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With private and government funds, employers are creating model training partnerships to bridge the nation’s skills gaps.
It wasn't the first time Pamela Howze, SPHR, was proposing an unorthodox solution to her human resource manager. Howze, a training and development manager for Siemens Energy Inc. in Charlotte, N.C., looked across the table at her boss and tried to establish some context. "I have a training idea," she said, "and I know it's going to be a little out of the box."
This time, her colleague was prepared. "Pam," he replied, "you don't even have a box."
Like Howze, more HR professionals need to replace their traditional thinking about training as competition for skilled labor intensifies, globally and locally. Public-private training programs represent a solution. The leading thinking on such programs centers on apprenticeships and community colleges—and both figure prominently in Siemens' approach.
Howze is closing in on her doctorate in adult education. She's one of the primary architects of the German manufacturing giant's innovative partnership with Central Piedmont Community College in Charlotte—and her innovative thinking helps make the partnership work. This initiative played a part in doubling Siemens' Charlotte workforce to roughly 1,450 employees when the company relocated its gas-turbine manufacturing plant from Ontario to Charlotte in late 2010.
The partnership, a complex combination of publicly funded incentives and sizable investment by Siemens, elicited praise from President Barack Obama in his January State of the Union address. The president subsequently proposed an $8 billion Community College to Career Fund to be co-administered by the U.S. departments of Labor and Education. The fund would help "forge new partnerships between community colleges and businesses to train 2 million workers for good-paying jobs in high-growth and high-demand industries," according to the White House.
Similar incentives, with smaller payouts from the Labor Department, already exist,reports Michael Ferraro, president and chief executive officer of Training Solutions Inc. in Chantilly, Va.
The president's proposal comes at a time when the nation's employers need out-of-the-box training solutions. Unemployment, though decreasing, remains high. Yet researchers for the U.S. Government Accountability Office (GAO) contend that traditional federal employment and training programs have become inefficient, and Sen. Tom Coburn, R-Okla., in a separate report said they're "rife with waste, fraud and abuse."
Meanwhile, the global skills gap grows broader. Last year, 52 percent of U.S. companies reported that they experienced difficulty filling jobs, a 38 percent increase from the percentage of companies expressing the same challenge in 2010, according to an annual ManpowerGroup survey. As early as 2006, says ManpowerGroup Chairman and Chief Executive Officer Jeff Joerres, survey data indicated that employers were upgrading technology quicker than people were developing their own skills. Training programs have not kept pace.
President Obama shared concern about this skills gap in January, noting that business leaders who want to hire in the United States "can't find workers with the right skills. Growing industries in science and technology have twice as many openings as we have workers who can do the job."
The skills gap raises a thorny question: How effectively do government training programs address the gap? Not very, according to a 2011 report by the GAO that said the programs were "in need of improvement." The report shows why the president in his Jan. 24 address expressed a desire to "cut through the maze of confusing training programs."
This maze includes47 programs administered across nine federal agencies. Despite costing taxpayers approximately $18 billion in 2009, "Little is known about the effectiveness of employment and training programs," GAO researchers concluded. The report indicates that all but three overlap with at least one other program. In his report, Sen. Coburn offers a harsh assessment: "The government has taken on a role for which it was never intended, pouring billions of taxpayer dollars into a broken web of job training and employment programs … lacking demonstrable effectiveness."
Practices that Produce Better Partnerships
Establishing a public-private training program begins with a phone call. HR professionals should "contact their local Workforce Investment Board or community college board to explore opportunities to either fit into an existing training program or explore opportunities to create a customized program," advises Marie Trzupek Lynch, president of Chicago Career Tech. She offers the following related tips:
Tap funding sources. Savings can be achieved by accessing public-private training when the program provides access to Workforce Investment Act Individual Training Account funding or On-the-Job Training wage subsidies for employers.
Enlist peer companies. If multiple companies require the same type of training, efficiencies can be derived from joining forces and resources.
Know your needs. Be prepared to discuss specific short-term and longer-term training needs specific to your organization.
