EDUCATION AND WORKFORCE
BUsiness Horizon Quarterly
BY JASON A. TYSZKO SENIOR DIRECTOR, POLICY, CENTER FOR EDUCATION AND WORKFORCE U.S. CHAMBER OF COMMERCE FOUNDATION
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production manager at a mid-sized manufacturing company is reviewing the company’s capacity to execute and deliver orders over the next three years. Given a growing shortage of precision welders and a high number of retirements expected among engineers, he
is increasingly concerned about the company’s capacity to staff projects. While the firm has posted position openings at local education and training providers and advertised online, the process to fill those positions has dragged on for months. The company has incurred high on-boarding costs and turnover rates for those they did hire, due to the workers lacking necessary qualifications. The installation of new automation systems and increasing overtime has allowed the company to maintain its current level of productivity, but the production manager knows all too well that absent a solution—and one arrived at quickly—the problem will soon undermine his team’s ability to deliver orders on time and take on new business. This example illustrates a common problem experienced by companies of all sizes across a diversity of industries: the skills gap is growing and impacting the ability of companies to compete. According to Tony Carnevale, Director of the Georgetown Center on Education and the Workforce: “The skills gap is one of the number one threats to American competitiveness today and in the future. There is a fundamental misalignment between education and our education and training system with increasing numbers of learners struggling to transition to employment while businesses are desperate for new workers.” A recent survey by Adecco found that 92% of executives believe there is a serious gap in workforce skills and nearly half are missing out on growth opportunities as a result.1 According to Manpower Group, 40% of U.S. employers are struggling to fill jobs.2 Left unchallenged, the skills gap will grow to more than 5 million unfilled positions by 2020.3 Our nation’s education and workforce development system is failing to keep pace with our economy, and employers throughout the United States are struggling to find skilled workers who can contribute to their growth. As a result—despite stubbornly high unemployment rates— many jobs are left unfilled. If employers throughout the country are to maintain their competitiveness, it will require closing an ever-worsening skills gap that continues to undermine economic growth and job creation.
EDUCATION AND WORKFORCE
BUsiness Horizon Quarterly
Employers control the greatest currency in the education and workforce marketplace: JOBS.
For decades, reform initiatives have sought to
19% at non-flagship universities, and a shocking 4% of
improve the education system; however, the results of
students at two-year institutions.6 For those who make
such efforts have not done enough to improve high
it through, the story is not much better. Nearly 54% of
school or college outcomes—or even the effectiveness of
bachelor’s degree holders aged 25 and under are either
workforce training programs. Consider the performance
unemployed or underemployed.7
of our education system.
At our current trajectory, employers can expect the
Nearly a quarter of all students do not graduate with a basic high school diploma. In 2012, more than
skills gap to be here to stay.
4
$3 billion was spent on remedial education for 1.7 million students entering college who did not have the basic math and reading skills to take college-level courses.5 In addition, too few graduate on time: 36% of students enrolled at four-year flagship universities,
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With limited time and resources, companies are increasingly interested in improving their return on investment. Employers are no strangers to investing in education partnerships. In K–12 education alone, corporate philanthropy invests on average $3 billion to $4 billion annually.8 This investment has served to
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strengthen the business presence in education but has
This approach—a bold departure from prior
achieved limited gains in terms of improving our system
practice—will explore how employers can lead the
as a whole. Over time, companies have become more
way by applying lessons learned from supply chain
sophisticated at investing their energy in efforts that are
management to their education and workforce
systemic and scalable. Return on investment, however,
partnerships. Employers have become increasingly
remains elusive.
sophisticated in managing high-performing and
The business community must be more involved. To that end, the U.S. Chamber of Commerce Foundation has launched a partnership with USA Funds to explore a new vision for employer engagement with education and workforce systems—one that yields more effective employment transitions for students and a better prepared workforce for all employers.
adaptive supply chains in all manners of their business. When it comes to talent, however, employers are left without the tools, resources, and partnerships to effectively manage costs, improve returns on investment, and establish sustainable competitive advantages. What is a supply chain? At its most basic level, a supply chain encompasses a set of business activities
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EDUCATION AND WORKFORCE
BUsiness Horizon Quarterly
and companies involved in designing, making,
can exercise their investment and hiring to drive
delivering, and using a product or service. Supply
behavior among leading suppliers and achieve a
chain management is the coordination of those
more skilled workforce—benefitting individuals,
companies and activities to achieve the best mix of
institutions, and businesses.
responsiveness and efficiency for the “end-customer” being served.9 Once employers begin to understand their role as the “end customers” in managing talent supply chains, they can reshape the education and workforce
LESSONS LEARNED Our collaboration’s initial review of supply chain management practices has already led to identifying several important lessons that can be applied in talent
systems as an extended chain of talent providers that
pipeline management.
prepare learners for careers in the most responsive
LESSON 1: Employers drive value creation
and efficient way possible. Employers control the greatest currency in the education and workforce marketplace: jobs. Through effective talent pipeline management, employers
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Not long ago, logistics functions within companies were treated as a cost of doing business that should be reduced as much as possible. Market leaders, however, began using more comprehensive supply chain
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management strategies that looked beyond cost and
differently about their approach to human capital.
instead looked at responsiveness, flexibility, and lead
Now, more than ever, employers need to link their
time to gain advantage in the marketplace. What was
education and workforce development investments
once the purview of logistics managers had become an
to their business strategy.”
area of shared ownership within the firm. In addition, leading companies developed customized solutions for different markets and used risk management techniques to make more resilient those supply chains that were most critical to a business’ ability to compete. When managing human capital, employers need to see
This requires that employers play an expanded leadership role as the “end customer” in order to develop customized talent pipeline strategies for all critical functions and jobs that provide the right mix of responsiveness, cost, and resilience. For many jobs, it makes sense to go to the broader labor market for
talent pipeline management as a driver of competitive
“time to fill positions” and “quality of talent.” For those
advantage. Robert Valentine, Global Director of STEM
positions that a company cannot afford to suffer a
Education at Dow Chemical Company, affirms that
shortage, talent pipelines are needed to circumvent “just
“Managing the talent pipeline—particularly in STEM
in time” job boards to reduce time to fill positions and
fields—is not about philanthropy but a business
cost, as well as increase productivity.
imperative that challenges employers to think
When managing human capital, employers need to see talent pipeline management as a driver of competitive advantage.
