Are They Ready For the Real World? A Survey of What Employers Value and What They Find Lacking in Recent College Graduates

DOI: https://doi.org/10.64010/XSGP6265

Abstract

The popular press, industry analysts, and academic articles have repeatedly reported on a skills gap in recent college graduates. But far too often, these reports do not provide educators with specific, actionable recommendations. This study is designed to determine whether Philadelphia-area employers experience a skills gap in soft skills as well as a gap in the more concrete, hard skills in recent college graduate employees. The primary contribution of the research is the comparison between the importance of a skill and the presence of that skill. Most surveys ask only for the presence of a skill, without addressing the relative importance of that skill. An additional contribution of this study is the development and testing of a fine-grained definition of skills. This study therefore addresses the need for direction on specific skills that employer’s value, but they find lacking in recent college graduates.

The findings of this study are generally in line with other surveys in observing a wide gap for soft skills such as decision-making and teamwork. The study also confirms a gap, to a lesser degree, for technical and functional skills. The findings on the importance of skills and the fine-grained research questions are intended to inform changes in the business school curriculum and the assessment of learning.

The paper begins with a review of academic research, industry surveys, consulting analyses, the business press, and association surveys with the goal of determining the parameters of the skills gaps. Next a process to define, test, and deploy the research survey for Philadelphia-area employers is described, followed by the results of the survey. Implications for curriculum design and areas for future research conclude the paper.

The Skills Gap

The Reported Skills Gap

The popular press is replete with alarming news that graduating students do not have the skills that employers are seeking. These skills are generally grouped into “hard skills” – the quantifiable proficiencies useful on the job – and “soft skills” that are difficult to measure, such as public speaking and problem solving. Although some hard skill gaps, such as data analysis, are reported, the soft skills are generally seen as more deficient than hard skills. For example, students are reported to be “failing in job skills” (Selingo, 2015), having “room for improvement” (McGraw Hill, 2016 p.6), and exhibiting “low score in preparedness” (AACU, 2015). Forbes (Strauss, 2016) reports that there are “nine skills missing,” while CBS News (Berr, 2016) says “grads are not ready for the workplace.”

The academic literature over the prior twenty years supports the existence of this skills gap, calling graduates “woefully ill prepared” (McLester & McIntire, 2006, p.22.). It might be expected that college graduates need some experience and seasoning, and perhaps that on-the-job training will close the skills gap. However, according to Rosenbaum (2002), students who do not learn basic employability skills before they are hired may not have the opportunity to learn them on the job. Employers may be reluctant to invest in the resources needed to provide remedial training for these skills.

Bok (2006) reports that college professors and administrators felt they were teaching students what they need to know, but only 35% of a sample of industry executives thought that colleges taught students what was important to succeed at work. Robst (2007) states that college students believed that a college education provided them with all the skills necessary to obtain employment upon graduation. If nothing is done to improve educational performance, the gap between the skill needs of industry and the skills of graduates will continue to grow (Plastrik, 2007).

These reports from the press and academe are not just the opinions of editors or an attention-grabbing headline, but are based on a number of surveys and studies performed by associations, consultants, and industry members. The surveys behind the storylines include those from The Conference Board (2006), The Association for Business Communication (2012), The Committee for Economic Development (2012), McKinsey & Company (2013), The Association of American Colleges & Universities (2015), McGraw Hill (2016), and PwC (2016).

These surveys uniformly addressed a spectrum of skills that employers found lacking in recent college graduates, both soft skills and hard skills. They also uniformly found that the gap was bigger in the soft skills.

The Nature of the Skills Gap – Soft Skills and Hard Skills

Employers look for graduates with communication skills, empathy, motivation, decision-making abilities, planning abilities, and improvisation abilities (Bagshaw, 1996). Zehrer & Mossenlechner (2009) add that graduates are expected to be proactive and able to solve problems in a creative way.

Yorke and Knight (2006) propose three main attributes for graduate employability – personal qualities, core skills, and process skills. Personal qualities consist of self-awareness, self-confidence, willingness to learn, emotional intelligence, independence, and adaptability. Core skills include self-management, written and oral communication, and critical analysis. Process skills refer to problem solving, team working, computer literacy, integrity, business ethics, planning and prioritizing, and coping with uncertainty.

These personal, core, and process skills are often grouped together and called “soft skills.” The prior surveys in this area indicate that employees need to possess these soft skills as well as the more concrete, hard skills.

For example, the Conference Board administered a survey of over 400 businesses in 2006. This survey asked the respondents to rank the presence of skills in new employees in two skill groups, basic knowledge and applied knowledge, corresponding broadly to hard and soft skills. The survey also asked the companies what was important, finding that oral communications and teamwork were ranked most critical to career success.