Publicize benefits. Share with your public partners the benefits your organization gains by helping put local people back to work and helping them develop new skills.
A U.S. Government Accountability Office report, Workforce Investment Act: Innovative Collaborations between Workforce Boards and Employers Helped Meet Local Needs, also contains useful guidance on forming such partnerships.
Many HR professionals and workforce development experts also voice frustrations. "How does an HR person even know where to start to look for training programs and/or funding?" asks Michelle Miller, executive director of corporate learning and economic recruitment at the Harris Campus of Charlotte-based Central Piedmont Community College. "How do they know what's available or might be available?"
This lack of efficiency and inability to determine effectiveness stems in part from such programs targeting a variety of overlapping objectives such as:
The funding process adds twists to the maze. The Workforce Investment Act of 1998 created a Workforce Investment Board for every U.S. community. These boards direct federal, state and local funding to workforce development. One of the law's objectives was to foster coordination among publicly funded training via a "centralized delivery system through one-stop centers," the GAO report indicates. "[H]owever, only a few employment and training programs have been consolidated."
And, serious questions remain about whether these investment boards are directing sufficienttargeted training dollars to retool underutilized labor pools with specific technology, health care and manufacturing skills needed today.
With some exceptions, the majority of boards focus on providing "generic training for the hardcore unemployed," reports Ed Gordon, author of Winning the Global Talent Showdown: How Businesses and Communities Can Partner to Rebuild the Jobs Pipeline (Berrett-Koehler Publishers, 2009) and founder of Imperial Consulting Corp. "Generic training is not what employers need today unless they're looking to hire people to stock shelves."
Sharing the Blame
At least half of Workforce Investment Board members come from private businesses, with designated positions for representatives of unions and educational institutions, so businesspeople share responsibility for the skills gaps.
Educators must take responsibility, too. "U.S. students' performance on standard math and science tests has declined relative to that of students in many other countries," Thomas A. Kochan, a management professor at the Massachusetts Institute of Technology and co-director of the Institute for Work and Employment Research, wrote in the March 2012 Harvard Business Review. "The percentage of young adults obtaining a four-year college degree in the U.S. grew steadily for much of the 20th century but then leveled off (and actually declined for men) during the 1980s. Enrollment in community colleges has grown, but the rate of completion remains very low. And just 15 percent of college students pursue math, science or engineering degrees."
Kochan points out that corporate leaders who say "people are our most important asset" rarely support that sentiment in practice. Citing higher turnover, he notes that the U.S. male worker's average tenure with a private company decreased by 25 percent from 1973 to 2006.
"The issue is not talent management anymore. The issue is talent creation," Gordon adds. "We need talent to make and service our products and do other work—not just the executives who run corporations. The fixation in business schools has been on the upper levels of the professionals. Well, we lack the technical talent."
That said, emerging public-private partnership models, like the one used by Siemens, as well as partnerships involving small and medium-sized employers, may offer some salvation.
Tailoring Your Approach
Examples of effective government training and retraining programs tend to include components such as public-private partnerships, apprenticeships and hands-on learning. "There has definitely been a rise in apprenticeship programs in the U.S.," notes Jennifer Homer, vice president of communications and career development at the American Society for Training & Development in Alexandria, Va.
Chicago Career Tech helps retrain unemployed city residents with previous annual incomes from $25,000 to $90,000. Launched in 2009, this private-public partnership receives federal, state, city and private dollars.
Participants hone technology skills in one of two ways:
More than 225 businesses and nonprofits partner with Chicago Career Tech. One, medical billing and collection services provider Accretive Health, has hired 74 graduates for "follow-up representative" positions with an average starting pay of $17 per hour, or about $35,000 per year, since May 2010. The company now has 2,700 employees and continues to hire people to help clients comply with health care regulations. This year, Accretive officials expect to operate three training sessions on-site for approximately 80 participants. Accretive and other "train-to-hire" partners do not pay for the training; Chicago Career Tech declined to reveal the cost.
