Posts Tagged ‘skills gaps’

In our previous post on Unequal Labor Market Distribution of Youth in the Arab World we looked at an example of applying a behavioral intervention to influence youth career choice in Gulf countries. While consumer behavior and decision sciences literature in the US and Europe has shown that prompting respondents to rank their values prior to making decisions can yield positive results in terms of post-decision satisfaction and lower levels of regret, asking youth in the Gulf countries to rank attribute values that they consider important when making career choices prior to choosing a career path was not as positively influential as Western literature suggests.

Our research findings suggest that behavioral interventions on career choices of youth in the Gulf decrease the likelihood that they will choose career disciplines characterized by labor market gaps or which are outside traditional career disciplines. This finding illustrates that behavioral interventions that seek to influence career choice of youth in the Gulf may be less effective due to students being unaccustomed to considering values when making career decisions, a finding that has also been demonstrated by previous research in the Arab World (IFC, 2011).

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Looking more closely at the assumptions on which behavioral interventions are designed can potentially reveal the extent to which such interventions or ‘nudges’ for improving decision quality are applicable in the Arab region. Thaler and Sunstein (2008) describe behavioral interventions or ‘nudges’ as ‘any aspect of choice architecture that alters people’s behavior in a predictable way without forbidding any options or significantly changing their economic incentives’. Their notion that people are ‘nudge-able’ is primarily based on the assumption that human nature often prompt individuals to follow heuristics in decision making that may lead to biases and errors. Heuristics, or rules of thumbs, are adopted by humans because they cost less time and effort and seem much more convenient given our ‘bounded rationality’ and selective attention. Kahneman and Tversky (1973) explain how heuristics such as anchoring, availability heuristics, framing effects, and higher sensitivities to losses than gains, may lead to judgment errors or biases that distort decision making processes and yield sub-optimal outcomes.

A major weakness in behavior intervention literature is the assumption that heuristics used to make decisions are similar across cultures. Cultural differences are often overlooked in designing behavioral interventions (Levinson and Peng, 2006). While some heuristics may be universal (for instance, our study showed a similar tendency of Arab youth, as is common amongst youth elsewhere, to stick to prevalently chosen and socially acceptable career disciplines given the increased perceived accountability associated with the decision (Dolan et al., 2010), studies show that not of all them are. The belief of one’s ability to influence events, risk tolerance, honoring of sunk costs, probability judgments, and cultural dimensions listed by Hofestede (2001) such as uncertainty avoidance (Keil et al., 2000) can all influence heuristics applied career decision making.

The need for further research into behavioral interventions and measures that would be more effective, familiar, and meaningful to youth in the Arab world is evident in order to promote socially optimal career decisions amongst Arab youth. Such work must be accompanied by the development of a behavioral model to ensure cultural variation is accounted for rather than treated as statistical noise (Levinson and Ping, 2006). At the same time, exploring the applicability of career guidance behavioral interventions and their pre-requisites in the Arab region and cultures other than the West would help in understanding the origin of biases. Exploring why biases or nudges are not as effective  in influencing career decisions of Arab youth as elsewhere may provide a different approach for exploring solutions that persuade Arab youth to enter career fields which face skills shortages and new and emerging fields which may not have the same level of social acceptability as more traditional career tracks.

Khamael Al Safi Khamael Al Safi

Khamael Al Safi specializes in the analysis and design of innovative organizational practices, and the development of tools and approaches for the governance of organizations and markets. Khamael has worked for the people and knowledge development functions of several organizations specialized in financial services, non-profit education and media and publishing. She has a particular interest in the role of behavioral decision making in human and organizational development and has focused her recent research on career choices of youth in the Gulf Arab world. She is a recent graduate of the London School of Economics where she studied for a MSc in Organisations and Governance.

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Last week the UAE joined the growing list of global financial hubs which aspire to also become Islamic finance hubs. The list includes countries such as Thailand, UK, Singapore, Hong Kong, India, France, Canada, Japan, India, China, Nigeria, Malaysia, and Bahrain. Despite their aspirations, many of these countries lack the critical financial sector standards and human resources to offer substantial sharia compliant banking and financial services.

