I recently completed a research project for Career Education Colleges and Universities (CECU) designed to determine the industry perspective on in demand knowledge, skills, and abilities (KSAs) that might be missing in graduates when they enter the work force. The project focused on the eight industries with the highest percentage of employees who have graduated from career colleges—anywhere from roughly 40% to over 90% of all employees in a given field.
While the research provided important insights into in demand KSA gaps, it also revealed a potentially profound trend in industry today: the move to conducting their own entry-level training for new employees.
Industry has invested in “on the job” training for existing employees for many decades. That is not new. And as the pace of change, particularly related to technology has increased, the need for more frequent and more in-depth training has also grown significantly. However, in a paradigm-shifting trend, some industries are also beginning to invest substantial resources in ab-initio training, thereby circumventing post secondary institutions as the go-to source for employees. The new trend poses a potential existential threat in the short term to vocational-technical/career colleges and it is wide ranging. The longer term threat extends to all of higher education.
College based training for automotive and diesel mechanics, allied health, aviation and trucking, plumbing and welding, IT, and other fields are at genuine risk as many employers have made the calculation that adding entry-level training as a cost of doing business is cheaper than enduring unfilled positions, competing for college graduates, and re-training upon hiring. Probably of greater importance, they get a known quantity and quality of guaranteed employees with proprietary training upon completion of their own, internal training programs.
In the automotive sector, BMW, Advance Auto Parts and Carquest, Toyota, and others are investing hundreds of millions of dollars collectively to build training facilities across the country that will serve as employee pipelines into their own companies. Large health care systems are operating in-house health science programs to train nurses, surgical technologists, medical imaging techs, medical assistants and other clinicians to staff their hospitals and clinics. Airlines and trucking companies have built their own educational infrastructure to train pilots, mechanics, and truck drivers. In many cases the training is free, requires no out of pocket expense, or debt is paid off by the employer, and in other cases the students get paid to go to school! Walmart and Amazon are both spending about a billion dollars in 2019 and 2020 on internal education efforts. Even unions have created paid apprenticeship programs where students learn to be pipe fitters, welders, and electricians at zero tuition cost, while earning apprentice wages.
Why are employers getting into the education business?
As Bill Conley, Head of Admissions for Bucknell University noted in a recent Chronicle of Higher Education article, “For too long, colleges — public and private, liberal arts and research-driven, rural and urban — have operated as if they’re solely in the higher-education business rather than in the broader postsecondary-education sector.” As a result, industry has chosen to incur the “hassle” and cost of the work traditionally done by community and career colleges because they can control the curriculum, customizing it in real time, in most cases without any accreditation approvals or regulators or boards looking over their shoulders, while filling their own hiring pipelines. The biggest advantage is simply speed. They can also deliver highly proprietary training that meets very specific employer needs. Fields with the lowest barriers to entry have gone first, but over time, this phenomenon will spread to higher-level post-secondary education and well beyond vocational programs. For example, the BMW STEP program, delivered at multiple regional sites, trains mechanics to work on BMW automobiles, with BMW technology, in BMW dealerships serving high-end BMW customers. Ultimately, the millions in cost is a bargain for their business model. Even in cases where industry has to jump through regulatory hoops such as in health science with boards of nursing, airlines with the FAA, or professional organizations that control licensing, they are still finding it preferable to use their own training/work sites and resources to custom train practitioners, virtually all of whom will go to work for the same companies upon graduation. Moreover, unlike colleges and universities, employers already have the exact equipment, technology, practice protocols, site supervisors, and clinical settings that graduates will work with on day one after program completion.
In most cases, these in house industry “colleges” require that students agree to work for the employer for a specified period of time after graduation. In the case of trucking, for example, students typically earn their Commercial Driver’s License (CDL) at the expense of the company by agreeing to drive for at least a full year exclusively for that company. Compared to potentially overwhelming debt, agreeing to work in a job you want to begin with, even if your choice of employer is temporarily limited, is a value proposition that typical colleges cannot come close to competing with. For the companies themselves, even if they lose modest numbers of employees after the contract period, they are still ahead by building a custom trained and loyal workforce, already socialized to employer values and norms.
Some programs for which employees have historically been trained in community and career colleges will become rare or even cease to be offered at the college level in the foreseeable future and will shift broadly to industry. Examples are likely to be truck driving, lower end allied health and even some nursing programs, and automotive technicians. Some types of computer programming, certain aviation roles, and vocational trades such as electrician, welding, and plumbing are also likely to shift broadly out of vocational schools and into industry. The same could happen for HVAC, culinary arts, hospitality, and manufacturing over time. What the current trends also suggest is that this phenomenon does not have to be limited to technical and vocational training. Similar models could be applied by industry to engineering, what are now graduate level health care positions, accounting, finance, HR, management, and other “professional” roles. This is particularly so if industry chooses to pair the training with apprenticeships and forgoes “liberal arts” curriculum as well. As an example, Amazon has created a free, in-house education program in computer engineering, which traditionally would have only been the purview of higher education. While industry will not be able to accommodate every student now served in post-secondary education institutions, they will “cherry pick” the most capable individuals, leaving schools with a smaller and even more challenged student body than they have today.
It was once thought that online education would be the jarring disrupter in higher education. That has not come to pass. The true disruptor may be something as simple as industry deciding that incurring the cost of educating the employees they want, the way they want, provides too great an ROI to pass up.
What are colleges and universities to do?
The only way institutions of higher education can counter this trend is to offer a better value proposition, to students and employers, than employer based education does. Based on current trends that will require profound change within colleges and universities—an industry and culture that, with rare exceptions, are not particularly known for innovation. The good news is that based on the many in-depth conversations I have had with industry for the in demand skills research cited earlier in this article, employers are very open to, and even enthusiastic about, deep collaboration with educational institutions. Those institutions that aggressively pursue such partnerships, with a willingness to take ground-level direction from industry, will enjoy a powerful competitive advantage within the post-secondary education ecosystem and will at least stand a chance of generating the necessary value proposition to compete with industry led education programs.