Making the Return on Investment Case for Apprenticeship
One of the most exciting and important forms of career-connected learning is modern apprenticeship. And right now, apprenticeships are still few and far between in the U.S. and getting employers involved is one of the biggest challenges.
If you need to make the case to employer partners about the value of apprenticeships, there is excellent research that demonstrates the return on investment pay-off. It’s called, “Benefits and Costs of Apprenticeships: A Business Perspective,” and was released by Case Western Reserve University in 2016. (Link: https://www.esa.gov/sites/default/files/the-benefits-and-costs-of-apprenticeships-a-business-perspective.pdf). The research was commissioned by the Economics and Statistics Administration of the U.S. Department of Commerce.
Here’s why the ROI research matters so much:
While there is growing interest in apprenticeships by policy makers and many educators, the biggest challenge is getting employers interested. In the U.S., employers have largely stood aside from education and had little direct involvement.
Usually employer involvement means pouring support/expertise, volunteers, and resources into school settings. The next level of involvement would be bringing learners into the work place for tours, short-term job shadow experiences, and internships and cooperative education experiences. The apprenticeship model is the approach that asks the most from the employer.
- In an apprenticeship program, the employer typically makes an actual hire for a permanent worker, or at least a very strong commitment to a future hire.
- The employer pays the apprentice while they are getting on-the-job training and related classroom learning.
- The employer commits to increases the apprentice’s rate of pay at certain intervals over a one to four-year period.
- The employer provides significant on-the-job training around a set of identified knowledge and skills.
While employers have been pretty well removed from education and training, this dynamic is changing. With critical shortages of skilled workers in a range of industries, and the wave of Baby-Boomer retirements hitting the American workplace, employers are citing chronic shortages of skilled workers.
So that’s the first ingredient for gaining deeper employer engagement, which is an urgent, felt need.
The second ingredient is a sense of possibility. Even with an urgent, felt need, employers need to believe that direct involvement, including the high commitment of an apprenticeship, is a worthwhile investment. They have to justify the pain of changing their company operations, developing new procedures, offering new training capacity, and paying the apprentice while they learn the industry knowledge and skills. This “pain of change” has to be outweighed by the potential pay-off – the pay-off of being able to fill skilled worker openings, gaining workers who are productive and understand the company culture, and also see increased worker loyalty, retention, productivity and flexibility.
The ROI Research
So, back to the Case Western Reserve research. They conducted an in-depth analysis of about a dozen companies and created financial and productivity metrics by which to analyze the hard costs and returns of the apprenticeship model.
Here is the analysis from two of the sites:
Dartmouth-Hitchcock, a health system in Lebanon, New York. Researchers found apprenticeship was a key factor in their expansion and reorganization plans. The apprenticeship program cost was $59,700 per medical assistant that was apprenticed. The apprenticeship cost was offset by a $48,000 per apprentice reduction in overtime costs and $7,000 per apprentice increased revenue from medical appointment bookings. By having more skilled staff, they reduced overtime costs and increased patient booking. The apprenticeship program was financially self-sustaining in it’s first year and paid a 40 percent rate of return on the investment. Further, the analysis showed that reducing overtime for workers reduced burnout and maintained the quality of care for patients.
Siemens, USA also participated in the study, focusing on its electric generator operations in Charlotte, North Carolina. Its rate of return for the apprenticeship program was 50 percent, compared to typical approach of trying to hire machinists off the street. Siemens found that apprentice candidates have a strong grasp of the principles of their work (as opposed to just operational knowledge) so these apprentices could also handle more complex repair work which brings in more revenues for the company. Siemens also found that apprentices finished their work in a timelier manner and they were slightly more productive than other workers.
Getting the word out to employers
Getting this research into the hands of prospective employers will help you make the case about the informed-risk of entering into an apprenticeship program. But even more important is the value of peer influence — finding the actual employers who already working with apprenticeship and giving them the platform to tell other employers about the approach.
I’m on a hunt to find good employer testimonial videos. There are lots of resources from the UK, but not as many in the U.S. Here are a few that I’ve found so far.
- PBS News Hour Story: https://youtu.be/zpDAocHVxwM
- Aerospace Apprenticeship in Washington State: https://youtu.be/5WIMj9c6A_M
Here’s a sample from the UK as well:
- UK stories about apprenticeship: https://www.youtube.com/watch?v=R14D1ieLY5M
If you know of good employer testimonials, written or video, here in the U.S., please send them my way and I’ll share them in a future post.
Thanks for reading and innovating with career-connected learning!
Hans Meeder is President of NC3T, the National Center for College and Career Transitions (www.nc3t.com). NC3T provides planning, coaching, technical assistance and tools to help community-based leadership teams plan and implement their college-career pathway systems and strengthen employer connections with education.