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What's Your Institution’s Economic Impact Through Skills

Understanding Your Institution’s Economic Impact Through the Supply, Demand of Skills

Getting a college degree in the United States used to be the pinnacle of achievement and the key to the door of prosperity and financial success. But as education costs escalate, job prospects disappear, and student debt accumulates to crushing proportions, the value of a college degree has significantly plummeted. In 2017, a Strada-Gallup study revealed that only 35 percent of US students felt confident that a college education would give them the training and skills necessary for a successful career. Likewise, only half of these students believed their major would help them find a good job.

Surprisingly, these studies have also revealed an alarming disconnect between university leaders and business executives. According to an earlier Gallup-Lumina poll, 96 percent of the nation’s Chief Academic Officers believed that their graduating students were fully prepared for the labor workforce, while only 11 percent of business leaders shared that confidence.

Business and education: A troubled pairing

There has always been a profound correlation between business and education—not only nationally, but on a global scale as well. The business community has always trusted the nation’s universities to provide an educated and skilled workforce, able to not only keep up with but also lead the way in developing the latest technologies and advancements.

But with today’s business leaders showing a vote of no confidence in the current university system and curriculum, it’s crucial for the nation’s institutes of higher learning to find solutions to bridge these skill gaps. Otherwise, enrollments will continue dropping while businesses will continue to be hard-pressed to find employees with sufficient knowledge and training.

The lack of trained talent affects more than just jobs for grads — it also affects the nation’s development and progress, especially in the tech industry. In one disturbing trend, tech experts say that the further development and implementation of cloud technologies will be delayed by at least two years, due to the lack of prospective employees (and college students) sufficiently trained in cloud Infrastructure as a Service (IaaS) skills.

And here’s another alarming statistic: According to recent studies, over the next 10 years employers nationwide will continue to face significant shortages of competent workers. Specifically, this includes shortages of nearly 800,000 workers with some college training or an associate degree, and shortages of more than 8.5 million workers with a bachelor’s degree or higher. Economically, these shortages represent losses of nearly $1.2 trillion for the nation’s business community.

These same studies revealed that 83 percent of employees continue to have difficulty in finding suitable, experienced job candidates with the appropriate skills. In addition, 75 percent of employers polled believed that their current job applicants were short on relevant skills as well.

At the heart of the solution is the need to understand the supply and demand of skills. Toward this end, skills need to be viewed as a valuable currency, or better yet, a commodity — a commodity that, like any other, needs to meet and maintain high standards in order to be economically viable in a global market.

The goal is clear: Colleges and universities need to overhaul and align their curriculums and teaching methods to meet the demands of today’s industries. Rather than focusing on degrees and grade point averages, these institutes of higher learning need to focus on the skill sets that employers are primarily seeking.

What is skills data, and why is it relevant?

A basic shared understanding of today’s necessary work-related skills, combined with a curriculum more relevant with workforce needs, is crucial for the continued successful relationship between business and education. One way to achieve these goals is by using data to conduct a skills gap analysis.

Within the business community, a skills gap analysis is a tool that is used to identify and evaluate things as they are, compared to ideal goals set for the future. HR departments often use skills gap analysis to identify the skills that are still missing from an employee’s skill set. One reason why businesses use skills gap analytical tools is because with today’s rapidly evolving tech advancements, employees need to stay on top of every new wave as it reaches them. With skills gap analytics, the company can address these gaps in the employee’s knowledge through intensive training programs as well as mentoring.

For colleges and universities, a thorough skills gap analysis of their courses, curriculum and degree programs could go a long way toward bridging the skills gap that’s currently closing the doors of industry in the faces of graduates. Here are some of the basic steps of a skills gap analysis, and how it can help colleges and universities become more relevant in the current tech age.

A skills gap analysis:

1. Identifies the skills needed by the labor workforce.

2. Identifies the skills offered by colleges and universities.

3. Analyzes the disparities between college classes and workforce requirements.

4. Develops a list of solutions to bridge those gaps.

Optimally, these solutions should not only come from college leaders, but also business executives with an interest in eventually hiring from the college’s talent pool. Toward this end, increased and continued input from business leaders would greatly benefit the skills gap across the board.

Essentially, the skills that universities produce need to align with the skills demanded by top employers. Colleges and universities can bridge the current skills gap by evaluating and analyzing the skills required by specific employers and industries, and overhauling courses, programs, and curriculum so that they align with these skills. Likewise, specific departments such as IT or business can hone the curriculum so that it meets the demands of the IT community or business workforce.

Besides making their curriculum more skills-specific, colleges and universities also need to provide more thorough, career-specific mentoring for students navigating their way through a multitude of majors and courses. Toward this end, educational courses (and their subsequent degrees) need to be defined more by their skill content. Likewise, this skill content needs to be clearly identified as it relates to a specific career. Ultimately, colleges and universities must produce demonstrable career outcomes for specific majors, as well as for specific courses and programs.

