1. SHRM Survey Findings: 2014 Economic Conditions—California Recruiting and Skills Gaps October 30, 2014

2. This is Part 2 of the California results from a series of SHRM survey results about the state of jobs and skills in the current economic condition, which relates to a SHRM survey series about the ongoing impact of the U.S. and global recession from 2007 to 2012. California and U.S. results are compared, and statistically significant differences are indicated in separate slides in the report. California results will be reported separately in three different topic areas:  Overall financial health and hiring.  Recruiting and skills gaps.  Global competition and hiring strategies. Overall results (including industry-specific information) for 2013 can be found on our website at http://www.shrm.org/research/surveyfindings/articles/pages/shrmpolltheon goingimpactoftherecession.aspx http://www.shrm.org/research/surveyfindings/articles/pages/shrmpolltheon goingimpactoftherecession.aspx Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20142 Introduction

3. Is recruiting for specific jobs difficult in California? About one-half (52%) of organizations in California indicated that they have had difficulty recruiting for full-time regular positions in the past 12 months. Among organizations experiencing difficulty in hiring qualified candidates, what are the reasons? The top reasons California organizations have experienced difficulty in hiring for full-time regular positions were similar to those for the rest of the U.S.: About one-half indicated that candidates lack the right technical skills (54%) and the needed work experience (52%), and one-half reported competition from other employers (50%).  Compared with the rest of the U.S., organizations in California were less likely to indicate that they have experienced difficulty in hiring for full-time regular positions because candidates do not have the needed credentials/certifications or qualified candidates are not interested in moving to their local area. What types of jobs are the most difficult to fill? Similar to the rest of the U.S., the top five most difficult positions to fill overall were highly skilled positions: scientists (74%), engineers (71%), managers and executives (71%), IT/computer specialists (70%) and high-skilled medical (e.g., nurses, doctors, specialists) (69%).  Compared with the rest of the U.S., organizations in California were more likely to find it very difficult to fill educators in full-time regular positions but very easy to fill hourly laborers. U.S. organizations were more likely to find it very easy to recruit for skilled trade positions. Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20143 Key Findings

4. What basic skills/knowledge gaps do job applicants in California typically have? Writing in English (30%), basic computer skills (24%), English language (spoken) (21%), reading comprehension (15%) and mathematics (computation) (12%) were the most common skills gaps.  About two-fifths (42%) of California organizations indicated there were no basic skills/knowledge gaps for their job applicants, the same as the rest of the U.S.  Compared with the rest of the U.S., organizations in California were less likely to report that job applicants lack basic computer skills. What applied skills gaps do job applicants in California typically have? The top three applied skills gaps were critical thinking/problem-solving (36%), professionalism/work ethic (32%) and leadership (29%).  Only about one-fourth (23%) of California organizations indicated no applied skills gaps exist for their job applicants. Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20144 Key Findings (continued)

5. Despite recent gains in the U.S. labor market, millions of positions are still going unfilled and, consequently, impeding the growth of some employers. In July 2014, there were 4.7 million job openings in the U.S., up nearly 800,000 from the beginning of 2014, according to federal data. Many economists and labor market observers cite weak economic demand as the cause of limited job creation in some sectors. But with millions of people seeking work and so many jobs going unfilled, it is clear that, at some level, a skills mismatch exists between some job seekers and open positions, and this is also inhibiting widespread job growth in the California and U.S. economies. Knowing that a skills mismatch may prevent jobs from being filled, a multipronged approach is needed to close this gap. HR professionals should explore training opportunities for their employees and potential partnerships with local educational institutions, which can involve creating curricula in line with the skills needed at their organizations. Government job training programs are also active in many communities, and HR professionals should be aware of these as a means of supporting their recruiting efforts. Even though many organizations are pursuing partnerships with educational bodies to develop training programs, on-the-job training led mainly by the employers themselves is still a vital part of employee and organizational development. HR professionals and their employers should not blame recruiting difficulty solely on this skills mismatch. There are other reasons why jobs are going unfilled; half of respondents in the California and overall U.S. survey cited competition from other employers, and two out of five California respondents— compared with 37% in the overall U.S.—said their candidates turned down the compensation offer. That suggests that hiring is becoming more competitive in some sectors, and HR professionals should consider creative compensation packages that include market-rate salaries and perhaps some form of flexible benefits, which are considered attractive by many workers. Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20145 What Do These Findings Mean for the HR Profession?