Children's Home + Aid, a child and family services agency with 880 employees, recently created a staff position for one of six interns it was hosting as part of a hands-on training component.
Eric Brenner, the company's lead systems analyst, created an HR data conversion initiative for interns to work on during a six-month assignment. The company's chief operating officer, Michael Shaver, says the organization agreed to be a host as a community service. In hindsight, he notes that the training also served as a six-month interview.
Shaver and Brenner point out that the benefits the organization gains from working with interns outweigh the time Brenner invests in oversight.
Figuring the Return
Larger companies that participate in public-private training programs have difficulty calculating return on investment.
Howze reports that Siemens Energy invests $170,000 per person to train apprentices in a community college program. Pre-screened 17- and 18-year-olds are paid for 40 hours of work a week while attending Siemens-certified training on the Central Piedmont campus. They will ultimately become certified computer numeric control machinists at Siemens' gas-turbine factory. The first six apprentices began in August 2011, and Howze and her team have just selected the next round of four apprentices from a stack of more than 60 applications.
This element of the Siemens partnership operates via Apprenticeship 2000, a technical training public-private partnership that recruits from high schools and the current workforce. Other members of Apprenticeship 2000that partner with Central Piedmont Community College include Ameritech Die and Mold Inc., Blum Inc., Max Daetwyler Corp., Pfaff Molds, and The Sarstedt Group. Graduates, who are paid wages during training, become machinists, tool-and-die makers, injection molding specialists, welding fabricators, and other machine and electronics technicians.
The Siemens partnership does not end there. From October 2010 to October 2011, Siemens filled more than 4,000 training seats in community college classes with new hires and existing employees who studied basic computer and software skills, advanced design software, technical writing, and more. Most of these classes take place at Siemens' site. "We share the cost of most of those classes with the state," Howze reports.
That helps explain why Siemens elected to relocate its gas-turbine operations to Charlotte in late 2010, when it also announced that it would expand operations—and add jobs—to its existing Westinghouse Boulevard campus. The incentives, according to the North Carolina Office of the Governor, include a $1 million grant from the One North Carolina Fund to help recruit for and expand high-quality jobs in the state and a state Job Development Investment Grant that could yield as much as $21.75 million in benefits for the company.
In 2010, the Office of the Governor estimated that Siemens would add 825 jobs in Charlotte through 2015 and invest at least $135 million in these operations. A Siemens spokesperson declined to provide a breakdown of the state incentives that the company received, and estimated the company's overall investment—including training, recruiting and relocation costs—at roughly $350 million.
There may have been political and financial factors at play when Siemens relocated its factory to Charlotte, site of the 2012 Democratic National Convention. Siemens, like many other companies, has donated to the Obama campaign. Regardless, the presence of the country's fourth-largest community college and the college's devotion to "becoming the national leader in workforce development" play a major role.
The partnership works extremely well, according to Howze and Miller, who meet weekly to assess progress and plan future training.
Such plans will only drive Howze further away from thinking about training in traditional ways. She helped arrange for three community college teachers to fly to Siemens' headquarters in Germany, where they received training at the company's technical academy. They are now Siemens-certified and use Siemens equipment in their classrooms. "Last fall, we kicked off a mechatronics program for Siemens' apprentices," Miller reports. "The curriculum blends electrical, mechanical and computer skills. … The graduates are not specialists in one area, but technical specialists in multiple areas."
Although Howze may not know the specific return on investment of the partnership right now, she expects to acquire the skills and information to measure it. "My dissertation," she adds, "is going to be on return on investment."
And it might behoove other HR and training professionals to study her model. After all, when it comes to closing the skills gap, "the federal government is not going to be able to retrain the American workforce," Gordon says. "It's just too big and too costly of a problem. This is a problem that's going to be solved in the local level, through regional talent and innovation networks formed through the collaboration of American free market enterprises, educational institutions and communities."
The author is a business writer based in Austin, Texas, who covers human resource, finance and social marketing issues.
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