Our study of Islamic financial hubs reveals several common structural approaches pursued by Islamic banking leaders:

  • Dual Banking Systems: The most successful Islamic banking hubs operate a full-fledged Islamic banking system in parallel with a full-fledged conventional system complete with liberalization measures that also allow foreign banks to operate
  • A Step-by-step Approach: Successful Islamic banking hubs have an overall long term strategy to develop a large number of instruments; a large number of institutions; and an Islamic interbank market
  • Comprehensive Legislation: Successful Islamic banking hubs pass comprehensive Islamic banking legislation and typically have a common Sharia Supervising Council for all Islamic banks
  • A Practical, Open-minded Approach: To complement education and training of potential employees entering the Islamic financial services sector, Islamic banking hubs employ research-based approaches and product experimentation to serve local needs and ensure innovation
  • Participation in Forming International Standards: Several Islamic banking hubs have established bodies to internationalize Islamic banking standards which are  involved in regulating the global industry and establishing standards involved in furthering Islamic finance training and education

As shown in the figure below, these structural approaches to forming an world-class Islamic banking system are underpinned by sound financial systems rooted in internationally accepted economic, financial, and statistical standards.

Islamic banking and financial systems

Establishing a sound financial system and Islamic banking sector requires adoption of internationally accepted economic, financial, and statistical standards

Human Resources Frequently Limit Ambitions of Aspiring Islamic Finance Hubs

Based on our projections that a another $87 to $124 billion could potentially enter the Islamic banking system in the UAE by 2015, approximately 7,800 new jobs will be created at Islamic banks in the UAE assuming current asset concentration ratios remain similar. We also project another 500 jobs will be created by 2015 in other Islamic financial services segments. By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000.

Established 2011 Total Assets in $Current Number of EmployeesProjected Number of New Employees Needed by 2015
Total$69,000,947,4116,2377,864
Dubai Islamic bank1975$24,683,505,1772,0002,522
Sharjah Islamic bank 1976$4,831,918,801412519
Abu Dhabi Islamic bank 1997$20,245,231,6081,2001,513
Emirates Islamic bank (merged with Dubai Bank)2004$5,853,895,0951,0971,383
Noor Islamic bank 2007$4,598,651,499650820
Al Hilal Islamic bank2008$7,697,841,417702885
Ajman Islamic bank2008$1,089,903,815
176222
Number of employees in the Islamic banking sector in the UAE

By 2015, the Islamic financial services sector will double in size from approximately 10,000 employees currently to 20,000.

To meet this growing demand for employees trained in Islamic finance, the UAE will need to significantly broaden its education and training options to ensure availability of human capital does not stall the growth of the sector. While it has a number of current executive training institutions and higher education institutions that target mid-level employees in the Islamic finance sector, the UAE does not have any programs that target new entrants interested in the field or senior level leaders. The UAE also does not have institutions which provide research and analysis that advances the field. The experiences of Bahrain and Malaysia show that research capabilities and institutions have been key structural feature of Islamic banking systems that lead to product innovation and effective regulation. Furthermore, many of the masters programs in Islamic banking and finance in the UAE remain general MBAs or masters degrees with very few specialized courses related to practical aspects of Islamic banking that are required by employers. The exceptions are Zayed University and Hamdan Bin Mohammed e-University which have in-depth course offerings in Islamic finance and economics.

Tahseen Consulting’s Related Work

Read about Tahseen Consulting’s work on skills gaps and how they impact Arab businesses

Islamic Banking Training in the UAE

While it has a number of current executive training institutions and higher education institutions that target mid-level employees in the Islamic finance sector, the UAE does not have any programs that target new entrants interested in the field or senior level leaders.

Malaysia's Islamic Banking Education and Training System

Malaysia’s human capital development programs span all levels of the industry with a focus on internationalizing operational and product standards.

Towards a Islamic Finance Human Capital Development Strategy for the UAE

To solidify its position as an Islamic finance hub amongst the heavy competition, the UAE will need to significantly enhance its current education and training system. This includes human capital development and research programs to ensure:

  • Quantitative supply of Islamic banking graduates through expanded undergraduate offerings or financial sector bridge programs that target non finance graduates
  • High quality executive training focused on resolving likely skills gaps amongst current employees
  • Specific executive training and leadership development training for senior level bank leaders and regulators to create the necessary vision and Sharia knowledge to enable product innovation
  • High quality research and thought leadership that pushes the boundaries of the sector and allows the UAE to participate in the internationalization of operational and product standards which is currently being led by competing Islamic financial hubs

Given the lack of an unambiguous definition of what constitutes a skills gap in previous surveys and imperfect measurement proxies, Figure 1 below shows that the present understanding of what causes skills gaps is similarly vague. If the intent of national skills surveys is to devise public policy interventions that might affect the behavior of firms in remediating skills gaps, the precision with which the causes of skills gaps are identified is of critical importance. Of the several skills surveys we reviewed, seven specifically ask respondents to identify the causes of skills gaps. From these surveys, four areas of thematic overlap emerge as potential causes of skills gaps: recruitment difficulties; HR practices related to employee development, motivation, and retention; strategic shifts in response to changing business environments; and transitional stages of employee orientation and integration. This section reflects briefly on these four thematic areas to advance a typology which takes into account the present understanding of the source of skills gaps.

