managemnet company strategy managemanet 5 Ways Companies Are Addressing Skills Gaps in Their Workforce

5 Ways Companies Are Addressing Skills Gaps in Their Workforce

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For years, business and HR leaders pinned their hopes for better workplace learning on MOOCs, or massive open online courses. Unfortunately, the evidence continues to show that these are not enough on their own, particularly for those who most need them.

Companies now have more options, thanks to better technology, innovative funding mechanisms, and old approaches reimagined to meet today’s needs. Below, I explain five of the biggest developments in this space. 

The New Digital Apprenticeship

How a medieval practice is propelling thousands of workers onto the career ladder

The apprenticeship is perhaps the oldest form of workplace learning, stretching back to ancient times, and boasting some illustrious alumni, including Benjamin Franklin. There are more than 580,000 active apprentices working in the U.S. right now — up 103% in the past 10 years, according to Department of Labor figures.

For companies that consistently struggle to fill important roles, apprenticeships may be an effective solution. While apprenticeships have historically been associated with blue-collar jobs, they’re increasingly becoming a way to fill white-collar jobs in the digital and tech sectors. Apprenticeships in the IT and telecommunications sector grew by more than 300% between 2011 and 2020, while cybersecurity apprenticeships grew by 600% during the same period, according to the Department of Labor.

This trend is powered by a growing number of companies, many of which are focused on fast-growing fields like software engineering and data science, that recruit, support, and train apprentices on behalf of large employers. One UK-based provider, Multiverse, was recently valued at $1.7bn and claims to have served 10,000 apprentices. “We’ve long been believers in the apprenticeship model, and we’ve found it particularly effective for tech and digital jobs,” said Rashitha Jayasekara, chief of digital manufacturing at Rolls-Royce, which works with Multiverse to upskill existing employees. “The experiential learning that apprentices get through hackathons and project work allows them to combine theory and practice in a way standard training doesn’t, and to continuously develop skills we need within the company.”

Verizon, another Multiverse customer, uses the apprenticeship model to fill software engineering jobs and reports that 95% of an initial cohort accepted full-time offers at the company after completing an apprenticeship program. The Verizon program was designed to “lower barriers to entry to software jobs while training truly great software developers that we fundamentally believe can propel our business through digital innovation,” said Shankar Arumugavelu, Verizon’s chief information officer.

Apprenticeships aren’t right for all training needs. For one thing, they require a significant investment of time — in the U.S., formal apprenticeships are usually four years long. In some markets they can also come with restrictive regulation. In the UK, for instance, the government’s apprenticeship funding program has been criticized for being too rigid and not in line with employers’ needs.

A Fresh Approach to Tuition Reimbursement

How a historically elite benefit is becoming accessible for all

Large companies have long offered to pay for their employees’ continuing education. However, these benefits have historically been reserved for a small number of white-collar employees, for example, those pursuing an executive MBA. Or employees were asked to pay for their courses out of pocket and get reimbursed afterwards.

As the labor market has changed, more companies are offering tuition benefits as a way to retain their frontline employees — store clerks, baristas, drivers, and hourly workers. In response, a new class of companies has emerged to smooth and synchronize the relationship between training providers, employers, employees, and (in some cases) the government. Employees receive coaching, advice, and support to help them find the training program that’s right for them, and the training programs are paid for by the employer.

For example, in 2021, Target announced a tuition-assistance program called “Dream to Be” in partnership with Guild, one of the leading players in this growing space. According to Chief Diversity and Inclusion officer Kiera Fernandez, “Target has offered a traditional tuition reimbursement program for more than two decades. Now, through our partnership with Guild to offer Dream to Be, team members can attend classes at more than 40 schools, colleges, and universities … with no out-of-pocket tuition costs.” Fernandez said that as of April 2023, more than 25,000 employees have been approved for the program.

If designed effectively, the benefits of tuition assistance programs for employers are clear. For example, Jack Hartung, chief financial officer of fast-casual restaurant chain Chipotle, told CNBC that “employees who take advantage of the company’s free degrees are three and a half times more likely to stay with the company and seven times more likely to move up into management.” However, research suggests that while 84% of employees value tuition reimbursement benefits highly, on average, only 2% of eligible employees use this benefit. This implies employers must do more to take advantage of this powerful tool.

A Shift to Learning Experience Platforms

How employees know what to learn next

Organizing and tracking what employees are learning can be a cumbersome task. For years, this work has been done by software known as “learning management systems” (LMS), which are relatively simple tools that store learning material, typically in the form of presentations, videos, and text. Most large companies have one, but few employees spend much time on them.

In the last few years, a new wave of tools has transformed the LMS into “Learning Experience Platforms” (LXP), with features like skills assessments, Netflix-style recommendations about what to learn next, and internal social networking. LXPs “make learning relevant for individuals, not just managing training programs,” according Todd Tauber senior vice president of strategy at Degreed, one of the leading providers in this space. Industry analyst Josh Bersin estimates the market for LXPs is $500m, up from $200m in 2018.

