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Job Crisis in America - july 2013

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Job Crisis in America - july 2013 prepared by PMOAdvisory.com

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Job Crisis in America - july 2013

  1. 1. Job Crisis in America - Today and Tomorrow 2013 TE WU PMO ADVISORY LLC | www.pmoadvisory.com
  2. 2. Management Consulting with a Social Conscience Page 1 Job Crisis in America - Today and Tomorrow Introduction The United States is facing a crisis. In many ways, this crisis is larger than the national deficit or the ongoing threat of terrorism. In fact, left unchecked, this crisis will almost certainly erode our country’s competitiveness and create economic consequences that will last for generations, if not forever. This crisis strikes at the heart of our historic national success, built largely with a world class workforce first trained and unleashed after World War II. The education and training provided by the G.I. Bill propelled America’s rise as the most competitive large economy in the world. But today, with thousands of college graduates unable to find solid entry-level professional jobs, a vacuum of vast proportions is being created. If left unchecked, this vacuum will continue its rapid growth, resulting in a shortage of future managers, executives and leaders. In this paper, we will look at the observable causes for the problem and propose a viable solution. Crisis Contributors As the American economy begins to once again steam forward, a large swath of the workforce is being left behind. Many recent college graduates are not able to find entry level professional employment in their field of study. This opportunity void did not developed because students have chosen limited or exotic degrees such as art history. The void is also not directly related to the shrinking of America’s manufacturing base. In fact, the lack of entry level professional opportunity is often most prevalent in the very professional fields that historically drove the greatest systemic wealth for the nation. According to Payscale (Payscale, 2013), these fields include business and business management (Rank #1), economics (Rank #10),biology (Rank #8), English (Rank #9), legal services, research and development and computer science. The Size of the Problem But, just how severe is the crisis? In a March 2012 Forbes article, job placement firm Adecco reported that at least 60% of recent college graduates could not find an entry position in their field of study(Crotty, J.M., 2013). In a more recent article by Huffington Post, underemployment among recent graduates can be as high as 40%. (Berman, J., 2013) Business and management majors are 8.2 times more likely to be underemployed. If you imagine a professional career as a ladder where each rung is built on the success of the previous rung, between 4 to 6 out of 10 college graduates are left without the ability to create their first rung. Successive rungs, including those that develop management skills, may never fully develop.
  3. 3. Management Consulting with a Social Conscience Page 2 The Three Major Factors to the Problem The Education Factor American business and professional schools are one ingredient in the growing crisis. Many undergraduate degree programs do not include basic workplace skills including moderate problem solving, project management and communication skills. Some do not have the basic skills of using Microsoft Excel or PowerPoint. A 2012 Chronicle of Higher Education and American Public Media’s marketplace study of 50,000 U.S. companies showed that over half of the companies surveyed reported significant problems finding recent graduates with appropriate skills.(Fischer, K., 2013) Secondary education points to their ability to generate internships as their de facto solution to advancing basic workplace skills for students and this may be a partial solution. In their book, Quarterlife Crisis, Abby Wilner and Alexandra Robbins note that recent college graduates are leaving a lifetime of clear and structured steps and entering a workplace that offers no clear roadmap. (Robbins, A. and Wilner, A., 2001) At the same time, graduates are also defining themselves personally. The difficulty with internships for graduates lies in that they are often veiled outsource opportunities, not leading to a legitimate employment offer. The Forbes magazine article also reported that employers complain that the short-term nature of many internships does not allow time for interns to clearly demonstrate a graduate’s ability to stay with a project or employer for years versus months.(Forbes, 2013) Some internships also do not aid in the formal development of the first career ladder rung because the intern is toiling in menial tasks. In fact, a short term internship may do more harm than good by isolating the intern from the habits and skills found in a functional workplace. The Graduate The graduates themselves areanother ingredient in the American workplace crisis. ACT, the educational research and testing organization, reported that 70% of recent college graduates do not have the work ethic needed for success in the professional workplace. (Chacon, B., 2013) Many recent graduates suffer from “ambition inflation,” according to psychologist Jean Twenge. In her findings reported by DailyMail.com, Twenge and her partners noted that many college students suffer from an inflated sense of their abilities coupled with an unrealistic expectation of how the workplace will reward their efforts.(Anonymous, Dailymail, 2013) When this “inflation” meets the real world, graduates are unprepared to adjust their expectations and align them with reality. Parents may contribute to this by promoting the idea of gaining “life experiences” rather than actual or independent workplace experience. If parents do not allow and help their children learn to manage disappointment and failure but rather “protect” their children from any unpleasantness, graduates may not be ready to handle real life difficult situations after college.