Causes of skills gaps implied by survey questionnaires

We reviewed skills surveys from 14 countries and found an ambiguous definition of what constitutes a skills gap and how they are caused.
Sources: (Campbell, Baldwin et al. 2001; Learning 2004; Development 2006; Learning 2007; Office 2008; Zealand 2008; Shury, Vivian et al. 2009; Education Analytical Services 2010; Shury, Winterbotham et al. 2010)

Recruitment Difficulties: Recruitment difficulties can arise for a number of different reasons such as:  competition from other employers; not enough people are  interested in doing a particular job; long training times to develop skills; limited capacity of training organizations in relevant fields; poor terms and conditions offered for jobs such as unsociable hours, unattractive employment modalities, or low pay; poor prospects of career progression; location in a remote location with poor transportation; attitude, motivation, or personality mismatches etc. The multitude of reasons for recruitment difficulties requires the need to distinguish between situations where there are few people in the labor force who have the required skills, work experience, or qualifications to perform a job (a skills shortage) and situations where there are people in the labor market with the requisite skills, work experience, or qualifications but, due to some reason, are not attracted to a particular job (a recruitment difficulty).

An important consideration, however, is whether skills shortages are a symptom of greater problems involving market and institutional failures in the skills formation system rather than a direct cause of skill gaps. Effective government institutions that prevent underinvestment in skills, provide adequate regulation, and coordinate stakeholders are key elements of effective national skills formation systems. These institutions exist to link economic development with the evolution of education and training systems; ensure qualitative and quantitative supply-demand match between outgoing students and the needs of the labor market; facilitate regular, on-the-job  training provision and  participation in skills formation by the business community; and address policy, informational, or financial sources of individual underinvestment in national workforce skills formation (Schwalje 2011). As governments attempt to influence the technological and industry structure of their countries, the absence or weakness of government mechanisms to coordinate and align skills formation institutions can create a need for skills that cannot be predicted by free market mechanisms which can result in skills shortages.

The effectiveness of formal education and training systems is increasingly measured by production of human capital in the quantity and quality required by the labor market and whether outgoing students meet the expectations of employers (Development 2010). Accessibility to education and training  institutions, quality, and the degree to which education and training systems produce employable students influence the preparation of individuals with the skills, work experience, and qualifications to meet labor market needs.  In this respect, education and training institutions can impact allocative efficiency in labor markets which can result in skills shortages.

Private rates of return explain the motivation of individuals to pursue different levels and types of education to augment natural abilities with skills subsequently sold in the labor market. Individuals engage in an investment optimization process in which they participate in education and training as long as the value stream of future earnings is more than foregone earnings, training, and equipment expenses. However, empirical studies have shown that wage differentials relative to less skilled workers can be affected by sectoral shifts requiring higher skill intensity (Schultz 1975); when expansion of educated labor outpaces expansion in employment (Pritchett 2001); and where technological progress is rapid and government policy is conducive to technological progress and skill intensive development (Rosenzweig 2010). Since the impacts of government industrialization policy may be unknown to individuals, information gaps about the future trajectory of industries and emergent skills needs, the returns to investing in particular skills sets, and projecting the future returns of education and training investments can result in market failure. Skilling investments may also be subject to short-termism in which individuals are unwilling to invest in skills with uncertain and longer-term return horizons. The motivation of the labor force to engage in lifelong learning to ensure continued relevancy of skills may similarly be impacted by return uncertainties. Capital market weaknesses in terms of a lack of funding to finance education and training investments can lead to underinvestment. Externalities and labor market rigidities may also alter the incentives and returns to skilling resulting in sub optimal investment in skills formation. The many factors which can alter the expected return to particular skills or which signal sectoral growth or promise affect individual skilling decisions which may result in skills shortages.

