They Retread Tires, Dont They? It has been estimated that in seven years, as the first Baby Boomers reach retirement age, there will be 10 million more jobs than workers. By 2031, that gap could widen to 35 million.
At the same time, there will be a dramatic demographic shift in the workforce. The number of workers 55 and older is anticipated to grow by more than 10.2 million by 2012. The Bureau of Labor Statistics predicts that, by 2012, one out of every five workers will be 55 or older.
In a world in which cumulative human knowledge doubles every seven years, most employees will have to be retrained at some point in their lives as they transition from one career to another. That applies equally to the 40-year-old textile worker whose job moves to China, and to the 60-year-old programmer who has spent most of his career maintaining COBOL applications.
One solution to the workforce crunch will be to continue, or accelerate, the current strong pace of productivity growth using technology. Another obvious solution is keep older workers active and productive in the workforce. These workers are, on average, more reliable and better experienced than younger workers.
However, the use of sophisticated technology and an increasingly mature workforce combine to make continual retraining imperative. This sort of retraining will be specific and dedicated to particular jobs. Our current models may not suffice. Businesses will need to create their own imaginative and aggressive retraining programs.
The first question is: Does retraining work? Or do outdated and dislocated workers face a bleak, downwardly mobile future?
Fortunately, there is evidence that it does work, in some cases. According to a study by the W.E. Upjohn Institute for Employment Research, retrained workers in Washington State were 9.2 percent more likely to be employed within nine months after finishing training than workers who didnt get the training. And they made an average of $2,080 a year more than non-retrained workers.
Fortunately, there is evidence that it does work, in some cases. According to a study by the W.E. Upjohn Institute for Employment Research, retrained workers in Washington State were 9.2 percent more likely to be employed within nine months after finishing training than workers who didn’t get the training. And they made an average of $2,080 a year more than non-retrained workers.1
But often workers who find themselves out of jobs never return to their former levels of compensation ? with or without retraining. A 1993 study done by Mathematica Policy Research found no evidence that a federally funded retraining program improved participants’ earnings or job prospects when compared with the wages and job histories of unretrained, laid-off workers.
The most comprehensive evaluation of training programs, conducted by the Department of Labor, followed 20,000 people over four years. For the vast majority of participants, training made no difference. People ended up with the same kind of jobs, whether they enrolled in programs or not.
A major obstacle to successful redeployment is that the people being displaced are not versatile. The current unemployment rate for college graduates is 2.9 percent. And if you don’t have a college education, you’re more likely to lose your job in the first place.
Business leaders say the future will be in highly skilled math and science related jobs, such as medical devices and testing, biopharmaceuticals, homeland security, and defense industries.
There will be 30 million job openings for people with at least a two-year college degree in the next 10 years. But only 23 million people are expected to earn those degrees. And two-thirds of American jobs are in occupations that do not require a college degree.2
How will corporations re-skill existing workers, while hiring marginal workers and bringing them up to high productivity quickly? What should people be retrained to do? How can we be sure the retrained skills won’t just diffuse overseas? These are tough questions that demand new ways of looking at the idea of training.
We expect to see a revival of enhanced professional learning programs known as corporate universities. The number of organizations with on-site universities has grown from 400 in 1990 to 2,200 in 2002. It also appears that the time has come for the accelerated use of e-learning programs.
McDonald’s, GE, and Motorola have “internal universities” that strive to make their employees viable in the long-term. Sun Microsystems, Charles Schwab, and Toyota also have in-house executive and management development organizations that go beyond traditional job training.
Corporate universities are essentially strategic partners of their sponsoring companies. Often working in conjunction with traditional educational institutions, they have faculty from top academic and business communities.
At some corporate universities, members of senior management serve as deans for schools in their disciplines, which allows the universities to instill corporate objectives and strategies and influence the organizational culture.
Corporate learning chiefs even hope to convert their universities into profit centers by enrolling their suppliers and customers. Perhaps the best-known institution, Motorola University, offers its business improvement practices to external organizations.
Corporate universities are also handling knowledge management and performance support. As corporate learning and retraining become more strategically important, companies are creating separate learning or training departments.
Will corporate universities expand their scope to the retraining of the entire company, not just the managerial elite? Many companies now use “just-in-time training” rather than traditional classes, especially at lower levels in the organization.
Research has shown that 70 percent of information learned in training courses is forgotten by the time a trainee needs it. Justin-time training allows workers to be trained when they need the information. Interactive training courses are available 24 hours a day via CD-ROM or the Internet.
Such e-learning has become particularly popular in the past two years. It enables courses to be delivered to PCs, and cuts the expense of flying employees to training centers.
