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Is it the best of times or the worst of times? A recent article in the Wall Street Journal got me thinking about the differences in employment and career management between people in technology professions (Engineering, IT, Science) and people in non-tech professions (Accounting, Law, HR, etc). The article discussed the dichotomy between a tight labor market for engineers (2.5% unemployment nationally) and the fact that there are engineers who have been out of work for a year looking for work. The author worked very hard to pin the blame on overly tight specifications from employers. I don’t think she was able to make her point. One of her examples was a HVAC company in Pittsburgh seeking an HVAC Engineer to design systems for hospitals. She found an HVAC Engineer they had interviewed but rejected. He had HVAC experience but no hospital experience. He felt that the company was being overly strict in rejecting him. If I remember correctly, his quote was, " After all, a pump is a pump."
Well, from my perspective, I would hate to be in a ICU hooked up to oxygen in a hospital where the mechanical systems had been designed by someone who was not intimately familiar with the codes for operating rooms, oxygen to bedside delivery, etc. I want oxygen out of my facemask, not fumes from the garage. Before you laugh, I think something like that actually happened locally about 10 years ago. Oops!
This got me to thinking about specifications and how they differ if there is a technical nature to the position. Are tech companies and managers too strict? Are these unemployed engineers victims of absurdly narrow specs? Who is at fault here?
I think the problem is a lack of understanding outside the technology community, in this instance the reporter, about the profound difference between the skills needed by a technology professional and a non-technology professional. Let’s explore the differences and then discuss the problems you may have in 2006 because your peers (CFO, VP HR, etc) may be unaware of that difference between tech and business-side employment.
There are two components to tech employment that make it unique. The first is the pace of change in technology itself. Our first example is a classic one. Let’s imagine a COBOL programmer who has been out of IT since 1996. He reads in the paper that IT careers are hot again and wants to get back in the market. Well, we all know that IT has gone through at least two profound changes since 1996 ~ mainframe to client server and client server to Internet. Within those generational changes there are also numerous changes within each technology. That COBOL programmer would probably need as much, if not more training, than a community college grad. It might sound cold but in 10 years the pace of change in IT may have made that person unemployable in their field.
That’s an extreme example so let’s take another. Take two people, a Tax Accountant and a Manufacturing Engineer. Both want to reenter the workforce after 10 years. I have spoken to a few accountants about what an accountant would go through in this situation. I am told that the accountant would obviously have to become aware of new laws and policies and would have to learn new software packages. No one I spoke to feels that this would be a daunting experience and a motivated person could be useful in a month.
Now, what about the Manufacturing Engineer? In 1996, he may have had some exposure to TQM but it is unlikely he would know much about modern methodologies like Six Sigma and Lean Manufacturing. On the systems side, he is way behind. On the technology side, his automation knowledge is likely to be limited to PLC’s, at best. He’s had no exposure to micro based automation schemes or MES. On the infrastructure side, if he had CAD experience it was generations ago in product cycle. While the accountants software packages have, like mine at home, gotten easier to use, the engineers CAD systems have gotten more robust and complex. In comparison to the accountant, after ten years the Manufacturing Engineers training is significantly more of a burden for his potential new employer.
There can be no doubt that the pace of change in technology has a huge effect on candidate "fit" for a job. OK, what’s the second component that is unique to tech careers?
The second component is the specificity of skills required in a tech career. This is often ignored by non-tech people, or, at best, minimized. The variables in technology became clear to me when I was training new recruiters for a former employer. I had to train both Finance Recruiters and Engineering Recruiters. In putting together a syllabus, I was able to break the accounting profession down into 5 major groups with minimal overlap. The finance profession was also title specific, for example a Semi-Senior Tax Accountant at Company A was a Semi-Senior Tax Accountant at Company B.
Next, when I started a syllabus for engineering, I was stumped. There are not enough trees in the world to make enough paper to explain the variances between and within every engineering and software discipline. I resorted to a blackboard and by the time I was done, my chart looked like a pile of spaghetti. To complicate matters further, engineering is NOT title specific. A Project Engineer in one company may be a Product Engineer in another, ad infinitum.
Let’s imagine two companies looking for a BSEE. Company X wants a BSEE with experience in circuitry design, specifically analog circuitry (but not RF) at high speeds. Company Y wants a BSEE too. However, they want someone who can do maintenance on their PLC controls in their manufacturing plant and who has experience working with unions. Both are looking for BSEE’s, but someone who can do one job most likely can’t do the other. Every once in awhile someone says," But a good engineer is a good engineer, no matter what the job." Maybe that’s true, maybe it’s not. But my answer is that the best person is a good engineer who is already trained in some, if not most, of the skills for job I need filled. You know that, I know that. As a manager, the problem may be that your HR person, your CEO or your CFO doesn’t know that.
