By Chris Engle, Vice President, Avalanche Consulting, Inc.
Companies and community alike continuously ask the question, “How can I build my best workforce for the future?” In fact, according to our latest survey of 200 economic development agencies in the U.S., “skilled workforce availability” was the corporate site selection factor whose importance has grown the most in recent years. Simply put, our ability to educate and train our workforce will be the defining competitiveness factor of the 21st century for companies and communities.
In just the last year, “workforce readiness” has grown in awareness from government and education wonks to the mass media who frequently profile the plight of the low-skilled, long-term unemployed or the debt-laden students who graduate with degrees that don’t land them jobs. State and local governments are now joining federal agencies in their call for greater “workforce alignment”, i.e. ensuring that worker training and student education better prepares them for employment. Often, workforce agencies point to a lack of good information on skills and occupational demand by industry – information that is crucial to making a better career and education choices. In fact, many states have passed legislation requiring their local workforce agencies and sometimes colleges to provide better career information to students and workers. No longer will “What Color Is Your Parachute?” career planning techniques around life goals and personality profiles suffice. How many of us had the information we needed at an early age to make a thoughtful career choice?
Employers in traditional industries such as manufacturing or oil exploration, who now offer some of the highest salaries for individuals with one or two years of college training, would argue that career awareness must extend down to students in middle schools or even elementary schools. How many times have we heard manufacturers lament, “By the time students reach college or even high school, it’s too late to interest them in manufacturing jobs. They’ve been taught by parents and teachers that manufacturing is dirty or for people who can’t make it in college.” On the contrary, today’s jobs on the manufacturing floor are clean, technical, and complex, and all jobs require a worker with a wide range of knowledge and teamwork skills. Some of the most difficult positions to fill for manufacturers are at the technician level – those which require some type of industry recognized certification and typically require a much shorter time to complete than an Associate’s or Bachelor’s degree.
Education ROI for Companies, Communities, and Individuals
The dollars spent each year on workforce development are staggering. By some accounts, U.S. companies spend $165 billion each year on workforce training, which comes to about $1200 per worker on average (Source: American Society for Training & Development’s 2013 State of the Industry report.) By comparison, the federal government spends just $3 billion each year through the WIA workforce system, which provides training grants to individuals and corporations via local workforce development boards. Communities across the countries breathed a sigh of relief when both houses of Congress re-authorized WIA as the “The Workforce Innovation and Opportunity Act: Investing in America’s Competitiveness,” which aims to modernize the workforce system (and the 1998 WIA law) by providing greater local control, requiring more standard accountability measures, and being more responsive to economic realities by “aligning workforce development programs with economic development and education initiatives.”
Looking to hire workers or retrain your existing workforce? Don’t hesitate to pick up the phone and call your local economic development agency – they are best positioned to find you training grants.
Leveraging publicly available funds will surely improve your workforce ROI. Thousands of companies across the country benefit from public training dollars. WIA-related dollars are just one of dozens of grant programs to help train workers. In 2013, another 4,000 grants totaling $1.5 billion were provided to state and local governments, non-profits, and education institutions to help train workers in specialized skills.
Let’s consider the ROI on college education for individuals. Currently, 27 million people are enrolled full- or part-time at post-secondary institutions (in 2012), representing 13 percent of the population 18 years or older. Budgets at the 1,800 non-profit and public post-secondary institutions surpassed $170 billion in 2012 (tuition accounted for just $67 billion). For-profit education providers generated another $33 billion. How can ensure that this investment is well spent? There is no shortage of opinions on all sides of the debate: “Just graduate from college and you’ll be fine.” “Middle skills jobs are hardest to fill, so get an Associate’s.” “Don’t overspecialize.” “Liberal Arts degrees best prepare you for a flexible career.” “Consider the cost as well as school quality when choosing a career path.”