At General Motors University, e-learning for employees has expanded from less than 1 percent of all hours taught a year ago to 14 percent last year. It is expected to grow to at least 25 percent in the near future. GM is saving $7 million a year on tuition costs for the e-learning programs it has recently installed. About 60 percent of Unisys University’s learning is delivered through e-learning. It has reduced training costs by 35 percent.
No matter how successful or prevalent e-learning becomes, companies will still need one-on-one mentoring, classrooms, and hands-on experience. That’s why they have embraced blended learning, which supplements classroom training with on-line instruction. It incorporates printed text and classroom-basedtraining with on-line content, simulations, and mentoring.
When retraining older workers, a one-size-fits-all plan probably won’t work. The methods for retraining elderly workers are different than those needed for retraining 35-year-old displaced workers. Older employees may be more set in their ways, and less open to change or adaptation.
That’s one reason why only a small fraction of qualified workers retrain. Some find other jobs; others think that they’re too old to go back to school.
Training for senior employees will have to concentrate on learning new methods and unlearning obsolete ones. They’ll bring maturity and a solid work ethic with them, but they’ll need to be routinely updated on new resources and technologies.
Older employees, unlike displaced miners or textile workers, might not need to work for conventional reasons. They may prefer to take a job for the medical benefits or for the gratification.
Retraining won’t be viewed as a bridge to tide a worker over until another job comes along. It will be seen as an opportunity to enhance work experience, to retool and provide experience and knowledge in unfamiliar areas. Employers will incorporate lifelong learning and competency development programs into their training programs.
Large corporations may over-rely on formal training ? on college courses, for example, with a certification at the completion of vocational or occupational courses ? rather than on informal, on-the-job training, which is usually more effective for small businesses.
In the past four years, the loss of more than 3 million manufacturing jobs has made retraining a volatile political issue. How can we ensure that public resources devoted to retraining are used to deliver practical business solutions, not just political points for the sponsors? If the public decides that transition assistance doesn’t work, voters could turn against free-trade policies. So retraining serves a valuable political purpose.
However, beyond the rhetoric, there’s a vital need for retraining. If such programs do little more than provide cover for politicians ? so elected officials can say they’re helping the unemployed ? they will act as little more than soup kitchens. So long as retraining isn’t politicized, it will have real value.
Who will fund these retraining programs? Taxpayers will pay for some. Others will be financed by special cooperative alliances. Some people may have to fund their training themselves. But, primarily, the responsibility will fall to corporations.
The government can help by providing subsidies and tax breaks, or direct grants as incentives to businesses to hire and train displaced workers or to do more workforce training, but otherwise it should stay out of the way.
What can we expect in the future? Let’s look at four forecasts:
First, real retraining will bode well for private training and certification companies, such as the Fourth R in Washington State, which focuses on corporate services and vocational training for adults. The inadequacy of public programs will open opportunities for specialized firms ? especially e-learning firms ? to retrain displaced workers in computer literacy, medical technology, and other specific technologies. Such firms will rely on flexibility and speed of response to meet demand where it arises. Whether the cost is borne by the individual or by corporate sponsors, these programs will provide value to all concerned. We will see increased demand for corporate training services as businesses continue to improve their productivity.
Second, we’ll see more dedicated job retraining programs such as the one developed by the United Mineworkers. Created in 1996 with a $2 million federal grant, the United Mine Workers of America’s Career Center recruited 625 displaced workers in western Pennsylvania. It retrained the miners, eventually placing 474 of them in jobs averaging $12.64 an hour with benefits. Such programs can be tailored for a given occupation, demographic group, or geographic area.
Third, corporations will provide their own employee training ? and the training won’t just benefit the business. A report on workforce training in the UK found that 70 percent of companies provided job-specific training, but fewer than half offered training in new technology.
Forty-five percent supplied management training. Only 4 percent offered foreign language lessons. Larger companies will develop their own programs structured around the needs of their employees. Such programs will continue throughout an employee’s career. Training will be general rather than specific, allowing for adaptation when necessary. Fourth, we’ll see more cooperative partnerships between business and community colleges. Companies will form consortia with accredited universities to offer specific degrees. Community colleges and businesses will try to match students’ skills to the needs of the shop floor. Companies will request a program customized to their company and industry. Demand-led training will see courses being designed by colleges in partnership with companies, as a college’s corporate education services division will create specific programs for its corporate clients. The corporate education centers will go offcampus to a customer’s site, operating like a consulting firm. These sorts of changes will necessitate improved public and private support for community colleges.
References List :
1. The Bellingham Herald, September 22, 2003, "Careers: Retraining," by Mary Lane Gallagher. ⓒ Copyright 2003 by the Bellingham Herald. All rights reserved.2. Christian Science Monitor, September 2, 2003, "Got Skills?" by Stacy A. Teicher. ⓒ Copyright 2003 by Christian Science Publishing Society. All rights reserved.
