Costs, inconvenience, and politics tend to hinder the efficient use of talent in the marketplace. It forces a sub-optimal situation that is not good for the company, the employee, or the economy as a whole. Several companies and individuals have elected to avoid this situation by adopting a contractor model, where the association between a company and a contractor is based on a single project, rather than an open term of employment. These types of arrangements account for about 12 percent of the workforce[ii]. The other 88 percent feels the interference of the above factors.

For economic survival in the upcoming era of worker shortages, talent market inefficiency in any form must be eliminated.

Severe Demographics

Simply put, there are not enough skilled workers to go around, and the situation is getting worse, not better. The gap between the participating U.S. labor force and the number of jobs is projected to exceed 5 million workers during 2000, representing nearly 5 percent of the participating workforce. Unfortunately, this gap will expand to more than 15 million more jobs than people in the U.S. alone by 2015 - almost 15 percent of the participating workforce.[iii]

The majority of open positions will be knowledge worker positions. However, you cannot just manufacture a knowledge worker overnight. The following are four recognized ways to deal with increasing shortages of workers:

Although a combination of all four methods may improve the situation, it will be almost impossible to make up for this fast-growing gap during the next 2 decades.

Productivity Gains Via Increased Market Efficiency

One way of handling worker shortages is to increase productivity. The following techniques can increase productivity:

Given the current level of inefficiency in the employment market, the second approach can have a significant impact. In a perfect world, it would be possible to eliminate virtually all inefficiency in the market. Because the current level of inefficiency is around 20 percent, this method could potentially result in enough increased productivity to overcome the projected 15 percent worker shortage for 2015.

While we certainly do not live in a perfect world, there is clearly much to be gained by improving employment market efficiency. Based on the author's experience in several large corporations, it seems reasonable to suggest that a 20 percent increase in productivity can be achieved simply by making more effective and targeted use of the talent that is available.

Certifications Boost Efficiency

The task of making better use of talent on a national or global basis is complex, and there is certainly no simple approach that will achieve it. Probably the most important act is for governments and corporations to remove barriers to the movement of human capital across their borders. Actions along these lines are evident as companies remove or reduce tenure-based benefits, introduce cafeteria-style benefits programs, outsource non-core functions to professional service firms, and introduce flexible work regulations; and as governments expand or eliminate quotas on immigrant workers.

Another action that would rank high in improving efficiency is to facilitate better matching of skills to specific job requirements. While there are several approaches to doing this, virtually all of them require an accurate and convenient way of measuring the knowledge and skills of the individual in a standardized manner so that they can be compared objectively against the requirements of a given job. The hiring company administering a screening exam to applicants typically accomplishes this task. Test results are usually owned by the company itself, and are not available to other companies considering the candidate for employment.

However, professionals do not want to take a new test each time they apply for a job. This would be as preposterous as having high school students take a separate exam each time they apply to a college, rather than taking the SAT once and sharing their scores with every college to which they apply.

What is a Certification?

A certification is a means for an individual to assess his or her skills or knowledge against an appropriate and recognized standard. The fact that the certification is awarded is a sign that a minimal level of competence has been demonstrated. We expand this definition to include the ability of the individual to share his or her detailed test results with potential employers. This is similar to showing specific scores on the SATs, rather than stating that the scores were above or below a specific cutoff level.

By allowing an individual to test once and to share the results with others, certification exams circumvent the process of repetitive exams and allow the talent market to operate more efficiently. Test results, including scores, can be collected in a central repository that is accessible to all parties with applicable security protection and privacy. This could work in the manner outlined in the figure below.

In the figure, all certification results are stored in a central repository that is accessible to any interested employer. To maintain privacy, access rights to specific records can be controlled by the individual. Results from a single or multiple skills certification engines can be stored and accessed through a secure interface using a standard language or framework, such as an XML.

By providing a more objective currency to match buyers and sellers and to enable transactions, certifications can boost liquidity in the employment marketplace. Because liquidity lowers transaction costs and allows buyers and sellers to consummate transactions more quickly, it increases efficiency in the employment market.

Summary

Worsening worker shortages may reach peak values in the United States of 15 percent or more within the next 2 decades. Consequently, human capital is becoming the most precious asset of any 21^st Century corporation.

At the same time, the current employment marketplace has at least 20 percent inefficiency, which is equivalent to a 20 percent decrease in productivity. By improving efficiency, the severity of the growing worker shortages can be reduced significantly.

Certifications improve market efficiency by increasing the liquidity of the employment market. A certification and skills/knowledge testing model that allows the individual to conveniently and accurately demonstrate his or her skills to multiple employers at one time can therefore make a great impact ability of the knowledge economy to continue to grow.

About the Author

Mike Russiello is President and CEO of Brainbench, the world?s leading independent skills certification authority. Prior to co-founding the company in 1998, Mike was a manager at EDS, where he successfully led a large-scale software implementation for the U.S. Department of Education. Prior to his operational role, Mike was a salesperson for EDS and is credited with sales totaling over $500 million. Mike is a graduate of the U.S. Naval Academy and holds advanced degrees in Electrical Engineering and Business Administration from the University of California and University of Maryland, respectively.