UV Letters

Dec 1, 2017 BACK

Sweep Away The Skills Gap

Volume VII, #24

When I came to the U.S. for college, I was clearly in the minority. Not just because I was Canadian and my roommates made fun of how I pronounced house, mouse and couch. But also a minority among Canadian male students: only a handful of us weren’t there principally to play hockey.

Sure I’d played hockey. We all had. But I realized earlier than most I wasn’t headed to the NHL. Which gave me time for other pursuits. Like working as a busboy, starting Bagelese – a magazine devoted to bagels – and playing Canada’s second favorite sport. Yes, I’m admitting it publicly for the first time: I was on my high school curling team.

Curling is shuffleboard on ice. It’s a blip on the world’s radar screen every Winter Olympics, but otherwise slides away in obscurity. It’s perhaps most famous for food and beverage consumed after – and sometimes during – competition. Per the “spirit of curling,” winners are obliged to buy losers a drink after a match. At one bonspiel (curling-speak for tournament), Paul Gowsell, a curler from Calgary, ordered a pizza to ice level. After eating the pizza between ends, the other team’s last stone picked on a dropped olive, allowing Gowsell to claim victory. All this drinking, eating, and bonhomie explain why many curlers appear as athletic as long-haul truck drivers; in 1987, two of Canada’s top curlers arrived at a pre-Olympic camp hoping to be selected to represent Canada at the 1988 Calgary Olympics. The only problem: neither could do a sit-up.

The truth is two keys to the game require some physical prowess. First is throwing (well, really sliding) the 40 lb. rock. At a minimum, it requires balance to slide along the ice on one foot, the other trailing behind. Then there’s sweeping, which can burn up to 500 calories per hour. Curling ice is intentionally not smooth. Water is sprayed to give it a pebbled surface. Sweeping rapidly ahead of the sliding rock melts the ice and makes your rock go farther, faster. Sweeping a path can also change a rock’s trajectory. And so curling is a sport mastered primarily through food, beverage, and conquering friction.

***

You wouldn’t want to be caught between colliding curling rocks. But this is where Millennials have been for the past decade: caught between the rock of declining college affordability, and the hard place of declining employment outcomes.

As in curling, friction has played a critical role. In a completely efficient market, everyone would be hired immediately into a job that perfectly suits current competencies and future potential. Unemployment, underemployment and unfilled jobs would be as unfamiliar as disagreeable behavior at a bonspiel.

But that’s not the way it works in real life; in real life there’s a lot of friction. The paperwork required to hire an employee, add them to benefits programs, arrange for direct deposit, etc. is substantial. One recent estimate is up to six weeks and $4,000. The paperwork involved in terminating a bad hire is even worse. According to one expert, bad hires can cost employers as much as $240k – a petrifying sum. As a result, American employers have developed a global reputation for wanting the perfectly qualified candidate delivered on a silver spoon – or they simply won’t hire, at least for good jobs. Peter Capelli of Wharton calls this the “Home Depot view of the hiring process,” where filling a job vacancy is “akin to replacing a part in a washing machine.” The store either has the part, or it doesn’t. And if it doesn’t, the employer waits. Many employers have opted to wait, which explains 6 million unfilled jobs.

The primary source of hiring friction isn’t imperfect information, but rather cost and risk. In other words, employers aren’t merely looking for someone – an algorithm, a platform – to stand up and vouch that Candidate A is a good match for a given open position, although sometimes that suffices (i.e., referral from current employee). Hiring friction won’t be materially reduced unless and until that someone offers to bear some/most of the cost and risk of hiring.

Equally important, new job creation is on a somewhat dystopian glidepath. The Bureau of Labor Statistics projects that of the 11.5 million new jobs that the economy will create in the next decade, 10.5 million will be in the service sector, 4 million of which will be in health care and social assistance. 1 million new jobs will be in health care support (median income $28k), 1.2 million in personal care and service (median income $23k), and 1.2 million in food preparation and serving (median income $21k). Without changes to the current dynamic, almost half of all new jobs will be in sectors with a median wage below the current national median ($37k). How could employers be convinced to experiment with more new higher paying jobs? By reducing the cost and risk of new job creation.

One promising strategy for reducing hiring friction is staffing. While many staffing companies provide temporary, seasonal or low-skill talent, some are attempting to reduce hiring friction by providing skilled hand-picked (and often trained) candidates on an evaluation-to-hire basis. This means employers aren’t hiring until candidates have proven they can do the job over a trial period that typically lasts multiple months. Avenica is the leader focused on new college graduates and entry-level positions across a range of industries. Founded almost twenty years ago as GradStaff, Avenica now has seven offices located around the country. Avenica bridges the gap from college to career for thousands of new graduates each year by soliciting résumés from seniors and new college graduates, analyzing their competencies according to a rubric developed at the University of Minnesota, and matching candidates to posted entry-level jobs (including jobs where Avenica has convinced clients to try entry-level candidates). Avenica matches a candidate to a position and prepares and schedules the candidate for an interview. When employers nod in the direction of Avenica candidates, Avenica hires them and staffs them out for an evaluation period. Employers love the ability to evaluate candidates on a trial basis before committing to hire. And more than 85 percent of the time, that’s exactly what they do.