Returning to the proposition that recruitment difficulties due to skills shortages are a symptom of greater problems in the skills formation system, it seems probable that skill shortages can result from market and institutional failures in the governance and institutional quality of skills formation systems, the employability of outgoing students from the education and training system, and  informational or policy-related sources of uncertainty which motivate individual investment in skills development. Market and institutional failures may influence firms to engage in substitution behavior where they hire employees which they know require additional skills to meet firm needs in the face of skills shortages. Similarly, market failures and institutional quality can result in a situation where new entrants to the labor force appear to be qualified but are subsequently found to lack skills. Both of these scenarios can result in skills gaps as firms absorb employees from the external labor market who do not have the required skills, work experience, or qualifications when facing recruitment difficulties attributed to skills shortages.

HR practices related to employee development, motivation, and retention: Firms provide training to increase and maintain workforce skills levels to support core competencies in addition to developing new skills that can form the basis of future firm competencies. The willingness and ability of firms to provide training and development depends on a number of factors. Managerial calculations of the returns to training may be complicated by informational gaps surrounding technology, future skill requirements, and benefits of training (Lall 1999). In situations of market or institutional failure, staff development may require training to retain competitiveness in addition to remediating inadequate pre-employment skills formation. Employee poaching, the tendency of firms to recruit employees with transferrable skills from other firms, and turnover may serve to limit firm-based training since training firms incur the cost of employee training only to lose the employee and resulting benefits of the training to another firm. Depressed levels of training and development due to a variety of factors can lead to skills gaps that erode creation and production of firm competencies jeopardizing the application of workforce skills toward market-oriented business objectives.

As mentioned in the discussion on the competence-based view of the firm, it is not enough for a firm to have a highly skilled workforce to achieve competitive advantage. A firm’s human resources pool must also be motivated to act in the interests of the firm. In England (30%), Scotland (7%), Northern Ireland (19%), and New Zealand (16%) many firms cite employee motivation as a cause of skills gaps (Zealand 2008; Shury, Vivian et al. 2009; Education Analytical Services 2010; Shury, Winterbotham et al. 2010). HR practices are both a way to develop workforce skills as well as to ensure alignment between workforce behavior and firm-level goals. HR practices, through their influence on employee motivation, induce productive employee behavior to apply their skills. Similarly, HR practices can affect employee turnover levels. For example, HR systems which promote employee involvement, participation, training in group problem solving, socializing, high concentrations of skilled employees, and higher average wages have been shown to reduce turnover (Arthur 1994; Delaney and Huselid 1996).

Numerous theories and metatheories of workforce motivation exist which propose various sources of motivation leading to individual behavior. By understanding the sources of motivation, firms can design HR policies to encourage productive employee behavior which enables full deployment of workforce skills. The most commonly researched HR policy areas which impact motivation include rewards (such as compensation and promotional systems); task (aspects of job and task design); management style; and social inducement systems (Leonard, Beauvais et al. 1999). Several studies have found that task complexity and whether a task is considered interesting or not may be more suited to certain types of motivational inducement systems (Gagne and Deci 2005). These findings suggest HR practices require tailoring to specific firm, job, and industry contexts to induce productive employee behavior. The consequence of misalignment of HR practices with sources of workforce motivation can affect employees’ choices regarding the direction, level of effort, and persistence of behavior which can lead to skills gaps.

Strategic shifts in response to changing business environments: The competence-based view of the firm stresses the criticality of consolidating human and other resources into market-oriented competencies that allow firms to adapt to changing environments. The ongoing renewal of competencies has implications on business processes, market positions, and expansion paths (Teece, Pisano et al. 1997). Competency renewal may involve changes in company strategy, goals, markets, business models, products and services, working practices, or technology. Evolving business strategies in response to the competency renewal process may require specialized skills that current employees lack resulting in skills gaps. Similarly, changing job requirements due, for example, to technology adoption or job promotion, might mean that once proficient employees now lack skills to perform new or evolving roles. Increasing and maintaining workforce skills in light of competency building and renewal in response to changing opportunities implies that skills gaps can emerge as firms struggle to respond to internal and external forces that threaten firm competitiveness.

