U.S. Corporations Find Prospective Employees Lack Basic Skills

AMA survey finds 38% are deficient in reading, writing, and math skills

New York, May 25—Over 38% of job applicants tested for basic skills by U.S. corporations in 1999 lacked the necessary reading, writing and math skills to do the jobs they sought, according to American Management Association's annual survey on workplace testing released today. The share of skills-deficient applicants is up from 35.5% in 1998 and 22.8% in 1997. Eighty-five percent of companies that test say they do not hire skills-deficient applicants, while 5% hire them and then offer some form of remedial training.

The AMA defines basic skills as "functional workplace literacy, i.e., the ability to read instructions, write reports, and/or do arithmetic at a level adequate to perform common workplace tasks." Forty-three percent of 2,133 major U.S. companies surveyed said they tested applicants for basic skills, up from 41% in 1998 and 39% in 1997.

"For all the concern about the shortage of high-tech workers, we are facing a lack of job applicants who can read and write," stated Ellen Bayer, global human resources practice leader for AMA. "Companies are going to have to find new ways to staff themselves with qualified workers. They are not going to be able to rely merely on selective hiring to achieve their goals—they will have to invest more in training new hires and current employees."

While more companies are testing for basic skills, only 13% offer employees remedial training in literacy and math skills, down from 24% in 1993. Remedial training costs an average of $289 per trainee, according to AMA's 1999 survey

As jobs that have traditionally required little training demand increasing levels of familiarity with new technology, employers are finding it harder to locate qualified applicants. The introduction of handheld inventory scanners and point of sale devices, for example, are increasing the complexity of retail and warehouse positions. The most pronounced levels of basic skills deficiency in this year's survey fell in the wholesale/retail and manufacturing sectors, which reported 46.8% and 41.7%, respectively.

"Employers are facing a period during which they will have to rethink the types of training they offer employees," commented Bayer. "In many cases, businesses are going to be compelled to develop rather than hire workforces."

In studying this issue over the past decade AMA has developed a set of best practices for managing human resources issues surrounding this problem:

1. Strengthen training efforts. It is more cost effective to train an employee than to replace one.

2. Establish a remedial training program either on site or through an outside training provider. As the job market tightens it will be necessary for companies to adopt more elastic hiring standards, and invest more in developing employee skill levels on the job.

3. Establish corporate citizenship programs that promote education. Support of local literacy programs, schools, and vocational institutions is an effective way of raising the level of the local workforce and recruiting skilled workers.

"Rapid economic growth is fueling job creation and, as companies reach further into the population to fill jobs, they are finding a pool of prospective workers in which many are unqualified for employment due to a lack of basic skills," stated Eric Rolfe Greenberg, director of management studies for AMA.

American Management Association is the world's leading membership-based management development organization. AMA offers a full range of business education and management development programs for individuals and organizations in Europe, the Americas, and Asia. Through a variety of seminars and conferences, assessments, and customized learning solutions, publications, and on-line resources, more than 700,000 AMA members and customers a year learn superior business skills and best management practices from a faculty of top practitioners. Those interested in program information or membership can visit AMA’s Web site at www.amanet.org.