May 22, 2018

The Skills Gap is Real -- Businesses Invest In the Future of Work by Investing In Education

By Ashley Smith, RTWBC

When looking to solve the skill gap crisis employers need to be proactive.  Aware that there has been a mismatch between the training and skills needed employers are beginning to seriously collaborate with regional workforce organizations and educators to build talent for the next generation and create continued economic growth and opportunity.  

The Skills Gap From 30,000 Feet 

‘The ‘‘skills gap’’ in the United States is serious” and “the land of opportunity” is its fundamental promise!’  McKinsey reports that ‘40% of American employers say they cannot find people with the skills they need’.  Yet, the Bureau of Labor Statistics reports that in April 2017, 6.3 million people are unemployed.  This mismatch between employer and workforce skills represents a complex signaling problem that can be resolved through strategic stakeholder collaboration and evidence-based application.

Partnering with colleges can be a way to ensure students are learning the necessary skills and obtaining the experience they need. This is not a “One Solution Fits All” kind of problem. While well intentioned, schools often miss the mark in preparing its students for the workforce by not providing work-based skills and experience.  In a Gallup survey, only 11% of business leaders strongly agreed that graduates were ready for work, compared with 96% of higher-education chief academic officers who said their institutions were very or somewhat effective at preparing students for jobs.   Thousands of companies partner with colleges but they vary in efficacy from meaningful to check the box kind of partnerships.  
Apprenticeship and other work-based training models are arguably the most effective way to combine classroom education with on-the-job experience where the educational institutions work closely with the company sponsoring the apprenticeship aligning classroom training with job skills.  

Companies Are Doing More Than Picking up the Tab: They’re Getting Involved

In June 2017, RTWBC hosted a convening in Minneapolis featuring successful employer-educator partnerships that represent workforce solutions: apprenticeships, bootcamps, two- and four-year degree programs that challenge employers to join with the local workforce and schools to build non-traditional partnerships and curriculum that address the skills gap and the future of work. This partnership model is the foundation of behavior modification in industry hiring best practices.  

Apprenticeship 2000 is a 4-year technical training program, located in Charlotte, NC, is designed to train people for highly skilled technical trades such as machinists, electricians, tool and die makers. High school students that qualify for Apprenticeship 2000 train for exciting technical careers with excellent pay and benefits!

Partner companies, an onsite 8000 hour training apprenticeship program, provides apprentices with an AAS degree in Mechatronics Engineering Technology from Central Piedmont Community College. Upon graduation, apprentices are awarded a Journeyman’s Card and Certificate by the State of North Carolina and a Certificate from the US Department of Labor.

The U.S. division of Fiat Chrysler Automobiles provides 118,000 employees full tuition to attend Strayer University degree programs.  Any employee who has been on the job for more than 30 days and is seeking an Associate, Bachelor or Master degrees are eligible to receive money for tuition, books, and fees.  Strayer overhauled its courses to address the specific needs of the automotive firm, removing case studies on other industries and replacing them with a curriculum directly tied to car dealerships supply-chain logistics and sales. 

Employees who participate in Cigna’s training programs are more likely to be promoted, retained or transferred within the company, which reduces talent management costs and drives bottom-line return. For every dollar Cigna invests in tuition assistance, it earns the invested dollar back and generates an additional $1.29 in savings — a return on investment of 129%

Recent Data Suggests a Significant Increase of ROI for companies

Walmart has invested over $2.7Billion in the Walmart Academy training program and increased wages.  The company is investing in their workforce with a calculated belief of improved retention, satisfied customers and increased sales.  "We're looking for behavior change. ... We know that the real learning happens when you're out on the sales floor."Pippa Pomeroy, Wal-Mart's senior director of HR strategy and training.

More and more we see retail and fast food workers taking advantage of tuition assistance and reimbursement programs.  Working at McDonald’s isn’t just a chance to earn money in your first job, but an opportunity to build skills for your future.  Research shows that these benefits more than pay for themselves, by reducing turnover and allowing employees to move up the ladder.

Collaboration is Key

The skills gap is complex and calls for a collaborative approach. Employers are now re-discovering successful partnerships with external forces to build talent pipelines primarily through work-based learning/hiring initiatives.  A sustainable workforce (versus the cost to work) is driving ROI.  The skills gap is real and can only be resolved through the collaboration of employers, educators, workforce and policymakers.

Ready To Work Business Collaborative, founded by a collective of Fortune 500 companies, is committed to working cooperatively to develop hiring best practices that target the long-term unemployed, under-employed, people with disabilities, military veterans, and Opportunity Youth. The RTWBC accomplishes this mission through collaboration, thought-leadership, and services that support employers who desire to serve these talent pools better.

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Ready To Work Business Collaborative works cooperatively to help employers develop hiring best practices that target the long-term unemployed, underemployed, people with disabilities, military veterans, and Opportunity Youth.

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