An apprenticeship is a program where employers develop their workforce, and employees get paid to receive a combination of work experience, classroom instruction, and credentials.
Apprenticeship programs have long been popular in many regions of the world; however, apprenticeship programs have traditionally been limited to a handful of industries in the US. The more typical path for education and training in the US has been to complete high school and move on to a college degree.
Contrast the US model with European countries, where many students choose a career path at the beginning of high school and receive targeted skills training through an apprenticeship program after completing high school.
A World Bank Study, A Comparative Analysis of National Apprenticeship Systems, took a deeper look at the prominence and effectiveness of apprenticeship programs around the world. Researchers reviewed apprenticeship programs in both the developed world and the underdeveloped world.
When compared to other countries, both developed and underdeveloped, the US ranked low on both its use of apprenticeships and the effectiveness of its apprenticeship programs. The developed world outside of the US (e.g. Canada, Europe, Australia, etc.) incorporate apprenticeship programs more broadly, and enjoy more successful apprenticeship programs as they relate to worker preparedness, retention, and program completion.
Many question whether the US should learn from other countries. The argument isn’t new. Every President from Reagan to Trump has called for increased focus and spending on skills-based work training. However, as Georgetown’s Anthony Carneval describes, the US’ “high school to Harvard” mentality has limited widespread apprenticeship program adoption.
Given the current shortage of skilled workers in the US marketplace, and a recent Executive Order pushing for growth of the apprenticeship ecosystem in the US, you may ask how can apprenticeships benefit my business? If you find that an apprenticeship program benefits your business, the follow up question should be How can I run an apprenticeship program that attracts and retains quality workers?
How apprenticeships benefit your business
Since the last recession, the US economy has recovered nicely. Unfortunately, the booming economy has left the US with another problem: a lack of skilled workers.
The US Department of Labor recently reported that for the 7.5 million jobs currently available, only 6.5 million workers are looking for jobs. That’s a worker storage of one million across all industries. If you look at job openings requiring specific skills, the outlook is worse.
A McKinsey & Company report indicated that 75% of employers it surveyed reported a skilled worker shortage. 60% of those surveyed were dissatisfied with the ability of entry-level job applicants and 90% reported that the skills shortage negatively impacts both productivity and employee job satisfaction. Unsurprisingly, the report found that both negative productivity and employee dissatisfaction were both likely to increase employee turnover.
Many blame the US’ focus on a college education as a major contributing factor to this labor shortage. Sarah Chamberlain recently reported in Forbes:
“This issue is partly due to our culture’s emphasis on going to college. Many high schools look to their university placement as the best judge of a quality education. That statistic discriminates against students for whom college is just not a good fit, especially when schools do little to inform students of non-collegiate options.”
If your business suffers from the one million skilled worker shortage, an apprenticeship program might help you fill your open positions. Apprenticeships allow employers to train individuals with two ideas in mind:
- A specific role, and the underlying skills needed to succeed in that role
- The unique requirements of that role as it relates to your specific business
One commentator described the difference between hiring for a role, and developing an employee for a role through an apprenticeship program as buying or building.
When you buy an employee out of the open job market, you take some risks. That employee might have some of the skills you require, but the employee will likely not have the entire skill set you need. Further, that employee will not be versed in the nuances or complexities of your business.
Accordingly, in addition to skills training, your new employee will need to learn the ins and outs of your business (e.g. how to get paid, what your customers want, who to escalate problems to, productivity goals, etc.).
On the other hand, if you build an employee through an apprenticeship program, you can customize that employee’s education with hands-on training to fit your particular business needs. As that employee learns within your business environment, the employee receives skills training while naturally being exposed to the intricacies of your business.
How are apprenticeships benefiting US employers?
In the US, apprenticeship programs have historically been limited to trades such as carpentry, plumbing, electrical work, machining, and masonry. However, the landscape is shifting, and industries like technology, hospitality, and healthcare are starting apprenticeship programs. Take a look at some of the companies that have recently launched apprenticeship programs:
- Dartmouth-Hitchcock Medical Center
- JP Morgan Chase
- Dow Chemical Company
- CVS Health
- Black Oak Casino
Adobe reported that 96% of its students who completed its apprenticeship program stayed with Adobe upon completion of the program.