In 2012 the American Management Association conducted a survey of executives that ranked the soft skills, in order of importance, as integrity, communication, courtesy, responsibility, interpersonal skills, professionalism, positive attitude, teamwork skills, flexibility, and work ethic. More recently, in 2015 the American Association of Colleges and Universities conducted a study of employers. According to this study, the most highly valued among the 17 skills and knowledge areas tested were written and oral communication skills, teamwork skills, ethical decision-making, critical thinking skills, and the ability to apply knowledge in real-world settings.

The surveys from other organizations generally divide the skills into two groups, soft and hard skills. The surveys also asked employers what skills were lacking. Although this abundance of prior research is useful in defining skills that are lacking, there is a gap in the literature regarding the employers’ value of the different skills. This research paper addresses the need for a finer definition of workforce skills and for a new dimension to the surveys, the value that employers placed on the skills.

The Research Approach

This research is designed to analyze these skills gaps in several steps: First a database was established from academic articles, US and International government surveys, non-profit and Non-Government Organization surveys, and consulting and for-profit surveys as well as articles from the business press and business magazines. Then, based on this literature review, a draft, paper-based survey was developed and refined with internal reviews and a trial panel prior to deployment of a final survey. Based on both the review of the literature and prior workforce and employer surveys, it was determined that the workforce readiness survey should: 1) examine the presence of both soft and hard skills, 2) examine what employers value in new employees – what is most critical – and 3) be kept short with a completion target of 15 minutes.

To further refine the survey vehicle, a panel group was formed of local employers and then led through a guided discussion on both soft and hard skills that they require of their employees. An on-line questionnaire was then developed from the focus group results. Then that questionnaire was tested with a small group of employers, and finally the resultant questionnaire was distributed to a broad cross-section of Philadelphia firms.

One challenge was developing the lists of soft skills and hard skills that are specific but also met the above-noted criteria of clear definitions, simplicity, and specificity. To address that concern, the survey included three types of skills – technical, functional, and soft skills – as listed in table one below:

Final Survey

The survey was revised and entered into Qualtrics. Qualifying questions were added, and a matrix with pull-down menus was developed to facilitate the ranking of the presence and importance of skills, side-by-side. The complete survey is available from the authors, and a sample section is illustrated below in Figure One:

Figure One

For each skill, please indicate your perception of the PRESENCE of technical skills in applicants and new hires as: High, Above Average, Average, Below Average, or Limited.

Also

Please indicate your perception of the IMPORTANCE of technical skills in applicants and new hires as: High, Above average, Average, Below average, or Limited.

Please use the pull-down menus to choose a response for each individual skill.

As illustrated above, the survey design directs respondents to simultaneously consider both the importance and the presence of each skill. This revised form was then used to collect data from Philadelphia-area businesses.

Survey Results – Data Description And Analysis

The Qualtrics survey covered the Philadelphia Metropolitan Statistical Area (MSA), which is ranked seventh in the US with a population of 6 million. The Philadelphia MSA has non-farm employment of 2.6 million, and over 145,000 firms. Budget limitations precluded a stratified sample that reflected the Philadelphia MSA, but a representative sample was requested.

Sixty-five surveys were completed out of over 200 attempts, reflecting the screening questions at the beginning of the survey (e.g. hiring of a recent college graduate) and the thoughtfulness requested on the two primary axes (presence versus importance) of a particular skill. The average time to complete the survey was 11 minutes, well within the target of 15 minutes.

Data Description

For the survey dataset, the mean number of employees is 4.03 and the standard deviation is 2.28. This is comparable to the Philadelphia MSA, where 72% of all firms have fewer than 10 employees (US Census Bureau).

Industries represented in the survey sample are shown below and compared to the 2015 Philadelphia MSA (US Census Bureau):

Therefore, the sample was reasonably representative of the Philadelphia MSA.

Data Analysis

As the relationship between importance and presence was the focus of this study, it was also the focus of the analyses. First, a basic measure of presence versus importance was derived by combining the top two categories of the presence measure — very present and above-average presence — and dividing that by the sum of very important and above-average importance. This resulted in a ratio that is greater than one if a variable is more present than important and vice versa.

The results by skill area and specifc skill are shown below:

The mean is .74 if social media and general technology are excluded.

A review of this basic data shows a dramatic difference in the average of the three skills areas – technical skills were met 95% of the time, looking at very important and important versus the top two categories for presence – and Functional skills were met 63% of the time. For soft skills, however, that number was only 54% of the time.

Analysis of Skills Impedance

One of the aims of the analysis was to ascertain the difference between what skills students come to their employer with — via their education, experience, etc. — versus what skills are required and valued by their employers; i.e., the impedance of those skills. To that end of determining this impedance, a separate measure was developed.

For each individual question, the respondent was asked to rate the recently hired employees on a scale from 1 – 5, on both: 1) the presence of each skill; and, 2) the importance of each skill. The impedance, therefore, is the difference between those scores.