Revature, the leader in entry-level IT talent, not only staffs out purpose-trained candidates for 12-to-24-month evaluation-to-hire periods, but is actively working to convince large employers that their workforces could be made more efficient and effective by adding more trained entry-level resources. Revature calls this a “return to the pyramid” – a traditional structure that many employers – their workforces bloated with mid-career employees – seem to have gotten away from.

Avenica and Revature reduce hiring friction because they bear the risk and cost of training and hiring. It’s a model that’s more difficult for public and not-for-profit workforce solutions with limited resources to emulate. It turns out that reducing hiring friction requires the lubricant of capital, which will come as news to progressives who are skeptical that free market forces can play any positive role in education and training.

***

Colleges and universities that attempt to address graduate employability with various career services initiatives, but without attempting to sweep away hiring friction are probably doomed to failure. But the biggest impediment in higher education to improving graduate employability isn’t capital, but rather attitude. Colleges and universities have always taken the labor market as a given. To many of my prior articles about the skills gap, I’ve received comments from faculty members or administrators to the effect of “that’s a labor market problem, not our problem.” It may not be higher education’s problem yet, but when students stop enrolling in expensive degree programs because they’re not confident that employment outcomes will allow them to repay their student loan debt, it will become higher education’s problem.

What colleges and universities may not realize is that decision makers in the labor market are as fallible as any of us. Most hiring and HR managers aren’t particularly adept at understanding what skills are required for a particular job, and then reducing that understanding into a job description. Few enterprises are able to envision the hit products and services of tomorrow, and even fewer are able to determine what new skillsets and positions will be required to execute on these opportunities.

Like the trajectory of a curling rock, hiring decisions are susceptible to change. And if you’re charging tens of thousands of dollars a year for a postsecondary program, you have an obligation to not only ensure that your curriculum is aligned to employer outcomes (i.e., throw the rock accurately), but also to attempt to reduce hiring friction. In curling terms, higher education is failing to sweep – an affront that would have gotten me kicked off my high school curling team. It’s a failure of imagination (i.e., envisioning where the rock could go), and of courage. Let’s hope colleges and universities learn to curl before it’s too late.

Share your thoughts

University Ventures (UV) is reimagining the future of higher education and creating new pathways from education to employment. UV portfolio companies are making higher education more affordable, pioneering entirely new approaches to learning, and helping employers think differently about how and where they discover talent. UV’s approach draws upon the values and traditions of higher education to play a sustainable role in transforming the path from education to a stronger economic future for students, universities, and employers. UV is led by principals with decades of experience as entrepreneurs, investors, authors, and leaders in higher education.

Comments

- No comments yet. -

Leave a comment

(required; won't be published)

Three articles that tell us where the puck is going in higher education

1. Hiring Is Broken Report from Allegis, the world’s largest staffing firm, on challenges in the hiring process. According to the survey, less than 10 percent (7.7) of employers strongly agree their recruitment process enables them to fill open positions quickly, attract top-quality talent and optimize costs… The report addresses several recruitment challenges [including]… Mismatched expectations for "turnkey hires" driving qualified candidates away… Faulty screening process… Employers lag in recruiting Millennials. Read more 2. Everybody Else Is Doing It, So Why Can’t We? East Asia Forum report on how Japan is considering moving to an income-contingent loan scheme similar to the UK, Australia and other countries, by Shiro Armstrong and Bruce Chapman. A system such as this improves access to university education for prospective students from all socioeconomic classes. Surveys reveal that many prospective and poor university students in Japan are choosing not to enroll because of worries about not being able to repay loans. An income-contingent loan system would therefore improve both the equity and the efficiency of the higher education sector, as well as make government funding more sustainable. Read more 3. Making A Difference Where It Counts USA Today article on efforts to deal with mental health issues in post-hurricane Puerto Rico, by Rick Jervis.
To help people in harder-to-reach communities, such as Jayuya, officials at Ponce Health Sciences University in nearby Ponce began deploying teams of doctors, psychologists and public health specialists into the mountains days after the storm. The private medical university has taken a leading role in recovery in the area and the teams have seen more than 6,000 patients since the storm. Read more





Sign up for UV letter

For regular bi-weekly commentary on “where the puck is going” in higher education, sign up for UV letters.