“Innovation distinguishes between a leader and a follower.” Steven Jobs

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Expert Perspective by Grahall’s OmniMedia Editorial Board

Just like the recession of the early 1990’s (think back to the battle between “41” and Bill Clinton for the White House), it became clear when the economy, “stupid”, did turn around that many of the jobs lost in that recession were simply not coming back.  Instead they were obsolete, outsourced, off-shored or automated to save businesses money and improve their bottom line.  When it is a fight for survival, even the stodgiest of companies will innovate to save money and their futures.  In part the problem then, as it is now, is that there is a serious lag between business innovation (for example outsourcing, off-shoring and automation) and educational innovation to put today’s graduates in a position to handle today’s jobs. 

The July 19, 2010 article in Workforce.com (Workforce Staffing Could Hit Pre-Recession Levels in Two Years at Many Large U.S. Firms) shared the results of an Accenture survey with the surprising finding that  “Just over half of large, recently downsized U.S. companies plan to boost staffing and reach pre-recession levels by 2012…”  This statement conflicts with the Obama’s concession (as part of its mid-session budget review) that “… the unemployment rate will remain at nearly 10 percent this year and not revert to pre-recession levels until 2016…” (Read more at White House Confirms Continued Trillion-Dollar Budget Deficits.

But even if the Accenture study is right, they admit that: “…the planned growth won’t come easily. As in past booms, highly skilled workers will be at a premium [and] a lack of relevant skills may present a hurdle for companies as they position themselves for growth…”

It feels like 1991 all over again, only worse for US workers.

We now have ubiquitous access to the internet making the virtual, global workforce a real, effective and cost efficient tool f or companies worldwide.  For an interesting history of the internet read “An anecdotal history of the people and communities that brought about the Internet and the Web” that reminds us that “Delphi was the first national commercial online service to offer Internet access to its subscribers. It opened up an email connection in July 1992 and full Internet service in November 1992. All pretenses of limitations on commercial use disappeared in May 1995 when… AOL, Prodigy, and CompuServe came online.” 

With India and now China well positioned to take on manufacturing and other jobs and at a far lower cost than US workers, aggressive off shoring and outsourcing continues to be a solution for US companies to help manage costs and improve their bottom line.   The world economy and worker availability has sufficient slack that US companies do not need to hire higher priced “process workers” (think call center operations) or blue-collar labor here when they can get these same workers for  a much lower price overseas.

Knowledge worker jobs will remain in the US, but if companies have not invested in the appropriate development programs and higher education isn’t rolling out graduates prepared for this work what is a company to do?  Look offshore again? If that is the solution, American workers and American college student are at a serious disadvantage.

We believe there needs to be a bi-fold approach addressing both formal higher education and “on the job” training and development.

We believe that all institutions of higher learning must re-tool to help students prepare for jobs that offer more than the chance to ask customers if they want “fries with that?”  Certainly those jobs are important and also have the advantage of not being able to be off-shored.  But after paying perhaps tens of thousands of dollars in education expense, it seems the opportunities should be better.  The debate remains about adapting higher education to more vocational learning or maintaining broad liberal arts type structure. The baby boomers were thought to be well positioned for changes in the world wide economy as a result of a strong liberal arts education background, but as we know the world was far different 50 or even 15 years ago.  Today’s Y generation of student might need to find a different path.  They have already started down their own path to a certain extent with (according to Wikipedia) ”a marked an increased use and familiarity with communications, media, and digital technologies.”  That can help but it may not be enough.

At a minimum, higher education and perhaps even secondary education guidance counselors need to reach out to businesses — both established and emerging, both local and global — to discuss their needs for talent, their plans for hiring and the skills necessary to fill available and anticipated jobs.  Retooling diploma programs to deliver graduates with the necessary skills would be the desired outcome. 

We know this is not simple, but it is smart.  

In the meantime, businesses need to take a close look at their most limited resource: compensation dollars.  This resource is even more limited than skilled workers and its optimal allocation can make a huge impact on the profitability and the future of a company.  The first step in this process is to identify the business units, and individuals within those units that are the most important to the overall success of the company.  These critical jobs may only represent 15% or 30% or 50% of the total company workforce. And for the people in these jobs, or for the people who will be hired into these jobs, the incentives, rewards and development opportunities need to match the criticality.  Gone must be the days where everyone is paid at the 50th or even 75th percentile. This approach might be administratively easy but it is financially foolish.  For jobs that are not critical (perhaps 50% to 85% of a company’s workforce), the people in those positions should be viewed (sadly) as replaceable. They should be paid below the “norm”.  This change alone would provide companies with a substantial pool of cash to redistribute as incentives and training and retention programs for those who are most valuable, and most irreplaceable.  

Businesses must also get an absolute hold on their internal training and development costs.  Strict guidelines and a laser focused approach to spending money on the critical workers are needed.   Diffuse training and development programs waste money and don’t address the business’s real needs.

The smartest companies already know that our higher education system can’t now deliver graduates with the necessary skills.  These companies are using the approach outlined above to find the necessary cash to create internal institutions of higher learning focused on their requirements and  on the individual most irreplaceable. 

Interestingly, we have found in studies that the most talented individuals in a particular job can produce as much as four times the value of an “average” worker in that same job.  The best part of this for businesses is that you don’t have to pay these high talent workers 400% more.  In fact just 25% to 40% increment in total rewards is all they require.

None of these changes are simple; we know that, we only said they would be fiscally smart.

The best outcome for both higher education and businesses is for graduates to arrive for with the skills they need to be successful in critical jobs.   Higher education institutions that innovate their diploma programs to deliver skilled graduates will have companies recruiting their students and prospective students eager for admission. Then companies can focus their cash on delivering shareholder value rather than “basic” skills training. Win/Win?  We think so. 

Contact Grahall’s OmniMedia Editorial Board at edie.kingston@grahall.com


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