Transitional stages of employee orientation and integration: A large percentage of employers in several countries highlight recent recruitment, post-merger employee integration, and lack of experience as a cause of skills gaps (Development 2006; Zealand 2008; Shury, Vivian et al. 2009; Education Analytical Services 2010; Shury, Winterbotham et al. 2010). However, it is unclear to what extent temporary, transitional phases associated with the beginning of the employee-employer relationship can be considered a cause of skills gaps since presumably such transitory skill gaps are likely to decrease as employees complete induction training and gain confidence in their roles. Generally induction training is firm specific and focused on acquainting new employees with the company structure, specific job requirements, and organization policies (Bijnens and Vanbuel 2007). A more appropriate indicator of causality would be whether an employee exhibits post-induction training persistence of a lack of skills to perform a job which results in the compromised ability of a firm to meet business objectives. Such an output indicator would then point toward an insufficient induction and integration program, rather than state of completion of the induction or integration program, as a potential source of skills gaps. Nevertheless, firms appear to view transitional stages in the employee induction process as a significant source of skills gaps.

A typology of skills gaps that considers this discussion and captures the present understanding of the source of skills gaps is shown in Figure 2 and explained below:

A typology of the causes of skills gaps

In this figure, we advanced a typology of skills gaps that considers this discussion and captures the present understanding of the source of skills gaps from several national skills surveys.

Market and Institutional Failure Induced Skills Gaps: These are skills gaps which stem from market and institutional failures in the skills formation system. When facing difficulty in recruiting employees from the external labor market under current market conditions due to lack of required skills, work experience, or qualifications a company demands, firms engage in substitution behavior by hiring staff who require further training. Firms may also hire new entrants to the labor market who are apparently trained and qualified for occupations but who are subsequently found to still lack a variety of the skills required. Market and Institutional Failure Induced Skills Gaps are caused by

•Poor Skills Formation Policy: Government coordination of the skills formation system fails to link economic development with the evolution of education and training systems; ensure qualitative and quantitative supply-demand match between outgoing students and the needs of the labor market; facilitate regular, on-the-job training provision and  participation in skills formation by the business community; and address policy, informational, or financial sources of individual underinvestment in skills development or

•Education and Training System Misalignment: Accessibility, quality, and the degree to which education and training systems produce employable students are insufficient to prepare individuals with the skills, work experience, and qualifications to meet labor market needs or

•Insufficient Individual Investment: The many factors which can alter the expected return to particular skills or which signal sectoral growth or promise negatively impact individual skilling decisions.

Human Resources Management Related Skills Gaps: These are skills gaps which are a result of inadequate HR practices related to employee development, motivation, and retention. Human Resources Management Related Skills Gaps are caused by

•Insufficient Staff Development: Depressed levels or inadequately planned training and development that erode creation and production of firm competencies jeopardizing the application of workforce skills toward market-oriented business objectives or

•Poor Retention and Motivation Practices: HR practices that inadequately address employee retention or a misalignment of HR practices with sources of workforce motivation.

Structural Skills Gaps: These are skills gaps which are a result of strategic shifts in response to changing business environments that lead to a mismatch between current workforce skills and the requirements of employers. Structural Skills Gaps are caused by

•Strategic Shifts in Response to Changing Business Environments: Failure to increase and maintain workforce skills to build and renew firm competencies in response to changing business opportunities that may involve adjustments in company strategy, goals, markets, business models, products and services, working practices, or technology. Structural skills gaps can be viewed as a strategy-skills lag in which current workforce skills lag new or expanded skills required by alternative strategic directions associated with competency renewal. Causal ambiguity and environmental complexity makes it difficult for managers to determine the sufficiency of the current human resources pool relative to desired states of the human resources pool to achieve adapted or future business outcomes.

Transitional Skills Gaps: These are skills gaps attributable to the beginning of the employee-employer relationship whether due to recent recruitment or post-merger employee integration. Presumably transitory skill gaps are likely to decrease as employees complete induction training and gain confidence in their roles.

With increasing attention on a growing “skills gap” in many countries, it is important to ensure that there is conceptual clarity surrounding the term. The term “skills gap” is often incorrectly used as a catchall term describing both quantitative shortages in external labor markets as well as qualitative skills deficiencies internal to the firm.

A multicountry, practice-based review of employer surveys reveals a distinction between skills deficiencies found in the external labor market (‘skills shortages’) and those applicable to a firm’s existing workforce (‘skills gaps’). Previous employer surveys conducted primarily in the UK define a skills shortage as an expressed difficulty in recruiting individuals from the external labor market under current market conditions with a particular skill set due a low number of applicants caused by least one of the following reasons: lack of required skills; lack of work experience a company demands; or lack of qualifications a company demands (Shah and Burke 2003; Paterson, Visser et al. 2008; Education Analytical Services 2010; Shury, Winterbotham et al. 2010). Because skills shortages apply to the external labor market while skills gaps apply internally to the firm, these survey approaches imply the two concepts of a skills shortage and a skills gap are separate and distinct phenomena.