Through complete transparency on the skills content of each course, students can make better curriculum choices that align with their career goals. This way, they know exactly what they’ve signed up for—and even more importantly, they know exactly how this educational course can impact their choice of career.

On another note: In order for any college or university to thrive, it’s essential to maintain a healthy alumni economic impact, in which the former students/graduates maintain positions of leadership within the business community. One downside of the current situation is that, with college closures and the rapidly devaluating college degree, alumni are no longer given top priority for jobs that, in previous years, they could have had for the asking.

Adapting skill language and curriculum to meet workforce demand

In recent years, employers have become increasingly more specific in their skill demands — and as a result, job seekers have become more intensely specific in their skill descriptions. While this degree of specificity has become a commonplace strategy for job seekers, it’s still not being addressed sufficiently within the classroom.

For higher education institutions, it’s imperative to adapt the curriculum language and content so that it’s relevant to the current workforce. This process of using a specific common skill language, shared between colleges and businesses, can make college courses more relevant to the labor market.

Adapting both curriculum content and curriculum language toward a shared goal can result in these advantages:

  • Motivating business leaders to become more involved in helping develop college curriculums.
  • Promoting confidence in new graduates.
  • Creating more targeted, career-specific courses for students.
  • Producing a higher ROI for college tuition.
  • Developing more highly trained students with specific, relevant job-related skills.

Degrees vs skills: Which is more relevant?

The skills gap between education and employment is often blamed, at least partially, on the traditional degree programs presented by the nation’s colleges and universities. Many employers believe that there’s a marked disparity between degrees and skills — and that gaining relevant skills (including critical and collaborative thinking) is far more important than earning a degree. Toward this end, some tech companies, including Apple and Google, don’t even require a college/university degree.

As for students, the overwhelming pressure to complete a degree — any degree — during their college years often results in a lack of complete commitment or interest either in their major, or in the degree they eventually take.

Unfortunately, some degree programs have not updated their standards enough to be relevant or economically viable in today’s rapidly growing industries. Yet all too often, when employers start mentioning the skills gap, many colleges and universities typically respond with a renewed emphasis on their degree programs.

For now, the degree-vs-skills debate seems bound to continue for some time with no satisfactory outcome; but in the end, employers and business leaders are the ones who make the employment decisions. If employers don’t feel a degree is relevant, then ultimately, students won’t either.

The emergence of new-collar workers

College enrollment has steadily decreased over the last decade, resulting in the closing of hundreds of colleges since 2016. On the business side, even during the COVID-19 pandemic, the US Bureau of Labor Statistics reports that, during the first quarter of 2021, the nation had seven million unfilled job openings.

Conversely, because of the COVID pandemic, jobs requiring a college degree have diminished significantly. For new grads, this means not only a decrease in job opportunities, but also increased competition from experienced workers returning to the workforce after being laid off during the pandemic.

That’s why, rather than hiring blue-collar or white-collar workers, some companies are focusing instead on hiring “new collar workers” — workers who develop, through non-traditional educational paths, the technical and soft skills needed for technology jobs. These paths may include vocational schools, internships, community colleges and even specially created company training programs.

As a side note, it’s worth mentioning that many employers are implementing certain micro-credentials to help narrow the candidate pool. For example, these micro-credentials can specify hiring only recent grads who live or work in-state, or hiring more women with stem skills. Interestingly, these micro-credentials often have little or nothing to do with the job candidate’s degree (or lack of degree).

Last-mile training: Why it works

In some industries, there’s a time-honored tradition of targeting talented graduate students and offering pre-graduation internships, so they can further develop the specific industry skills they’ll need for success. By training with on-the-job experience, students can get the intensive experience they need — and the confidence to follow. This so-called “last-mile training” is, economically, a win for employers, as it greatly mitigates the risk of having to let newly graduated employees go because of incompetence. This is especially relevant when you consider that companies can lose as much as $30,000 if a tech position is left vacant for at least two months.

According to the US Bureau of Labor Statistics, approximately 50 percent of graduates leave their entry-level jobs within the first two years. For employers, this represents a loss of time and money, as many new employees are leaving at a point when their training is finally resulting in a higher level of productivity for the company. By investing in a last-mile training program in association with local universities, employers can save time and money, while students can gain invaluable work experience before actually becoming active staff members. For students, this takes a great deal of the pressure off to perform at a high level from day one on the job — and it also adds to their confidence once they officially become a member of the company team.

In the end, you might be wondering who has dropped the ball more — educators for not keeping curriculum relevant, or employers for not getting more involved with overhauling educational programs? It’s safe to say that, rather than blaming one side more than the other, the important thing now is to help foster a collaborative effort between business leaders and educational leaders, in hopes of bridging the ever-widening skills gap. Ultimately, this gap threatens to undermine not only our educational system but also nationwide employment and, eventually, the national economy.


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