The evolving role of employers in employee education

In the wake of the globalization across scores of industries, we have entered a new era of the skills economy. And in a skills economy and a skills marketplace, employers are—as should be expected—taking a different lens on the return on investment of sourcing, growing and attracting talent and on nurturing the pipeline of next generation employees.

A study from the Association for Talent Development indicates that U.S. businesses spent approximately $1,200 per employee annually on training in 2013, totaling $164.2 billion. Of that, 63 percent is spent internally and 47 percent is outsourced as employers recognize the importance of skilling workforces to remain competitive. This figure is in addition to the $18 billion invested in employee directed tuition assistance programs.

{mosads}Historically, most of these training dollars have gone to the top of organizations. A study conducted by Bersin by Deloitte shows that in keeping with past trends, 35 percent of corporate training dollars were spent on a limited number of professionals in leadership and management positions in 2014. But, thankfully, that’s starting to change. Why? Here are three primary reasons:

1. It’s more efficient to deliver training than it used to be, so the cost per training unit is lower which extends the reach and yield of spending levels into middle management and front-line customer facing employees
2. We now have a more flexible model of training, self-paced, on demand, personalized—so it’s more efficient and more effective for both the employees and employer
3. We can be more precise about what people need to be trained on and analytics platforms that can better measure overtime impact on the individual’s productivity, performance and retention.

This all plays into the new skills economy that we’re living in—now employers look at skills differently, and by default they will need to take a more active role in providing solutions for training and developing their employees. There are some 73 million adult Americans who have an associate’s degree or less. This is a large proportion of the employment market who are often struggling because they aren’t prepared to keep pace with the accelerating rate of change and respond to how the new skills economy functions. Progressive employers recognize that need and their self interest in keeping their workforces contemporary.

Even the traditional idea of employers assuming a continually refilled workforce pool of high school graduates is increasingly outdated in today’s world. With a national high school dropout rate of 20 percent and as high as 50 percent in some urban communities, enlightened employers that rely heavily on this talent pool such as retail, hospitality and manufacturing sectors are awakening to the reality that they cannot take for granted that the traditional high school system alone will provide a workforce with the basic requirements for a large percentage of jobs.

Of the $550 billion spent funding public K-12 in the U.S., 12 percent comes from the federal government; 44 percent each comes from the state income and 40 percent from local community property taxes. However, non-completers post traditional high school age have an acute challenge as no government entity truly owns the stewardship for on-ramping these second chance learners that did not complete high school. Once a student drops out, they are no longer under the jurisdiction of the local schools, and there are limited options for these students beyond self-paid adult high schools and community-based GED programs. Unfortunately, without thoughtful intervention these folks are often set up for a life of chronic unemployment, economic and health challenges.

Historically, employers have rationally assumed that local communities will produce sufficient high school graduates, and then employers may have some responsibility to help those graduates/prospective/current employees from that point forward that have this career orientation.

Unfortunately, this theory is no longer valid, given we now have 24 million Americans over 25 years of age with no high school diploma [source: U.S. Census Bureau, Current Population Survey, 2013 Annual Social and Economic Supplement]. This a significant challenge and opportunity for employers that lean-in to support these prospective employees—those who have dropped out are often “off the grid” and have no scaled advocacy. This number doesn’t even take into account the under-25 cohort, the so-called “opportunity youth” segment, high school dropouts who are seeking employment and are estimated to be in excess of 8 million people. This is where employers need to provide the support and advocacy missing in these lives and local communities. It is time for businesses to step up and create a more talented, skilled and prepared pool of high graduate candidates for the labor force of the future.

Britt is CEO of Penn Foster, a leader in career-focused distance and hybrid learning for 125 years.