· November 7, 2018

Two interesting pieces on Clocking In. Their deep dive title piece is around how companies are investing in training due to tight labor markets. The other is a piece on Bloomberg about how millennial males (25-34) are less likely to be working than for other age and gender cohorts. 

 It’s difficult to pin down whether the demographic wants to remain on the sidelines or is kept there by a dearth of attractive options. They could be choosing to stay home or enroll in school because well paying, non-degree jobs in industries like manufacturing are fewer and further between.

The thing that links the two is the question of training (upskilling or reskilling as the MIT piece puts it). The driving factor for the person interviewed by Bloomberg was that the kind of jobs he could get were crappy - he’s better off enrolling in school and looking for a career that is both satisfying, and pays better. The trend noted in the quote above is not that “well-paying” jobs are disappearing: its that well paying, unsatisfying jobs are disappearing. The pay compensated for a manufacturing job that may have been extremely dull, but the current crop of bad jobs are also badly paid. 

The flip side is in the Technology Review article. It looks at is the gap employers are seeing in where they want their staff to be, and where they are. 

 Employees weren’t asking for this training, but they need it to remain relevant, says Jennifer Fitzmaurice, AT&T’s assistant vice president of training.

The piece posits this is because of the tight jobs market, which means there isn’t that much opportunity to hire better trained people. Its a supply/demand issue - requirements go up as supply of labor increases, and the “price” goes down (even if not in wages, things like training have value to employees) and the opposite happens when the job market is tight. 

There is some truth to that - if you can hire in the skill, its generally going to get you better results than trying to train. My quibble with that is that its almost always true: if you hire someone that demonstrably has the skill then not only do they have it, they also have experience of doing it. Training folks up results in a very different base of knowledge, which makes me think there is something else driving these training programs. 

One interpretation is that demands have just increased:

[…] she also found an ongoing trend toward job postings that ask for new or more advanced skills no matter what’s happening in the job market. Modestino attributes this to continuous technological innovations within companies.

This is fair too, and likely true, but also: hasn’t this been true for a while? While deep learning and newer robotics techniques have swept over many industries, a lot has been replacing improved computer managed systems and the simpler robotics of the previous wave, and so on. This trend has been going on pretty much since the industrial revolution, so it seems odd for it to be a driver of training investments now. 

There are clearly some external factors - take a look at the release from Boeing on their program in June:

 Boeing recently launched new workforce development programs, the latest step in fulfilling its 2017 pledge to invest $300 million in employees, infrastructure and local communities as a result of U.S. tax reform.

And Disney in January: 

 The Company will also make an initial investment of $50 million in a new and ongoing education program specifically designed to cover tuition costs for hourly employees. The two new initiatives are a result of the recently enacted tax reform and represent a total allocation of more than $175 million in this fiscal year.

However, they both feel different from the AT&T initiative, which is at the heart of the article. There’s a great HBR article from 2016 on the program AT&T has been working on, and the story it tells is larger than skills - they were designing their job roles to be more flexible, and to move faster. They overhauled all sorts of aspects of their business, for example: 

1. Performance metrics were simplified to focus more directly on how individuals contributed to business goals and to better recognize the market value of jobs. This has increased the financial rewards for individuals with skills in high demand, including cybersecurity, computer science, data science, IT networking, and software-defined networking.

2. Performance expectations were raised. In AT&T’s Technology and Operations unit, for example, the number of managers receiving the two highest performance ratings on a five-point scale declined by 5%, while the bottom two ratings increased by 37%.

3. Redesigned compensation plans de-emphasized seniority, added more variable compensation to motivate high performers, and gave weight to the in-demand skills.

This, for me, is where the two stories come together. Work in the US has become significantly more pay for performance, and that performance is at an ever-higher bar. 

The millennial men dropping out for further education, and the companies investing in “upskilling” are looking at the same thing: to succeed they need to increase their performance at delivering the services they deliver. While there was a profitable mediocrity before, that appears to be going away. Automation is one way to drive performance, but its a pretty blunt tool - the pressure is throughout the business, which means responses to it have to be throughout the business. 

Training investment is a facet of a larger shift in how businesses manage their people. Training buys them flexibility in moving people into new roles, which is always easier to do with folks who already work for you, whatever the market condition. That flexibility, and responsiveness, is absolutely key.