Customers report that the model is working. Chris Harry is the chief learning officer of TEK Systems, a staffing firm that’s been using Degreed. “Since moving our various employee development programs onto Degreed, we’ve seen our highest-ever engagement and satisfaction rates,” he said. According to Harry, 96% of TEK employees have created an account in Degreed, and the company consistently sees 40 to 50% of them actively using the platform each month, which he says is “far higher than anything we’ve seen before.”

Results like these require real investment beyond simply buying the technology. For example, another Degreed customer, Ericsson, said it hired internal champions and developed an extensive internal marketing campaign to roll out its program. 

The Democratization of Coaching

How all of us can have a Sherpa for our careers

Professional coaching is a well-understood way to boost workers’ learning, confidence, and effectiveness. However, it has typically been an expensive tool, reserved only for senior executives. Moreover, even for those who can afford it, finding a coach can be a challenge.

New platforms have emerged that use technology to make it easier to find, match, and work with coaches. New companies provide tools to assess what each employee needs from their coach, match them with a coach who has the right experience and expertise, and even conduct coaching sessions via a digital platform.

The space is growing. According to the International Coaching Federation, there were 71,000 practicing coaches in 2021, up 33% from 2016. Investors expect growth to continue: The leading digital coaching startup, BetterUp, raised $300m in 2021 at a $5bn valuation as part of a wave of investment into coaching startups.

Much of this growth is powered by large companies offering coaching services more broadly to their employees. Danone, the France-based food products company, has been working with one provider, CoachHub, to offer this benefit to 250 employees. According to Maxime Hollande, who leads diversity and inclusion for Danone in the Netherlands, “these coaching sessions have been of big added value for employees… One of the metrics we watch closely is the extent to which each employee has progressed toward the personal goals each of them define with their coach. The average score on this metric is 4.9 out of 5.”

Chevron, the American global energy company, has made coaching sessions available to 7,000 of its managers around the world via BetterUp. “Prior to BetterUp, we utilized an assortment of internal coaching resources and multiple external coaching vendors,” explained Rhonda Morris, Chevron’s chief human resources officer. “BetterUp’s virtual coaching model … has matured our coaching culture making it more accessible for all who want it.  Coaches no longer have to travel to meet our employees. Our employees have been very vocal about their positive experiences with BetterUp.”

Because coaching sessions are inherently private experiences, it can be hard for employers to ensure a focus on the topics that are most important to them. At Chevron, they measure the success each quarter by asking employees to rate the effectiveness of leaders who’ve received coaching. “Leadership Effectiveness is consistently one of our highest scoring categories across our organization,” Morris said. “This shows that our BetterUp offerings are having a positive impact on our workforce and culture.”

The Rise of Cohort-Based Courses

How to build real skills online

When it comes to online learning, most participants don’t finish the courses they start, mainly because the learning experience is asynchronous. Individuals must be disciplined and diligent enough to complete large amounts of the learning material on their own. This is particularly difficult in today’s workplace, where the number of meetings and distractions has ballooned in recent years.

Now, a new delivery format called “cohort-based courses” has emerged as a way to improve completion rates. Groups of participants together take a course with defined start and end dates, regular homework assignments, and an instructor to run periodic live online discussion sessions. Within this more structured format, participants still access much of the learning material on their own time, making it easier for them to complete the course and have the chance to apply what they learn over its duration. One of the pioneers of this space, altMBA, says its learners have achieved a 96% completion rate.

Boston Consulting Group (BCG) is one leading employer that has embraced cohort-based courses, working in partnership with Emeritus (where I work). Lidia Juszko, BCG’s executive director of global learning and teaming, describes how the format works particularly well for a professional services firm like hers. “We’ve found that cohort-based courses offer a level of structure and support that makes them more engaging than standard online learning,” she said. “Our colleagues report that the combination and cadence of ‘office hours’ with instructors, live discussion sessions with the rest of the cohort, and short videos and exercises to be completed each week are a more accessible way for them to learn. Learning and development opportunities like this allow us to continue to attract and retain the best talent.”

HSBC, the global banking organization, recently began piloting cohort-based online courses as well, and the early results are promising. According to David Morris, global head of people capability, “One of our challenges has been to deliver in-depth learning in an online format, given the range and complexity of our markets. Our early results show that the online cohort-based format is achieving significant improvement across key indicators like completion, confidence, and capability.”

The downside of this format is that the live learning elements that make it effective come at a substantial cost. A single license to an open library of standard online courses costs about $30 to $60 per month for access to thousands of courses (most providers also offer significant volume discounts). Meanwhile, cohort-based courses can cost between $500 and $5,000 per course. This means cohort-based learning is unlikely to be an option for all employees, and employers must carefully decide who can benefit the most.

We are in an unusual economic situation, one where recession fears are up but the job market is still tight. As training budgets inevitably come under pressure, organizations will need to find more targeted ways to address their skills gaps. The five approaches outlined above can help companies move beyond the MOOC to find a learning program that’s right for their employees.

Editor’s Note: Harvard Business Publishing has a content creation and distribution partnership with Emeritus. Neither the author or editor who worked on this article are involved in that partnership.

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