Why companies hire veterans, and why they don’t

Veterans might seem like the perfect employees: Disciplined, loyal and resilient, and with highly valued leadership and teamwork skills. And indeed, many companies have been increasingly tapping military veterans to fill their leadership ranks. Fortune wrote a cover story in 2010 about how major companies like Wal-Mart, General Electric and PepsiCo are hiring young officers. The annual Military Friendly Employers list by G.I. Jobs Magazine has grown from a Top 10 to a Top 100 list (Amazon, Southern Company and CSX took the top three spots in this year’s list). And “hiring events” and job fairs that focus on veterans are getting more attention.

But despite the interest in hiring veterans for their unique skills and experience, there is also plenty that’s holding them back. A new report from the Center for a New American Security (CNAS) finds that annual unemployment rates for post-9/11 veterans averages one percentage point higher than that of non-veterans. The numbers for young veterans is even worse: Among departing military members between the ages of 22 and 24, the unemployment rate was, on average, 3 percent higher than for nonveterans of the same age. In 2009, unemployment for veterans of this group reached almost 22 percent.

The CNAS report helps to build the business case for hiring veterans and, unsurprisingly, finds that almost two-thirds of the companies in its sample are proactive in their efforts to hire veterans. Another 13 percent of the companies said that while no formal programs exist, veterans would be prioritized over equally qualified nonveterans in a hiring situation. But where the report is particularly interesting, especially given veterans’ higher unemployment rates, is in its explanations for why businesses might not be hiring former active duty members.

In in-depth interviews with 69 companies, CNAS found that more than 80 percent named one or two challenges to hiring veterans. The most commonly mentioned was a difficulty in skill translation — that is,  employers say that deciphering the acronyms that make up veterans’ experience is too complex. Veterans themselves have trouble explaining how their military experience can be adapted to the business world, and get flawed or limited help from military programs or computer-based skills translators. And many businesses simply don’t know enough about military hierarchies and culture, meaning they are under informed about which armed services jobs reflect high-performance status. As the CNAS report states: “the importance of certain awards or qualifications or a quick progression through pay grades relative to time in service may be lost on many civilian employers.”

Skills translation isn’t the only problem for veterans in finding jobs. Concerns about a mismatch of skills, military hires getting uprooted for future deployment, and the belief that veterans need time to re-acclimate to civilian life were all commonly cited as well. More than half the businesses CNAS interviewed also listed negative stereotypes about veterans as a challenge: Many are concerned about post-traumatic-stress disorder, while some others even see the discipline and rigor of military experience as a downside. One executive expressed worry “that the veterans will be too rigid or structured to function well or deal with a corporate setting because the military is all that they have ever known.” A military culture that rewards brevity, directness and discipline can seem at odds with more creative organizations.

To fix these issues, business leaders will need to do more to educate themselves about military culture, language and jobs. And veterans will need to learn how to better translate their skills appropriately to civilian life. But the biggest onus may be on the leadership of the Department of Defense. As the CNAS report suggests, they are the ones who can create a voluntary resume bank for veterans that can be accessed by employers, helping to resolve a complaint that a quarter of the companies had — they don’t hire more veterans because they have a hard time finding them. The DoD can do more to instruct departing service members and the employers who hire them about how various military jobs, skills and titles translate to the broader world. And they should create more partnerships with businesses and nonprofits to improve transition training, job opportunities and career advice for outgoing service members.

The sacrifices made by veterans are, of course, the primary reason military leadership must do more to improve members’ opportunities after they leave the service. But it’s also critical because, without some improvement on this front, the military loses one of its primary recruitment messages. What does it say to potential recruits when they hear that veterans’ unemployment rate — particularly young veterans — is actually worse than those who didn’t serve their country? Solving this problem requires leadership from companies, as well as from federal, state and local governments. Yet most of all, it requires leadership from the military itself.