CVS launched an apprenticeship program to combat a shortage of pharmacy technicians.
CVS found that pharmacy techs who completed the apprenticeship program were half as likely to leave the company as those who did not onboard through the apprenticeship program. Adobe and CVS have learned what many employers have found out about quality apprenticeship programs: they help increase employee retention.
Glassdoor recently put together a list of US companies that don’t require a college degree:
- Penguin Random House
- Whole Foods
- Home Depot
- Bank of America
Google’s former Senior Vice President of People, Laszlo Block, told The New York Times that the company’s early practices of hiring the brightest candidates from schools like Harvard and Standfor was a “mistake”. The company now looks for factors like capacity for logic and creativity, grit, and the ability to learn skills. Google seems to be looking for great apprenticeship candidates rather than great employees.
Giant US companies aren’t the only ones seeing the benefits of apprenticeship programs. President Obama campaigned heavily on expanding apprenticeship programs in his second term. President Trump signed an Executive Order committing to many of the policies Obama pitched towards the end of his Presidency.
Apprenticeships are growing in the US. They are becoming more attractive to both companies and the US government to help combat growing labor shortages and lack of skilled workers. Employers are reaping the benefits of their apprenticeship programs, and are pouring more investment into such programs.
US apprenticeship programs seem to be working for US employers. But, is the US apprenticeship trend as beneficial to workers? Early indicators suggest apprentices like the programs as well.
How apprenticeships benefit apprentices
The typical American education path doesn’t include getting paid to learn. In fact, post-high school students are paying more for education than at any other point in history. Student debt has become a heated political topic. It has surpassed both credit card debt and auto loan debt in the US, and is now second only to home mortgages.
Apprenticeship programs allow students to earn their education, customized to a specific occupation, and get paid to go through the process. Students and employers are taking notice of this win-win situation. Almost 700,000 new apprenticeships were completed in the US since January 1, 2017. The average starting salary for apprentices who successfully completed their program was $70,000. That’s almost 30% more than the average starting salary for recent college grads which remains around $51,000.
Additionally, job prospects for apprentices are good. 94% of apprentices who successfully complete their program land a job. That’s better than the 86% of students who earn their bachelor degree or better without an apprenticeship on their resume.
A never ending conundrum for employers hiring entry level employees is a desire to hire candidates with experience. Young candidates, fresh out of school are natural applicants for entry level positions; however, young people can’t possibly have experience when applying straight out of school.
Apprenticeship programs help solve this problem. Apprenticeship programs blend classroom education with hands-on experience.
Employers desire candidates with “experience” because they want employees who can hit the ground running. An experienced employee, with skills that fill a need in your business, can immediately contribute to your business.
Apprentices build their skills while working for you and earning their education. When the apprenticeship program is complete, that apprentice has gained enough experience to contribute to your business, and likely other businesses as well. Accordingly, apprenticeship programs help inexperienced workers gain the elusive “experience” that all employers desire.
In addition to generic “experience” apprenticeships specifically target skill development.
Apprentices who complete their programs develop specific skills that employers can hire and deploy quickly, with less training than a typical candidate. It’s no secret that training new employees takes time and costs employers significant money each year.
To worsen the already unattractive prospects of hiring an inexperienced candidate for a current opening, candidates that feel ill-equipped or unappreciated are likely to search for alternative employment. Employees are quitting jobs in the US at unprecedented rates. A quarter of employees who quit jobs in 2018 did so because the job was not the “right fit”.
Training is expensive, but it’s not as expensive as replacing employees who quit. Studies suggest that it takes three to five months to find a replacement employee, and the cost associated with replacing an employee equals six to nine months of the leaving employee’s salary.
Employees are much more likely to remain with your company if the job is a fit, and they feel confident they are contributing to the success of your company. Apprentices enter new positions with experience under their belt, making them more likely to be happy with the role and inclined to stay with the company.
Given the cost of training and replacing employees, and the increased retention rates of experienced employees, it’s no wonder employers desire experienced candidates. Apprenticeships are job and skill specific. They ensure employers that employees have the skills needed, and increase the likelihood that apprentices land a job that is a good fit.