  4. 4. Management Consulting with a Social Conscience Page 3 The Offshoring and Outsourcing Factor American business is the final and perhaps the most important ingredient in the employment crisis. Job outsourcing has become a staple for business leaders driven to short term economic gains. For a company to quickly reduce costs, outsourcing appears to be a simple solution and first rung positions are typically the easiest to outsource to hungry and low cost foreign workers. It is not surprising that cost reduction or control is cited as the number one reason for outsourcing.(Job Outsourcing Statistics)Companies save significantly by avoiding recruiting, hiring and training costs. Furthermore, American business, particularly the large publically traded flavor of American business, has a very short economic attention span. Results are measured in calendar quarters and the delta between costs and profits is the immediate and constant driver. Chief Executive Officers have an average tenure generally reported to be between four and eight years. So, “long” range planning often only extends into the next year or two. This perpetual cost pressure often does not allow room for the time and effort required to even partially develop a college graduate and many senior and middle managers take shortcuts and outsource entry level functions to foreign countries. Probable Crisis Outcomes When all of these ingredients come together, the lack of a career first rung has two clear outcomes. For the graduates, it is likely that their entire adult work life will not truly recover economically. The combination of delayed employment in their field and basic financial needs will almost certainly place a burden on the already thin American support system with continued unemployment and welfare payments. Perhaps a larger concern to American business should be the future lack of new managers. As long as there have been businesses in the United States, there has also been formal and informal grooming processes for developing tomorrow’s middle and senior managers. By transferring first rung employment opportunities to outsource providers, American companies are trading short term financial savings and lower head counts for a certain inability to manage their companies in the future. The valuable trade of entry level employment and the mentoring and observation needed to develop next generation managers is lost in the outsourced business model. A Solution to the Crisis Although many solutions have been proposed, they have severe design flaws. Some solutions, such as the promise of government sponsored additional training are not economically feasible or the training themselves relevant to today’s business needs. The proposed solution of stemming outsourcing through regulation is worse as it impedes the competitive abilities of American companies and rewards foreign providers not burdened by the same regulations. We believe that the solution requires three successful components that together develop a virtuous economic partnership that also avoids continued government or corporate handouts.
  5. 5. Management Consulting with a Social Conscience Page 4 First, today’s graduates must develop real and relevant skills for today’s business environment. This includes the need to work on real projects being completed in real U.S. companies. Graduates will benefit from operating in the world beyond the classroom and field of study theory. They will also have a real-world education in work ethic, communications and problem solving skills they will need to fully develop their first and subsequent career ladder rungs. Second, graduates must be willing to invest in themselves through continued training opportunities and trial by fire. Also, they need to be willing to share the costs of this education and the sometimes negative results that are often the inevitable result of trial and error. Sharing in the “pain” of their shortcomings while also delivering tangible value to customers will give graduates skills that the American free market system will recognize and reward. Finally, businesses must recognize the true cost of outsourcing and be willing investment partners in the United States. There can be no future for an American business if there is no early development of tomorrow’s team leads, managers and leaders. About PMO Advisory Our company, PMO Advisory, is a socially progressive firm created with a dual mission: 1) Helping our clients to be more successful by improving their business effectiveness and achieving execution excellence; 2) helping our society by nurturing the next generation of business leaders and by promoting greater sustainability (e.g. green project management). Our senior leaders are both seasoned business professionals and experienced educators. We have constructed an environment that permits students and graduates to work on moderate and long term real world projects under the supervision of our experienced professionals. Our company is not against offshoring or outsourcing; they are the reality of today’s business. But we believe unless we stem the loss of future talents, both individual graduates and America will lose. By unleashing the basic market economy forces, in the form of lowering cost to customers, creating real and tangible business value, providing experience and robust learning to today’s graduates, balancing the risk by engaging experienced professionals, PMO Advisory is leading the creation of a new socio-economic business model that is both sustainable and virtuous. It is a win-win for our graduates, for our customers, for the business professionals, and for our country. For more information, please visit us at www.pmoadvisory.com. Address: 466 Pompton Avenue, Suite 4, Cedar Grove, NJ 07009 Email: advisor@pmoadvisory.com Office: 201-688-0680
  6. 6. Management Consulting with a Social Conscience Page 5 Reference: 1. Anonymous, Dailymail Reporter (2013), How college students think they are more special than ever, January 5, 2013, MailOnline. Retrieved form http://www.dailymail.co.uk/news/article- 2257715/Study-shows-college-students-think-theyre-special--read-write-barely-study.html 2. Berman, Jillian (2013), Underemployment Widespread Among College Graduates, Worst For Business Majors: Analysis, Huffington Post, June 18, 2013.Retrieved form http://www.huffingtonpost.com/2013/06/18/underemployment-payscale_n_3459887.html 3. Chacon, Belen (2013), #1 Thing Hurting New Grads In Their Job Search, Careerealism.com, March 15, 2013. Retrieved form http://www.careerealism.com/job-search-new-grads/#chitika_close_button 4. Crotty, James Marshall (2013), 60% Of College Grads Can't Find Work In Their Field. Is A Management Degree The Answer?, Forbes, March 1, 2013, Retrieved form http://www.forbes.com/sites/jamesmarshallcrotty/2012/03/01/most-college-grads-cant-find-work- in-their-field-is-a-management-degree-the-answer/ 5. Fischer, Karin (2013), A College Degree Sorts Job Applicants, but Employers Wish It Meant More, The Chronicle of Higher Education, March 2, 2013. Retrieved form http://chronicle.com/article/The- Employment-Mismatch/137625/#id=overview 6. Job Outsourcing Statistics (2013), Sourcing Line Computer Economics, July 20, 2012. Retrieved form http://www.statisticbrain.com/outsourcing-statistics-by-country/ 7. Payscale (2013), The 10 Most Underemployed Majors, Retrieved form http://www.payscale.com/data-packages/underemployed/slideshow/business-administration-major 8. Robbins, Alexandra and Wilner, Abby, Quarterlife Crisis: The Unique Challenges of Life in Your Twenties, 2001, Penguin Putnam Inc, New York.

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