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The Best Way to Land a Job? It's Still Word of Mouth


The Best Way to Land a Job? It's Still Word of Mouth

Photograph by Mike Powell/Getty Images

The college commencement speeches are mostly over. The diplomas are handed out. The parties are winding down. The deadline for repaying student loans looms. Newly minted college graduates are looking for employment, pounding their keyboards and working their mobile phones. Although the job market is slowly mending, it remains grim for young college graduates. The unemployment rate for graduates aged 21 to 24 averaged 9.4 percent over the past year (ending in March 2012), while the underemployment rate was a steep 19.1 percent, according to calculations by the Economic Policy Institute.

Unexploited young talent is disturbing enough. Yet employers consistently say they can’t find qualified workers for open positions. Take ManpowerGroup’s (MAN) seventh annual Talent Shortage Survey.

The employment behemoth surveyed more than 1,300 employers, and 49 percent of them said they were experiencing difficulty filling jobs within their organizations. At the same time, many college graduates aren’t finding the kind of work that builds a career. For example, only two in 10 surveyed college graduates saw their first job as setting them on a career path, according to Chasing the American Dream: Recent College Graduates and the Great Recession. The report from the John J. Heldrich Center for Workforce Development at Rutgers University notes that nearly two-thirds of the graduates said their jobs were weakly related at best to their field of study in college.

The experience of stumbling about for jobs and a career path is familiar to anyone who graduated during the recessions of the mid-’70s, early ’80s, and even the beginning of the ’90s. Yet since the 1970s, access to information has exploded. Want to research the job market in the 1960s? Google it. Eager to find a community that shares your enthusiasm for indie rock? Spend time on Facebook (FB). According to the McKinsey Global Institute, for less than $600 you can buy a disk drive with the capacity to store the world’s music. Surely, it should be slam-dunk easy to match potential employees with potential employers considering the expansion of the Internet, powerful search engines, vast social media networks, and Big Data. Apparently not. “We find that in the U.S., information about work and jobs is relatively hard to come by for someone seeking employment,” says James Manyika, director of the McKinsey Global Institute. Adds Adam Cobb, professor of management at the Wharton School of the University of Pennsylvania: “The best way to get a job now is the same as in the ’70s and the ’80s—word of mouth.”

A major impact of technology seems somewhat perverse. The barriers to applying for a job have fallen sharply. Once a résumé is created, job seekers can submit hundreds of applications online with zero or minimal extra cost. Companies have responded with crude filtering devices to cut through their overcrowded in-boxes. Taken altogether, it’s a frustrating, toxic mix for both sides of the online employment equation. Says Wharton’s Cobb: “What all of the technological advancements have not done is to overcome the primary barrier to getting a job—which, from the employer’s standpoint, is being able to answer, ‘What type of worker will the applicant be?’”

Many colleges and universities are trying to build better career centers, with mixed success. Graduating students seem to have little idea what kind of jobs are expanding and where the career opportunities lie. Employers are struggling to grasp the qualification of applicants. Training standards and education benchmarks vary greatly throughout the country. A medical research company in the Twin Cities might have a nuanced sense of the abilities of a graduate from Saint Paul College, a community and technical college in St. Paul, Minn. What about an applicant from Glendale Community College in Glendale, Ariz., or Northeast State Community College in Blountsville, Tenn.? “When looking at someone from an elite school with a 4.0, employers know what they’re getting,” says McKinsey’s Manyika. “It’s not the case with many community colleges, for example.”

For the most part, technological advancements don’t help people get a foot in the door. What does matter is a recommendation and personal assessment. A large body of academic research shows that half or more of all jobs come through informal channels—connections to friends, families, and colleagues—according to Limited Network Connections and the Distribution of Wages by Kenneth J. Arrow of Stanford University and Ron Borzekowski of the Federal Reserve Board. “Character is a big deal,” says Art Rolnick, co-director for the Human Capital Research Collaborative at the University of Minnesota. “Character references are always big, and the Internet doesn’t change that.”

Yet much more can be done to improve the flow of information between hirers and hirees. The folks at the McKinsey Global Institute, ACT, the Iowa-based educational nonprofit, and others are calling for much more. On the one hand, how about creating a national database—from welders to medical technicians to software programmers—showing which jobs are in demand locally and nationally. On the other hand, marry that initiative with national standards for certifying the skills of college graduates for potential employees.

Digital technology is transforming many aspects of our society and economy. Websites such as Monster.com (MWW) and LinkedIn (LNKD) are focusing on the jobs and networks. Advances in information technology have made it much easier for job applicants to research companies, track trends, and glean insights. Still, the promise of information technology for playing matchmaker between employers and employees has been just that—a tantalizing promise. Public and private investments in better job information and standardized credentials could go a long way toward narrowing the job gap.

Chris_farrell
Farrell is contributing economics editor for Bloomberg Businessweek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace.

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Companies Mentioned

  • MAN
    (Manpowergroup Inc)
    • $74.24 USD
    • -1.67
    • -2.25%
  • FB
    (Facebook Inc)
    • $59.72 USD
    • 0.63
    • 1.05%
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