That’s a problem for a few reasons. One, those people either determine your budgets or help you in the employment process. Two, their sense of the labor market is either informed by their knowledge of the general labor market through CNN or the experience they had looking for work. Three, engineering and technology are about to become the most sought after skill set in professional employment today.
Here is why: Last year saw a strong economy and a tight labor market. Right now the national unemployment rate is 5%. Locally, some counties in our region (Montgomery, Chester and a few others) have unemployment between 2.5% and 3%. We’ve already found out that unemployment nationally for engineers is about 2.5%. Through 2006, my bet is that the national unemployment will drift down to 4.6%, with drops locally, if possible.
But wait a minute, your CFO says, high oil prices and the Katrina recovery should slow things down. As things slow down, it should be easier to find engineers. Also, how about the "housing bubble"? As we used to say growing up on the schoolyards in Philly ~ "No way, Jose!" Those factors will actually increase the need for engineers and technology people. Let me explain my thinking.
Despite the best efforts of Congress, you can’t legislate low energy prices. Despite the best efforts of finance people, you can’t manage your corporate books so your energy costs are $30/barrel for oil, not $60/barrel for oil. Last year, 2005, proved that the US economy would still grow even with $60/barrel oil. We may not like it but we can live with it. We still want to fix it, however. That fix will not come from politicians or accountants. It is a technology fix and it will come from tech people in all flavors. It will come from the people in your department and the people you want to hire.
It’s a tech fix in every possible way. Oil exploration requires more engineers to explore and design new technologies that make it easier to find and extract oil. Oil refining requires technologists to create new refineries that are more efficient and to upgrade existing refinery capability. Oil usage requires engineers to manage energy consumption and to come up with ways to reduce it. This opens up a market for new products, once again designed by technologists. I haven’t even mentioned alternative energy yet.
An educated guess might say that 10% of the engineers in the US work in the energy sector directly ~ another 5% peripherally, designing HVAC controls and systems or products like pumps and valves used by refineries. I guarantee that every oil and gas company is now planning on adding to their engineering staffs, both on the exploration and refining side. On the usage side, back in 1980, the last time energy costs were high, many companies devoted part of their Facilities or Project Groups directly to Energy Management. There were even engineering majors in energy management. It’s not going to be difficult to imagine a manufacturer or an A&E firm creating a 70k/year Energy Management job that can save 300k/year in costs. On the product side, we will need all kinds of equipment like pumps, compressors and pressure vessels to be designed for optimal energy consumption. No doubt, there will be software packages specifically designed to control energy usage in a specific industry. Is it difficult to imagine that 15% of the engineers in the US devoted to energy becoming 20%? Not for me. While that 5% difference may not seem like a lot, here is what it will mean to you.
You manage an engineering group for an electronics company in Lansdale. You’ve just made a 55k offer to a Mechanical Design Engineer. Unfortunately, he just got a 62k offer from a company in Bristol that just saw a 30% increase in orders for their compressors. Ouch. You manage a packaging company in West Chester and just lost a Controls Engineer. Uh oh. He got an offer from Fluor to be part of a new alternative energy development team they are starting.
"How about Katrina and the housing bubble", says your VP HR." That will put a lot of engineers out of work, won’t it?"
Nah, at worst they will balance each other out. Personally, I think the housing bubble is a myth, certainly so locally. Our region is one of the cheapest places to live on the East Coast. Some parts are expensive and some are not. If there is a national bubble, boy, it’s the most talked about bubble I have ever seen. I have been hearing about it for last 2 years. If, in 2005, there were still some speculators left in the housing market, they weren’t watching TV or reading the newspapers. There has been plenty of warning.
Katrina. Someone is going to have to make the new roofing materials, water faucets, concrete, structural steel, etc. In fact, Katrina may make 2006 and 2007 the best years for manufacturing that we have ever seen. It’s just like the oil issue, a technical, supply chain and manufacturing fix. I think the same analogy holds.
This boils down to a problem for a tech manager. Are you going to have to hire in an extraordinarily tight market that no one else in your company knows about? Can you get your CFO to increase your salary budget so that you don’t lose people? Will he understand why you have to budget $75,000 to fill a job you filled last year at $68,000? Will your HR person come to you with 20 resumes of BSME’s she pulled off Monster for a design job (key word search for mechanical design), thinking that someone who designed customized capital equipment can easily design high-volume injection molded parts? Will you be able to manage your interview process to be more candidate friendly in order to compete with companies paying more?
I hope so. It will be interesting to revisit this thesis at the end of 2006. After all, what do I know? I am only a recruiter. In any event, don’t forget Right Recruiting for all your employment needs and have a great New Years!!! Thanks for your time. Jeff
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