The Inadequacy of the Pricing Mechanism in Solving Skills Deficiencies

The view that skills deficiencies are ephemeral and disappear as labor markets adjust is widely held (See for example Hay, Faruq et al. 2011). Underpinning this view is a belief that the pricing mechanism, exercised through expected wage returns and premia that motivate individual investment in particular types of skills and the ability of firms to increase extrinsic pay to obtain particular skills, leads to allocative efficiency within labor markets. However, persistent skills deficiencies over the last decade reported in several countries that began instituting national skills surveys in the early 2000s challenge the assumption that skill deficiencies are short lived and the effectiveness of the pricing mechanism in reducing the occurrence of deficiencies (Shah and Burke 2003; Paterson, Visser et al. 2008; Education Analytical Services 2010; Shury, Winterbotham et al. 2010).

The cobweb theory explains how labor market adjustments related to professions requiring training that delays labor market entry might mitigate the effect of the pricing mechanism on skills supply and complicate reaching market equilibrium. Shifts in the underlying supply of and demand for skills require time to reestablish market equilibrium due to the lag in time it takes to develop particular skills. For example, in analyzing the markets for lawyers and engineers, Freeman (1975; 1976) finds that the duration of the training period to obtain particular labor market skills and accompanying lag in labor market entry due to the training period can result in cyclical shortage-surplus cycles in professional labor markets. Freeman employs the cobweb model to show that supply of particular labor market skills is highly related to the economics of a profession, such as expected salary, and other forces that signal ongoing job opportunities and the state of the market such as R&D, output levels, and competition from others with similar skills. An important finding of Freeman’s model is that forces signaling professional opportunity and market health are more influential in motivating the supply of particular skillsets than salaries. Various factors are at play that signal increasing demand for a particular skillset, but the supply of individuals with those skills is delayed by the amount of time training to acquire a particular skills set takes. The time lag between the duration of the training period and labor market entry may potentially explain how labor market adjustment caused by adaptive expectations could potentially lead to endogenous cyclical cycles of skills shortages. While there is no similar theory regarding skills gaps, empirical studies also cast doubt on the pricing mechanism as a corrective measure to eliminate internal skills deficiencies. In skills surveys across a number of countries, firms consistently rank increasing pay or relying on the market mechanism amongst the least used measures to overcome skills gaps (Young and Morrell 2006; Management 2009; Shury, Vivian et al. 2009; Education Analytical Services 2010; Shury, Winterbotham et al. 2010).

Given the questionable role of price adjustment in remedying immediate labor market skills deficiencies, such as skills gaps, ensuring conceptual clarity, understanding the causes and consequences, and considering potential solutions is critical. Rather than an ephemeral shock, skills gaps have been a persistent issue immune to corrective market forces that affect the workforce of firms in many countries.

Tahseen Consulting’s Related Work on Education and Skills Formation

Creating National Skills Formation for Knowledge-based Development

How Skills Gaps Impact Firm Performance in the Arab World

Through a multicountry, practice-based review of establishment skills surveys, this article identifies conceptual issues with defining and measuring skills gaps. By harmonizing divergent conceptualizations, an operational definition of skills gaps as a situation in which current employees lack the skills to perform their jobs which results in the compromised ability of a firm to meet business objectives is proposed. This operationalization of the concept offers a more complete answer to how firms are impacted by workforce deficiencies in achieving business objectihttp://www.blogger.com/img/blank.gifves implying that understanding job proficiency without assessing the organizational context in which workforce skills are deployed towards market objectives is insufficient. By addressing measurement issues, an alternative approach to establishment skills surveys is advanced that can play a more effective role in determining how workforce skills influence achievement of firm business objectives. The open systems model of the firm is used to explain how skills gaps serve as a bottleneck to the overall functioning of the firm and to demonstrate that firm mitigation strategies are subject to managerial perceptions which can influence the effectiveness and level at which strategies are targeted. A typology of the causes of skills gaps is also proposed as a starting point for government intervention.

Rethinking How Establishment Skills Surveys Can More Effectively Identify Workforce Skills Gaps