6. Percentage of Organizations Having Difficulty Recruiting for Full-Time Regular Positions in the Last 12 Months Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20146 Note: Respondents who answered "don't know" were excluded from this analysis. Only respondents whose organizations were hiring full-time staff were asked this question.

7. Main Reasons That Organizations Have Experienced Difficulty in Hiring for Full- time Regular Positions Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20147 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages may not equal 100% due to multiple response options. Only respondents whose organizations were having difficulty hiring for full-time positions were asked this question. California (n = 253) United States (n = 1,417) Candidates do not have the right technical skills 54%50% Candidates do not have the needed work experience 52%50% Competition from other employers 50% Candidates do not have the right professional skills 42%39% Low number of applicants42%43% Qualified candidates reject compensation package 40%37% The local market is not producing enough work- ready/qualified job candidates 39%40% Candidates do not have the right workplace (soft) skills 32%27% Candidates do not have the right basic skills 22% Candidates do not have the needed credentials/certifications 22%29%

8. Main Reasons That Organizations Have Experienced Difficulty in Hiring for Full- Time Regular Positions (continued) Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20148 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages may not equal 100% due to multiple response options. Only respondents whose organizations were having difficulty hiring for full-time positions were asked this question. California (n = 253) United States (n = 1,417) Candidates are overqualified 18%15% Qualified candidates are not interested in moving to our local area 16%26% Qualified candidates are not able to move to our local area (due to mortgage or other issues) 15%12% Candidates do not have the needed training 13%16% Candidates do not have high enough levels of education 12%15% Lack of interest in type of job 11%16% Qualified candidates reject benefits package 9%8% Our organization does not provide relocation funds 9%11% Other10%7%

9. Main Reasons That Organizations Have Experienced Difficulty in Hiring for Full- Time Regular Positions Economic Conditions—California Recruiting and Skills Gaps ©SHRM 20149 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison Organizations in California are less likely to indicate that they have experienced difficulty in hiring for full-time regular positions because candidates do not have the needed credentials/certifications compared with the rest of the U.S. Organizations in California are less likely to indicate that they have experienced difficulty in hiring for full-time regular positions because qualified candidates are not interested in moving to their local area compared with the rest of the U.S. Candidates do not have the needed credentials/certifications California (22%)<United States (30%) Qualified candidates are not interested in moving to local area California (16%)<United States (27%)

10. Organizations Having Difficulty Filling Certain Job Categories for Full-Time Regular Positions over the Last 12 Months Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201410 Note: Respondents who answered “don't know” were excluded from this analysis. Percentages do not equal 100% due to multiple response options. Only respondents whose organizations were hiring full-time staff were asked this question. Figure represents those who answered “very difficult” and “somewhat difficult.”

11. Organizations Having Difficulty Filling Certain Job Categories for Full-Time Regular Positions over the Last 12 Months (continued) Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201411 Note: Respondents who answered “don't know” were excluded from this analysis. Percentages do not equal 100% due to multiple response options. Only respondents whose organizations were hiring full-time staff were asked this question. Figure represents those who answered “very difficult” and “somewhat difficult.”

12. Organizations Having Difficulty Filling Certain Job Categories for Full-Time Regular Positions over the Last 12 Months Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201412 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison In the last 12 months, organizations in California were more likely to find it very difficult to fill positions for full-time educators (e.g., teachers, professors) compared with the rest of the U.S. In the last 12 months, organizations in California were more likely to find it very easy to fill positions for hourly laborers compared with the rest of the U.S. In the last 12 months, organizations in California were less likely to find it very easy to fill positions for skilled trades (e.g., electricians, carpenters, machinists, mechanics, welders, plumbers) compared with the rest of the U.S. Very Difficult—Educators (e.g., teachers, professors) California (21%)>United States (8%) Very Easy—Hourly Laborers California (47%)>United States (35%) Very Easy—Skilled Trades California (5%)<United States (12%)

13. Basic Skills/Knowledge Gaps Job Applicants Had in the Last 12 Months Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201413 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages do not equal 100% due to multiple response options.

14. Basic Skills/Knowledge Gaps Job Applicants Had in the Last 12 Months (continued) Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201414 Note: Only statistically significant differences are shown. California responses were excluded from the United States group for this analysis. United States—California Comparison In the last 12 months, organizations in California were less likely to report that job applicants lack basic computer skills (e.g., using a mouse, typing, opening/closing/saving files, terminology, accessing the Internet) compared with the rest of the U.S. Basic Computer Skills California (24%)<United States (32%)

15. Applied Skill Gaps Job Applicants Had in the Last 12 Months Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201415 Note: Respondents who answered "don't know" were excluded from this analysis. Percentages may not equal 100% due to rounding.

16. Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201416 California Demographics

17. Demographics (CA): Organization Industry Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201417 Note: n = 572. Percentages do not equal 100% due to multiple response options. Percentage Professional, scientific, and technical services16% Accommodation and food services, retail/wholesale trade11% Health care and social assistance11% Manufacturing11% High-tech10% Other industry9% Government agencies9% Finance, insurance, real estate and rental and leasing8% Educational services7% Construction, mining, quarrying, and oil and gas extraction6%

18. Demographics (CA): Organization Sector Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201418 Note: n = 572. Percentages do not equal 100% due to rounding.

19. Demographics (CA): Organization Staff Size Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201419 n = 504

20. n = 535 Demographics (CA): Other Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201420 U.S.-based operations only 67% Multinational operations 33% Single-unit organization: An organization in which the location and the organization are one and the same. 30% Multi-unit organization: An organization that has more than one location. 70% Multi-unit headquarters determines HR policies and practices 48% Each work location determines HR policies and practices 3% A combination of both the work location and the multi-unit headquarters determines HR policies and practices 49% Is your organization a single-unit organization or a multi-unit organization? For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both? Does your organization have U.S.-based operations (business units) only, or does it operate multinationally? n = 542 n = 398

21. 21 SHRM Survey Findings 3,655 HR professionals participated in this survey from a randomly selected sample of SHRM’s membership from the entire United States and an additional random sample from California U.S. respondents (including CA) = 3,335, response rate = 13%, margin of error = +/-2% CA respondents = 572, response rate = 10%, margin of error = +/-4% Survey fielded December 16, 2013 - January 16, 2014 Survey Methodology Economic Conditions—California Recruiting and Skills Gaps ©SHRM 2014

22. SHRM California Resources  http://www.shrm.org/hrdisciplines/pages/california.aspx http://www.shrm.org/hrdisciplines/pages/california.aspx SHRM Leading Indicators of National Employment (LINE)  http://www.shrm.org/research/monthlyemploymentindices/line/pages/def ault.aspx http://www.shrm.org/research/monthlyemploymentindices/line/pages/def ault.aspx SHRM Jobs Outlook Survey (JOS)  http://www.shrm.org/research/monthlyemploymentindices/lmo/pages/defa ult.aspx http://www.shrm.org/research/monthlyemploymentindices/lmo/pages/defa ult.aspx SHRM Metro Economic Outlooks  http://www.shrm.org/research/monthlyemploymentindices/pages/metroeco nomicoutlooks.aspx http://www.shrm.org/research/monthlyemploymentindices/pages/metroeco nomicoutlooks.aspx SHRM’s Workforce Readiness Resource Page  http://www.shrm.org/hrdisciplines/staffingmanagement/articles/pages/ workforcereadiness.aspx http://www.shrm.org/hrdisciplines/staffingmanagement/articles/pages/ workforcereadiness.aspx SHRM Foundation: What’s Next: Future Global Trends Affecting Your Organization, Evolution of Work and the Worker  http://www.shrm.org/about/foundation/shapingthefuture/documents/2- 14%20theme%201%20paper-final%20for%20web.pdf http://www.shrm.org/about/foundation/shapingthefuture/documents/2- 14%20theme%201%20paper-final%20for%20web.pdf Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201422 Additional SHRM Resources

23. For more survey/poll findings, visit shrm.org/surveysshrm.org/surveys For more information about SHRM’s Customized Research Services, visit shrm.org/customizedresearchshrm.org/customizedresearch Follow us on Twitter @SHRM_Research@SHRM_Research Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201423 About SHRM Research Project lead: Tanya Mulvey, researcher, SHRM Research Project contributors: Alexander Alonso, Ph.D., SPHR, vice president, SHRM Research Evren Esen, director, Survey Programs, SHRM Research Yan Dong, Survey Research Center, SHRM Research Christina Lee, researcher, SHRM Research Qikun Niu, intern, SHRM Research Jennifer Schramm, manager, Workplace Trends and Forecasting, SHRM Research Joseph Coombs, senior analyst, Workforce Trends, SHRM Research Copy editor: Katya Scanlan, SHRM Knowledge Center

24. Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org.shrm.org Economic Conditions—California Recruiting and Skills Gaps ©SHRM 201424 About SHRM