff. In order to improve the quality of the data, the questionnaire was pretested with a small number of respondents. The pretest interviews were monitored by WRI and AARP staff, and conducted using experienced interviewers who could best judge the quality of the answers given and the degree to which respondents understood the questions. Contact Procedures Each telephone number in the sample was called an average of four times. The sample was released for interviewing in replicates, which were representative subsamples of the larger sample. Using replicates to control the release of the sample ensured that completed call procedures were followed for the entire sample. It also ensured that the geographic distribution of the numbers called was appropriate. Calls were staggered over times of day and days of the week to maximize the chance of making contact with potential respondents. After four calls a message was left on the answering machine of the respondent informing him or her of the purpose of the survey along with an 800 number to call to be interviewed. Employer Experiences and Expectations

33

Weighting The total sample was weighted by number of employees. The table below contains information about the weighting. The table explains the percent of the population for all companies in each size category based on Dun & Bradstreet; the percent of each type of business in the sample; and the percent of each company after applying the weights.

Table 1. Weights Number of Employees 50-99 100-499 500-999 1000+

Population 58.0 percent 30.1 percent 5.4 percent 6.4 percent

Sample 25.0 percent 25.0 percent 25.0 percent 25.0 percent

Weighted Sample 58.1 percent 30.1 percent 5.4 percent 6.4 percent

Statistical Testing The significance testing reported in this study used the “effective” base size as opposed to either the weighted or unweighted base size. The effective base size was calculated simply as the (sum of the weight factors) squared/sum of the squared weight factors. The formula was as follows: n n

(Sw1)2 __i=1___ Sw12 i=1

Where: w was the magnitude of the weight n was the number of cases in the sample i was the first case

Response Rate/Cooperation Rate/Refusal Rate The response rate for this study was measured using AAPOR’s response rate 3 method. The cooperation rate was measured using AAPOR’s cooperation rate 3 method. The refusal rate was measured using AAPOR’s refusal rate 3 method.

Telephone

Response Rate 10 percent

Cooperation Rate 95 percent

Refusal Rate 3 percent

Source: AAPOR Outcome Rate Calculator Version 2.1, May 2003, www.aapor.org.

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AARP Foundation

Appendix 2: Annotated Survey June 2010 n=1,003, Sampling Error =±3.1 percent, RESPONSE RATE 10 percent Quotas:

Group 1 (20-99 employees): Group 2 (100-499 employees): Group 3 (500-999 employees): Group 4 (1000+ employees):

250 Respondents 250 Respondents 250 Respondents 250 Respondents

Screener Questions S1.

[BEGIN ONLY AFTER IT APPEARS YOU MAY HAVE THE RIGHT PERSON ON THE PHONE] Hello, my name is _________. I am calling from [vendor] regarding a National Human Resources Survey of Employers. I am trying to reach [CONTACT NAME FROM SAMPLE OR, IF NO NAME SUPPLIED, “the head of your human resources department”].

[IF NO HUMAN RESOURCES DEPARTMENT OR PERSON FROM SAMPLE IS NO LONGER WITH ORGANIZATION, “Then may I speak with the person who makes decisions regarding recruiting, training, and other decisions related to human resources.”

[PROCEED ONCE CORRECT PERSON IS ON THE PHONE]

[IF PERSON NOT AVAILABLE, RECORD NAME AND CONTACT NUMBER FOR CALLBACK.]

NEW HR CONTACT NAME: _______________________________________

NEW HR CONTACT PHONE: ______________________________________

[INTERVIEWERS: IF NECESSARY CALLBACK IMMEDIATELY TO GET THE ABOVE INFORMATION.]

S2.

We are conducting a national study among HR executives across the country. Your organization has been randomly selected to participate and we would very much like to include your views.

Is now a good time to do this? [IF NOT: Can we schedule another time that is more convenient? [IF NECESSARY: “In all, the survey will take 15 to 20 minutes depending on your answers.”] 1 Yes, Now is a Good Time è [PROCEED] 2 No, Now is NOT a Good Time è [SCHEDULE CALLBACK] 3 REFUSED è TERMINATE

INTERVIEWER & PROGRAMMER NOTE: PLEASE ASK FOR PHONE NUMBER FIRST, THEN CONTACT NAME. HOWEVER, ALLOW INTERVIEWERS TO RECORD THEM IN EITHER ORDER IN CASE RESPONDENT OFFERS ONE BEFORE THE OTHER.


35

IF NECESSARY: “I assure you that we are not selling anything and you will not be contacted by anyone as a result of your participating in this survey.”

“All of your answers would remain completely confidential. Neither you nor your organization would be specifically identified in the data.”

S3.

