When a company identifies the need to fill a job role or particular skill set, what is the first instinct of management? More often than not, employers gravitate toward recruiting the talent they need through hiring sites like Monster, Indeed, and more. However, what if the talent is simply not available? Many employers in manufacturing and construction are finding themselves in this exact position due to the skills gap in the skilled trades industries. A 2016 Department of Commerce (DOC) report notes that many firms often require employees to have a high level of company-specific knowledge that often cannot be found in the labor market.1 When positions are continually left open, employers must deal with the consequences of delivering products late or turning down work altogether.

To combat the skills gap in skilled trades industries, many firms have naturally turned inward to establish internal skills development programs and apprenticeships. Not only does developing talent from within help narrow the skills gap, but it enables firms to retain the company-specific knowledge they would otherwise not find in the talent market. And to top it off, developing talent from within is beneficial to your bottom line.

The ROI of Apprenticeship

Businesses get more out of developing an apprenticeship than a way to avoid highly competitive recruiting landscapes. For example, in the 2016 DOC study Siemens USA reported achieving over a 50 percent rate of return on its CNC machinist apprenticeship program, compared to hiring machinists off the street.2 Workers who graduate from apprenticeship programs gain a deep understanding of the work and the principles that form the foundation of those skills through a combination of on-the-job (OTJ) training and related instruction (studying theory behind skills). These employees have better judgment and flexibility, which make them powerful assets for the company.

For employers utilizing distance learning providers for related instruction, their apprentices' flexibility is a game-changer; these workers are able to study theory on their own time and from their homes " as opposed to from an onsite classroom or local school. Indeed, the productivity of the graduates from the same Siemens apprenticeship is so high that these workers only fall behind on their tasks 13% of the time, in comparison to 33% of the time for employees hired from the local talent pool.3

Several companies interviewed in the same DOC study also noted that apprenticeships spurred more rapid advancement in the company, enabling them to develop their future leaders. Employees supported by development programs from their employer tend to foster strong loyalty toward the organization, in turn boosting their engagement, motivation and retention at the company. However, employers aren't the only ones getting major benefits from apprenticeship programs. According to ApprenticeshipUSA, ninety-one percent of people who complete an apprenticeship find a job, typically with the company that trained them. Their average starting wage exceeds $60,000.4

As a final incentive to employers, many states provide businesses with tax credits and labor benefits to host an apprenticeship program. These breaks typically come in the form of funding for technical assistance and career and technical training to prepare students for apprenticeships. Based on the positive results of these programs for both employers and apprentices, the U.S. Department of Labor (DOL) has invested $265 million since 2015 to expand apprenticeships.5

Stay tuned for the next installment of our bi-weekly series, The Apprenticeship Guide!

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Resources: (1, 2) Department of Commerce (3) New America (4) Economics and Statistics Administration (5) Department of Commerce