Getting Your Best Workforce in Three Easy Steps
1. Assess your long-term strategic needs
Companies are as concerned with their long-term position as well as meeting immediate workforce needs. Communities likewise seek to boost employment (and lower unemployment), while generating or attracting workers that enhance long-term competitiveness of their economies.
Corporate site selection decisions have a profound impact on both the short-term and long-term competitiveness of their workforce. Consider the choice of Boeing to expand in right-to-work South Carolina (where their headcount grew from zero to 6,000 in less than five years). Not only did they assess that their long-term manufacturing growth required a second location outside of Seattle, but they are also choosing to invest in R&D and information technology centers in North Charleston, creating nearly 1,000 new IT jobs.
Companies must continually evaluate the geographic dispersion of its workforce competitiveness. Often decisions to relocate or expand outside an existing location can be more of a cultural decision than an economic. Toyota announced earlier this year that it is relocating its North American headquarters (nearly 4,000 jobs) from California to Plano, Texas (in north Dallas). While the headlines point to the $40 million in incentives offered, moving to a pro-business, car- and truck-friendly state means growing a workforce that is more aligned with their consumers. Much has been touted by Texas economic developers about the quality of the workforce – for the price (and, zero personal income tax and reasonable housing costs certainly help in recruiting workers).
2. Inventory your capacity to meet your long-term needs
Often, companies – and even – communities realize that they aren’t able to generate the workforce they need for their desired future. Often, this means that companies may make unusual site selection decisions – at least decisions that surprise the losing communities.
The competitive search for IT talent has led to surprising pairings between companies and communities. After a disappointing partnership with Microsoft to produce in-dash computers, General Motors plans to bring 90 percent of its information technology development in-house, from 10 percent today. The company is opening several IT centers throughout the U.S. to achieve its goal, including Atlanta, Austin, and Phoenix. Financial institutions such as Fidelity National Financial and Deutsche Bank have turned Jacksonville, FL into an emerging location for IT and data center activity, as companies place greater emphasis on ROI and service quality.
3. Upgrade or retool your existing workforce capacity
Companies must continuously evaluate and upgrade the skills of its workforce to stay competitive. For manufacturers, much of the skills gap in hiring new workers equates to both foundation skills and the ability to understand why and how a certain engineering, or other technical area, concept is applied within the business process. Communities that have been able to supply these multi-disciplinary skills have helped their training institutions create programs that teach skills and concepts within the real business world applications. This contextualization of learning has the ability to produce a crop of workers that not only understand a technology (mechanical engineering circuits, for example), but also understand how the technology is used within the larger business model.
Enhancing partnerships between local education and industry can get a community closer to the creation of a truly talented pipeline of workers that have both the theoretical and applied understanding of their chosen education pathway. This practice is very well developed within the model of applied learning courses offered at local community and technical colleges. In many cases, it’s simply a matter of connecting local industry with the technical education provider to help develop the right courses with effective hands-on learning. Companies are well-served by working with technical and community colleges to help drive their future workforce as well as develop corporate training and professional development programs for their current workforce.
Where Do We Go From Here?
More now than ever, businesses are making decisions on relocating, growing and even closing based on the availability of a skilled and talented workforce. The health and vitality of a skilled and talented workforce is not the job of one singular entity or institution - it truly “takes a village” to succeed. Students need to be made aware of the local employment opportunities in their backyard – which courses to take that will prepare them for these opportunities and connections to industry so they understand the real life setting and opportunities that these careers can provide.
Today’s economy requires dynamic support, attention and care for the development of a skilled and talented workforce pipeline. Strategic efforts to increase the talented workforce pool include a diverse set of stakeholders focusing on a number of different strategies and tactics. Efforts range from content development, enhanced local and regional collaboration and strong public awareness communication strategies. The good news is that we live in a world where information is at our fingertips at all times. The success of U.S. companies and communities will require a clear understanding and continuous information sharing so that workers get trained in the fields and skills needed to ensure industry competitiveness.