Let’s get started. First, are you the head of human resources for your organization? 1 2 98 99

Base: Total respondents Yes è [SKIP TO S6] No DON’T KNOW / NOT SURE REFUSED è [TERMINATE]

n=1003 percent 96 4 -

S3a. Are you a manager or higher-level executive with responsibilities for human resources policies for your organization? 1

Base: Total asked Yes

n=44 percent 100

S4a. When it comes to making decisions about human resource policies that include recruiting and workforce planning, would you say you… 1 2 3

Base: Total asked Make decisions by yourself and have a high degree of influence over recruiting and workforce planning for your organization Make decisions by yourself and have some degree of influence over recruiting and workforce planning for your organization Make decisions with others and have a high degree of influence over recruiting and workforce planning for your organization

n=44 percent 33 5 62

S4b. Would you say that you have a high degree of knowledge or have decision-making responsibility in your organization for training and development programs for employees?

[INTERVIEWERS: NOTE THAT THE RESPONDENT DOES NOT NEED TO HAVE PRIMARY RESPONSIBILITY OR DIRECTLY HANDLE TRAINING AND DEVELOPMENT PROGRAMS. HAVING A “HIGH DEGREE OF KNOWLEDGE” ABOUT THE AREA IS ALSO ACCEPTABLE. VERIFY ‘NO’ TO BOTH BEFORE ENTERING ‘NO’] 1 2 98 99

Base: Total asked Yes No DON’T KNOW / NOT SURE REFUSED è [TERMINATE]

n=44 percent 100 -

{Continue with survey only if respondent answers “yes” to S4b. Otherwise, terminate.} {If correct person on phone based on screening criteria above, continue to S6} {If not the correct person on the phone, based on responses above, continue to S5a and S5b}

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AARP Foundation

S5a. Can you please tell us the name and contact information for the head of your Human Resources department or a person with a primary decision–making responsibility in the areas of benefits, workforce planning, and employee training?

NEW HR CONTACT NAME: _______________________________________

NEW HR CONTACT PHONE: _______________________________________

S5b.

May I speak to him/her? 1. Yes, Coming to Phone è [SKIP TO S2] 2. No, Not available è [SCHEDULE CALLABCK] 3. REFUSED è [TERMINATE]

S6.

Have you been with your current organization for at least six months? 1

S7.

Base: Total respondents Yes

n=1003 percent 100

Which of the following best describes your organization? (READ LIST. ACCEPT ONLY ONE ANSWER) 1 2 3 4 5 97

Base: Total respondents Federal, state, or local government Public school system or public university Private school system or private university Non-profit organization other than government For-profit organization Other (Please specify: ______________________)

n=1003 percent 1 9 2 17 71 1

If S7=public school system or pubic university, or private school system or private university: S7a.

Which of the following best describes the location of your offices? Are your offices located at your school system’s or university’s headquarters or main office, at the sole location for your school system or university, or are they located somewhere else? 1 2

Base: Public/private school system or public/ private university Headquarters or main office Sole location

n=102 percent 89 11

If S7 does NOT equal public school system/university or private school system/university: S7b. Which of the following best describes the location of your offices? Are they located at your organization’s headquarters, a subsidiary headquarters, at the sole location for your organization, or are they located somewhere else? 1 2 3

Base: Not public/private school system or public/private university Headquarters Subsidiary headquarters Sole location


n=901 percent 79 9 12

37

S8.

Excluding nonpermanent employees, such as contract or temporary workers, approximately how many employees does your organization have TOTAL, in all locations in the United States? [IF NECESSARY: “Just your best estimate is fine.”] [Record ACTUAL # and CHECK QUOTA BASED ON categorIES BELOW] 1 2 3 4

Base: Total respondents 20-99 employees 100-499 employees 500-999 employees 1000+ employees

n=1003 percent 58 30 5 6

If S7= nonprofit, for profit, or other {auto fill for schools and government per instructions below} S9.

Which of the following best describes the industry or type of business your organization is primarily involved in? [READ LIST. ACCEPT ONE RESPONSE ONLY. IF RESPONDENT OFFERS MORE THAN ONE ASK, “If you had to pick only one of these to represent your organization, which one do you think best describes it?”]

1 2 3 4 5 6

7 8 9 10 11 98

S10.

n=1003 percent 17 9 14 6 18 6

6 8 3 2 11 1

In what U.S. state is your organization’s headquarters or home office in? [Please capture the state’s two-letter abbreviation] 1 2 3 4 5 98

38

Base: Total respondents Retail or wholesale trade Healthcare / health services Education and educational services {Auto fill for S7=2 or 3} Construction Manufacturing Professional and business services (IF NECESSARY: “This includes services such as legal services, marketing, advertising, consulting, bookkeeping, and engineering.”) Technology, information, and information services (IF NECESSARY: “This includes services such as publishing, media, telecommunications, and internet service providers.”) Finance/insurance/real estate Hospitality/leisure Government {Auto fill for S7=1} Or is your organization involved in some other industry? [Please specify: _______________________ ] [DO NOT READ] DD DON’T KNOW RR REFUSED

Base: Total respondents Northeast Southeast Midwest Southwest West DK/refused

n=1003 percent 68 9 12 7 5