To analyze this data, presence versus importance, the difference between the two scores was computed and the result was squared. Squaring removes the direction of the difference –negative versus positive differences — and emphasizes the larger disparities. For example, if the Soft Skill Set, Oral Communication, was graded 3 for importance by one respondent and that same respondent graded 3 for presence, then that result is 0 (= (3 – 3)2). If another respondent graded 3 and 5, respectively, then that results in a 4 (= (3 – 5)2). The sum of the two would be 4 (= 0 + 4). With this scheme, perfect agreement of every respondent will result in a zero overall, and perfect disagreement will result in 1040 (= 16* 65) (= (1 – 5)2 * N). An overall score for each question is the sum of those squares (SSQ) across all of the respondents (N = 65).

While the SSQ shows the magnitude of the impedance, it was also of interest to show the direction: is the difference positive where the respondent indicates there is a surplus of skills, rating presence higher that importance, or negative, where there is a lack of skills? To this end, an approach similar to the above was performed with the exception that the result was not squared. This was denoted as the sum of the differences (SDF), with positive values indicating that the employees have the skills, but that they are not valued as highly by the employer; negative, which shows skill are lacking; or, zero, where the skills sets are either aligned perfectly by every employer or were offset (averaged to zero) by the differing opinions of the various employers.

The results of the analysis, (sorted by SSQ), grouped by skill are presented below:

It is clear that on most of the measures, there is some lack of needed skills, shown by a non-zero for SSQ and a negative value for SDF. The one exception is that of Social Media, where students seem to have a surplus of skill in an area for which the employers have no need.

Analysis of Rates of Failure

Finally, it was of interest to determine the failure rate of employees: how many employers fired employees for lack of skills. This occurs when an employee is perceived as having skills, perhaps because of a college degree, but fails to show/use them on the job.

A simple question was posed as to whether an employer had fired an employee for lack of skill, and then for which skill. The analysis is simply the percentage of those who said ‘yes’ for the respondents (N = 65) (in each major category and overall). The results are as follows:

(The overall response/percentage is not the sum of the components, as they are not mutually exclusive.)

It was disturbing to the authors to note that more than half of companies surveyed fire their employees for lack of skills. Note that this is the percentage of companies, not the percent of employees. Further research in this area would appear to be warranted.

Statistical Analysis

The small sample size makes it doubtful that statistical analysis adds to the understanding, but nonetheless it was performed using SPSS.

A regression on overall skill satisfaction with overall satisfaction of soft, functional, and technical skills was performed. The model was significant but functional skills are not.

A factor analysis of the three skill-rating scales was performed: Technical skills only captured 60% of the variation; resulting in 2 factors; all scale items loaded nicely on first factor except social media, which loaded nicely on second factor by itself. Functional skills only captured 62% of the variation; resulting in 2 factors; all items load on first factor nicely except Technical/ Computer and Language; Technical/Computer loaded on second factor by itself; Language marginally loaded on second variable but was negative, meaning it was the polar opposite of whatever that factor represented.

Soft skills only captured 66% of the variation, resulting in one factor; all items loaded nicely on that factor. Low captured variance meant there was still something major was not captured. Reliabilities on the three scales; Cronbach alphas, were high and acceptable.

An exploratory factor analysis was run on all questions, with the result indicating the grouping by the skills, (technical, soft, functional) alone, thus indicating a good grouping of the original questions.

A regression, same as #1 above, but controlled for company size, showed no impact.

Summary of analyses

The analyses of the survey data support the hypotheses that soft skills are generally more important than present, and that hard and technical skills are also more also important than present, but to a much smaller degree. Detailed analyses of particular skills give insights into these skills in all three areas that are held more important than present, also providing insights into areas for curriculum development.

Summary And Areas For Further Research

Surveys at the national and regional level indicate that soft skills are not present at the level desired by employers. This research project was designed with the express purpose of assessing the hard and soft skills sought by Philadelphia-area employers by collecting survey data on specific skills in three groups – soft skills, technical skills, and functional skills – with the intention of incorporating the results into business school curriculum design. The results may also be of use to the other schools at the University. A survey instrument was developed from existing surveys, tested on a focus group, and then deployed through a survey consultant. The cost of the survey kept the size of the dataset small, with an N of 65, but the respondent profiles by industry and firm size are fairly representative of Philadelphia-area employers. The primary contribution of the research is in asking the respondents for a comparison of the importance of a skill vs. the presence of that skill among recent college graduate hires, as most surveys ask only for one aspect of a skill or the other. The findings of the survey are examined at the category level and by skill level, for soft, technical, and functional skills. In general, the research found that many specific skills were lacking, but that soft skills are both more important and less present that other skills. The research findings have been initially incorporated into curriculum design – several optional courses were moved into the core, and a new course on analytics has been proposed. Areas for future research include asking students the same sets of questions that were asked of employers, as other surveys have indicated that students have a much higher opinion of their skills than employers have, particularly in terms of soft skills. Another potential area for further research is an assessment tool for specific skills, with a focus on soft skills. That would also lead to a third area – how to train students in soft skills. Finally, the survey contained one question about firing for a lack of skills, with over 50% of the respondents answering in the affirmative. Further research in this area is also warranted.

References