In addition to skills-based training and experience, apprentices can gain a certification they can add to their resume. President Trump’s Executive Order aiming to expand apprenticeships has led to a flurry of government activity regarding apprenticeships. Apprentice.gov launched last year as an Online hub where employers can promote apprenticeship programs and job seekers can find apprenticeship opportunities.
In addition to this central hub, the Department of Labor is working on a certification program called Industry-Recognized Apprenticeship Programs (IRAP). IRAPs would be validated by a standards body and offer accreditation to apprentices who complete IRAP-certified programs.
Job candidates would benefit from listing an IRAP accreditation in much the same way they would from listing licenses, degrees, and other achievements on their resumes. IRAP is currently going through a Federal rulemaking process.
Is an apprenticeship program right for your business?
An apprenticeship program might be a good fit for your business if:
- You have trouble filling skilled positions
- You have difficulty retaining talent
- You want to diversify your talent pool
- You need to train for needs specific to your business
Filling skilled positions
Accenture recently surveyed 1,000 community college students. 60% of those surveyed indicated a desire for employment in the tech sector. However, 80% of those interested in tech suggested they would need additional training, after obtaining a community college degree, to land a desired job.
Accenture’s Pallavi Verma, a Senior Managing Director, told CNBC “People don’t necessarily have the right skills…. In any business where talent is your primary commodity, you have to take control of the talent that you have and take responsibility for the skilling that they have.”
To take control of the skill shortage, Accenture launched its own apprenticeship program in 2016. If you find your business in a similar situation, consider whether you can fill this skill gap through an apprenticeship program.
A recent report by Cebr found that 80% of companies with apprenticeship programs report an increase in staff retention. LinkedIn’s 2018 Workforce Learning Report found that 93% of employees would not leave a company if the company invested in employee careers.
In an economy where almost half of employees are dissatisfied with their job, investing in your employees is a good method to combat the problem of employees searching for alternative employment.
Investing in your employees through an apprenticeship program allows you to cultivate the skills your business needs and demonstrates to employees that you care about their development, and are willing to invest in them.
Diversity is an increasingly important element of modern workforces. Unfortunately, historical recruitment tools (college campus programs, networks referrals) don’t help diversify the pool of candidates. Many companies are experimenting with apprenticeship programs as a path to increase workforce diversity. Treehouse, an online software developer school, recently tested such a program. Treehouse CEO, Ryan Carson, explained:
“This is not charity. This is a bottom-line decision. We need to attract new candidates to our industry and break down barriers that keep underrepresented populations out. I predict that apprenticeships will become the primary talent path into companies.”
Recruiting talent through an apprenticeship program allows you to focus on candidate grit, problem solving, and desire. This takes away elements such as college degrees, who candidates know, and other elements that have historically prevented underrepresented populations from participating in the modern marketplace.
Business specific needs
Unfortunately, the perfect skill set on paper will not automatically lead to a perfect match for your business. Your business has its own unique culture and nuanced operations. It’s impossible to know how an outside candidate will perform and integrate into your business until that employee starts and tries to work within the confines of your business. A perfect skill set match will not overcome an irreconcilable conflict in culture, values, or vision.
These unique aspects of your business make it a great place to work for some, and complete barrier to happiness for others. Ramping up an employee through an apprenticeship program helps introduce a new employee to your business as that employee learns the skills necessary to succeed in your business.
Apprentices learn more than skills. They learn the politics of the office, the culture, the operations, the expectations for success and failure, and all the other facets that make your business what it is.
Apprenticeship programs expose potential employees to your business and uncover whether it will be a fit early in the process. No interview or resume can prepare you or an employee for a day to day working relationship. But, this is exactly what an apprenticeship does.
The US isn’t known for a strong history of apprenticeships. However, the US government and business community are working to change this reputation. Governments and private businesses alike are investing heavily in apprenticeship programs, and you should consider whether an apprenticeship program makes sense for your business.
If you have trouble finding skilled labor, retaining employees, achieving a diverse workforce, or landing employees to meet your specific business needs, an apprenticeship program might be able to fill some of these gaps.