How Employers Can Lead on Youth Unemployment

August 20, 2015

Photo credit: Samuel Mann. Licensed under a Creative Commons Attribution-ShareAlike 2.0 General license.

Employers need to improve their ability to measure, manage, and raise the skill level of their employees in order to remain competitive and achieve their business goals.

That is one of the key insights in a new Brookings report, Unemployment among young adults: exploring employer-led solutions, which combined in-depth data analysis and interviews with employers, business associations, and community colleges using the two metropolitan regions of Chicago and Louisville as microcosms for exploration.

In each, we found ample examples of employers implementing new approaches to improve their recruiting, assessment, hiring, and training strategies to up the rate at which they find, keep, and grow workers with the necessary skills. Many are making considerable investments of time and resources to ensure they have the right workers—particularly at the middle-skill level—to reach productivity and customer service goals.

A plant manager for a manufacturing firm said, “Talent is a strategic point for any business. You can say, I want to grow x percent and increase my profit margin by y percent, but those words mean nothing if you don’t have the talent.” The company’s old approaches to assessment and hiring resulted in high rates of turnover, errors, and customer complaints, so it overhauled its approach as a key step to increase productivity and formed close partnerships with educational institutions.

The key insight was the recognition by company leadership that they could not achieve their business goals with their previous HR policies or by relying on the “spot market” for their hiring needs.

A long-term care provider determined that it needed to reduce turnover among front-line workers to achieve its standard for quality care.  It concluded that turnover was driven more by poor cultural fit than by inadequate skills, so it developed an assessment tool for job candidates based on the qualities and behaviors of successful employees.  Another health care provider spends millions each year in direct investments to help workers earn degrees and technical credentials, with a measurable ROI in the form of increased advancement and retention among workers receiving educational benefits.

Notably, these employers’ actions reflect not only an appreciation for the value of employee skills but also the capacity to measure, manage, and increase the skills of their workforce. The key insight was the recognition by company leadership that they could not achieve their business goals with their previous HR policies or by relying on the “spot market” for their hiring needs.

While employers can develop more strategic human capital practices on their own, broader efforts led by industry consortiums or business organizations hold potential to build critical mass and also to spread the costs of implementing new approaches among firms, particularly smaller firms that might not tackle these issues on their own.

Other research has highlighted the importance of supporting not only the education and skill attainment of individuals but also the human capital management capacity of firms. In fact, when it comes to increasing productivity and profits, increasing a firm’s capacity to measure and manage employee skills may be as important as directly investing in employee skills.

While employers can develop more strategic human capital practices on their own, broader efforts led by industry consortiums or business organizations hold potential to build critical mass and also to spread the costs of implementing new approaches among firms, particularly smaller firms that might not tackle these issues on their own.

Chambers of commerce or economic development agencies could assist companies in assessing and improving their workforce planning capacity, although in most cases this would represent a new line of business that they’d have to staff and resource accordingly.

As readers of this blog know, the U.S. Chamber of Commerce Foundation’s Talent Pipeline Management Initiative is forming a learning network with seven states and regions to apply the principles of supply chain management to create stronger educational pipelines and workforce development strategies. Such strategies could build out and spread the knowledge base about practices that help employers meet their workforce needs more strategically.

ABOUT THE AUTHORS

Carolyn Gatz is director of metro engagement for the Brookings Institution. Martha Ross is a fellow for the metropolitan policy program for the Brookings Institution.