As Pressure To Upskill Grows, 5 Models Emerge

The Business Roundtable made big news in August when it redefined the role of corporations to focus on not just share price, but stakeholders. According to the nearly 200 CEOS who joined the statement, making that shift requires that employers not only compensate employees fairly, and provide “important benefits,” it  “includes supporting them through training and education that help develop new skills for a rapidly changing world.” 

Their announcement reflects the rise of a new corporate agenda that is shifting investments in talent from the periphery to the core of business strategy. Giants like Amazon and AT&T have announced multi-year investments of $500 million or more in worker retraining.  And with good reason: there are now more job openings in the United States today than there are unemployed Americans. And as automation and other technological advances march ahead, millions of Americans are at risk of being left behind. McKinsey & Company has estimated that as many as a third of American workers will need to switch occupations by 2030 because of rapid automation.

Whatever your preferred statistics, the message is clear: Millions of American workers need new skills, and that number is only set to grow. This talent mismatch isn’t just bad for individuals, it’s a challenge to businesses’ continued productivity and growth. That makes investments that help workers build new skills, and chart a course toward economic mobility, not only mission-aligned—but a business imperative. 

In response to a growing imperative, we are experiencing a sort of renaissance at the intersection of education and corporate training.  

But to achieve scale, new and emergent models will need to demonstrate their ROI. Education as a benefit, for example, has gained new life following a Lumina Foundation study showing that Cigna Corporation saw a 129% return on its tuition benefit programs.

Quantifying the value of a new era of educational investments starts with setting expectations about returns, and defining—with greater precision— their value in a particular corporate context. As the market evolves, we’re seeing five distinct categories—on-ramps, upskilling, reskilling, outskilling, and education as a benefit—that each have their own particular business proposition.  

On-ramp programs are, in many ways, the counterpoint to coding and skills bootcamps for workers without college degrees. They represent a small but growing segment of the training market, which provides tailored training for hard-to-fill frontline jobs. These short-term programs create a direct pipeline for employers and help unemployed or marginally-employed workers move back into the workforce quickly and in positions that provide a family-sustaining wage. They’ve existed for decades in some forms, such as apprenticeships, but are seeing an influx of new activity as the labor market tightens and demand for workers in middle skill jobs grows.

On-ramp programs in the past have been both supported by and limited by philanthropic and government funds, but new models in this category are tailored to businesses’ needs and increasingly funded through pay for placement, pay for service, and apprenticeship models. In this way, on-ramps can serve as a custom talent generator. Techtonic, a software and talent development company, for example, runs an outsourced apprenticeship program in four cities that allows firms to evaluate candidates’ work without having to manage the program themselves. Participants go through 12 weeks of training, and then Techtonic hires them to work on client projects. In that way, the client firms get to sample a candidates’ work before committing to a full-time hire.

Upskilling initiatives target workers who are in thriving or stable fields, but who need additional training to remain relevant or to advance in their existing company or industry. Think the marketer who needs to learn how to use new digital tools, or the engineer who needs to master a new coding language. This type of training—which is the most widespread—is moving from on-site training, conferences, or full-length courses to bite-sized digital learning. Upskilling also is broadening from its roots in compliance-based learning and development to encompass broader learning, such as systems thinking, data analysis, and digital skills.

Guardian Life Insurance Company, for example, recognized it needed to increase the skills of its professional workforce to make the most of new technologies, such as Fitbit monitors and car sensors, that are generating data on health and habits that can help insurance companies more precisely calculate risk. The company partnered with General Assembly, a digital skills provider, to upskill actuaries through short workshops and intensive bootcamps. Similarly, Coursera is leveraging its platform to allow companies—the likes of Google, IBM, Cisco, BCG, and PwC—to develop courses and certificates that teach everything from blockchain to leadership. 

Reskilling programs are designed for workers who need to move into an entirely new type of job and career. They don’t just need additional skills; they need entirely new ones. This type of training often happens after an employee has been laid off but, increasingly, employers are investing in it as a way to avoid layoffs and costly hiring initiatives.

AT&T, for example, has invested heavily in analyzing its workforce and retraining employees according to expected growth areas. The company’s research showed that only about half of its 250,000 employees had the necessary science, technology, engineering and math skills—and around 100,000 workers were performing hardware-related work that would likely be obsolete in 10 years. Rather than hire a whole new workforce, the company invested $1 billion in a multi-year initiative that features a career center, online courses, and collaborations with Coursera, Udacity and leading universities.

Walmart, as another example, provides 2-to-6 week training academies in advanced retail skills, designed to help employees move into new jobs in the company. It just announced a new effort to help its employees retrain for healthcare jobs, as the company begins rolling out primary care clinics across the country. 

Outskilling is a last-resort form of training for employees who simply won’t be able to find a new role at their current companies. As automation and other technological advancements continue apace such career transitions are likely to increase. Outskilling programs provide education as a severance benefit for employees being laid off or bought out, and it works best when workers start retraining before they leave their old job. Amazon recently announced a major investment in this area: expanding AmazonCareer Choice, a program that helps its fulfillment center employees—whose jobs are are risk to increasing automation—retrain for high-demand occupations outside the company.

Currently, out placement is an estimated $5 billion industry, but largely focuses on providing career advising, resume workshops, and access to jobs boards. At a cost of $2,000 to $8,000 per employee, those services are falling well short of the true retraining and job coaching that is possible. 

During a period of major layoffs in 2011, Nokia demonstrated what is possible when a company focuses on getting  outskilling right. It launched a Bridge program for 18,000 employees expected to be laid off because of major technological shifts and company restructuring. Employees were offered a range of services, including job search support and retraining. By the time the layoffs came, 60% of the workers affected had a clear plan and path forward. 

In many ways, this model is turning the usual order of education and work on its head for middle-skill workers: they used to go to college to get a job; now they get a job to go to college. With the benefit of meaningful tax incentives, companies like Starbucks are  leveraging a partnership with institutions like Arizona State University to offer employees access to online bachelor’s degree programs, regardless of whether they are directly relevant to the employees current work or a potential career path at Starbucks. The Starbucks College Achievement Plan covers 100 percent of tuition for a first-time bachelor’s for every benefits-eligible employee.

Guild Education uses a partnership model to offer similar education benefits for companies that lack the scale—or resources—of a Starbucks, or who simply don’t want to administer the partnership themselves. Employees participate in programs offered by Guild’s college partners while continuing to work at their current employer. Bright Horizons, a pioneer in employer tuition assistance programs, is supporting multigenerational strategies by pairing higher education with childcare, and offering free education to its network of preschool teachers, nationwide.

Each of these training categories has its own unique potential to change the business case for investing in worker training and, ultimately, economic mobility. New models in each area are emerging, but they remain underdeveloped. We need businesses and potential partners in education, philanthropy, and government to get far more creative about extending these models.

Millions of Americans are depending on such ingenuity.