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EDUCATION AND WORKFORCE
BUsiness Horizon Quarterly
LESSON 2: Employers organize and
takes to train them, what skills they are trained
manage scalable network partnerships.
in, and how well they perform after being hired. The result is a set of institutional partnerships that
Leading supply chain managers increasingly
share costs, benefits, and, most importantly, value.
recognize that costs and benefits are shared across the network, and companies compete based on
LESSON 3: Employer measures and
their combined value, not just their individual
incentives drive performance.
performance. For example, it is not just Toyota competing with Ford, but Toyota’s supply chain competing with Ford’s supply chain. This requires alignment across demand planning, sourcing, and fulfillment in a way that balances quality, cost, and responsiveness among partners. In addition, while many companies compete based on supply chains, many more—particularly small business alliances—collaborate through shared supply chains where they leverage one another’s purchasing power as a network and coordinate across critical functions. Similarly, employers can work to establish a value network of education and workforce partners that can deliver a skilled workforce. A well-coordinated talent pipeline can reduce lead times to fill positions and improve response rates to changing job requirements. This can be achieved by increasing transparency among partners around hiring requirements. Examples of this are happening today. “Manufacturers are leveraging new and innovative technology platforms to signal their competency and credentialing requirements to their training partners,” said Jennifer McNelly, president of The Manufacturing Institute. “The result is better employment opportunities for learners, and more qualified workers for employers.” Other examples of critical feedback include the number of people being trained, the time it 50 | B U S I N E S S H O R I Z O N Q U A R T E R L Y // I S S U E 1 1
Supply chain management has long dealt with the danger of inconsistent performance measures that reward units on their individual performance as opposed to a team. One partner may hit their performance targets at the expense of increasing the cost and reducing the performance of another partner. Silos can perform quite well while the supply chain languishes in long lead times and inefficiency. To correct this, effective supply chains share data across partners to measure overall performance. Much of this is achieved through integrated data systems that support dashboards and scorecards across partners. In talent pipeline management, the partnership network is not measured by how well any one partner performs (e.g., enrollments and graduation rates) but instead by “time-to-full productivity” in the workforce. In our current system, education and workforce providers report to a diversity of state and federal agencies that measure success inconsistently. For talent pipeline management to work well, it requires aligning shared performance across partners from the point when a student or worker selects a career pathway all the way until they are employed in a career and earning a competitive wage. Through new public-private partnership models that build on lessons learned from supply chain management, employers across a wide range of
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industries—including manufacturing, information technology, energy and others—will be better able to communicate demand, establish strategic talent pipeline partnerships, and manage partner performance. The result will be a more demand-driven education and workforce system that is responsive to employer needs, improves transitions and outcomes for students, and begins to close the skills gap. The U.S. Chamber of Commerce Foundation will release a white paper in early fall that elaborates on the lessons learned from supply chain management, as well as highlights successful employer-led partnerships. Following the paper’s release, the Foundation will host a series of regional roundtables to seek input from business and critical stakeholders, culminating in a national conference on November 19 in Washington, D.C., to lay out a plan for employers to scale talent pipeline management solutions. Q
Jason A. Tyszko is senior director of education and workforce policy at the U.S. Chamber of Commerce Foundation where he advances policies and programs that preserve America’s competitiveness and enhance the career readiness of youth and adult learners. Tyszko’s prior experience focused on coordinating interagency education, workforce, and economic development initiatives. In 2009, he served as a policy adviser to Illinois Gov. Pat Quinn’s administration. In addition, Tyszko was deputy chief of staff and senior policy adviser to the Illinois Department of Commerce and Economic Opportunity. Tyszko received his Master of Arts from the University of Chicago and his Bachelor of Arts from DePaul University. He is a certified teacher in the state of Illinois. 1 “The Skills Gap and the State of the Economy,” Adecco, 29 Oct. 2013. 2 “The Talent Shortage Continues: How the Even Changing Role of HR Can Bridge the Gap,” Manpower Group, 2014, 4. 3 “Recovery: Job Growth and Education Requirements Through 2020,” Georgetown University Center on Education and the Workforce, June 2013. 4 Marie Stetser and Robert Stillwell, “Public High School Four-Year On-Time Graduation Rates and Event Dropout Rates: School Years 2010–11 and 2011–12,” U.S. Department of Education, April 2014. 5 “The Game Changers: Are States Implementing the Best Reforms to get more College Graduates,” Complete College America, Oct. 2013, 8. 6 Ibid, 3. 7 “Half of New Graduates are Jobless or Underemployed,” Associated Press, 23 April 2012. 8 Allen Grossman, Jan W. Rivkin, and Nithya Vaduganathan, “Lasting Impact: A Business Leader’s Playbook for Supporting America’s Schools,” Harvard Business School, Feb. 2014, 2, 9 Michael H. Hugos, Essentials of Supply Chain Management (Hoboken: John Wiley & Sons, Inc.: 2011), 2-4.
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