Are Apprenticeship Programs The Answer To The Skills Gap?

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David Rice: Colleges and universities have long served as the tap that filled the talent pool. Over time, the insulation of universities has become an issue as the digital economy has flourished. Today, being cut off from the real world has led to colleges struggling to develop graduates who can meet the demands and needs of organizations they strive to work for.

Over the last 40 years, very little has changed in terms of the programs offered by universities. The lack of speed to adapt the curriculum to suit a fast-paced, quickly evolving market in nearly every industry has yielded a crop of college graduates which only 14% of hiring managers feel are prepared for employment.

Layer on the student debt crisis of the last couple of decades and you have an environment where faith in higher education is eroding. College enrollments are plummeting as young people and workers seeking skill development and career changes explore other avenues for learning. From 2018 to 2022, college enrollment dropped 8%, the steepest decline on record.

So what can be done to address these skills gaps? What can be done to ensure that Korn Ferry’s estimate of 85 million jobs going unfilled by 2030 at a cost of 8.5 trillion to the economy doesn’t become a prophecy? The answer may just lie in a new approach to an old idea.

Welcome to the People Managing People podcast. We’re on a mission to build a better world of work and to help you build happy, healthy, and productive workplaces. I’m David Rice, Senior Editor of People Managing People and your host.

My guest today is Ryan Craig—Managing Director at Achieve Partners—a venture capital firm dedicated to investing in the future of learning and earning. Ryan joined me ahead of the release of his new book titled Apprentice Nation: How the “Earn and Learn” Alternative to Higher Education Will Create a Stronger and Fairer America. We’re going to talk about the challenges facing apprenticeship programs, how other countries use apprenticeships for workforce development, and who the task of building these programs actually falls to. So let’s just jump right in.

So Ryan, thank you for joining us. I know we’ve got a lot to talk about, so I want to get right into it. And my first question for you is – apprenticeships, you know, they’ve evolved significantly over the years and they’re no longer limited to just traditional trades. We see apprenticeships popping up in tech and other sectors.

Can you provide us an overview of apprenticeship programs? You know, how they have the potential to transform workforce planning, essentially, and how organizations develop or seek the skills that are needed?

Ryan Craig: Sure. Well, we’re facing a combination of a skills gap where employers aren’t finding the talent they need.

And that’s coupled really with an experience gap where employers are larding job descriptions with requirements that really would mean that someone trying to get an entry level position in a field needs to have worked for a year, two years, or three years. I mean, it’s some shocking statistics if you actually look at these job descriptions for jobs that used to be truly entry level. On average, they’re asking for a year’s worth of work experience.

And, cyber security is a perfect example. A tier one analyst to break into cyber security, those jobs ask for certifications that you really need to have worked for three years to attain. So, it’s employers aren’t finding the talent that they want, and young people are increasingly having a hard time launching careers.

40% of new college graduates are underemployed. Americans of all stripes feel stymied in terms of, how do I access this dynamic digital economy? Right? Five years ago, my last book was about the rise of what I call faster and cheaper alternatives to college bootcamps and so forth. But those programs have not had a, you know, not been successful for everyone.

And the reason for that is that it may be equipping you with the skills you need, but you’re not getting the experience. And even though there is a shortage of Salesforce administrators, not many employers are excited about hiring someone who’s just, you know, just out of a bootcamp program who’s a newly minted Salesforce administrator.

So that’s the dynamic that we’re seeing and the impact of it is, I think it’s really wide and deep across the country and is leading to some of the economic, social, and even political instability that we’re seeing. People feel like there’s no pathway to economic opportunity and socioeconomic mobility.

So apprenticeship is a great tool we could harness to address all of the above. And the reason for that is that it’s not just a training program, like boot camp, let alone college degree. It’s not a program that requires you to pay tuition or take on debt or take any financial risk. Apprenticeships are by definition a job.

And it’s a job that pays a living wage with built-in training, both formal classroom training, as well as on the job training, with built-in wage increases as you become more productive and a built-in career path. And so how great would it be if we had a country with as many large scale apprenticeship programs across every sector of the economy as we have colleges and universities, with as many apprentice jobs as we have seats in freshman college classes.

And so that’s really what the book is about. And question is how we go from, well, first of all, where we are on apprenticeship as a country and how we go from here to there.

David Rice: It’s interesting, like companies have these huge, learning development budgets and they’re willing to spend tons on technology to support that.

As you’ve noted, few companies create apprenticeship programs themselves, and if they do, they very rarely scale it. And it seems like, you brought up in the book that an intermediary is really kind of required. You’re suggesting that it sets up and runs the apprenticeship program for companies.

Can you talk a little bit about that? And cause I think people will hear that and they’re kind of curious, like who is the ideally intermediary if it’s not higher education?

Ryan Craig: Right. Yeah, who’s doing that. So first of all, let’s look at where apprenticeships actually thrive around the world. In the U.S., we do have a vibrant apprenticeship sector in the construction trades. And in the construction trades, it’s not construction firms that are setting up and writing their apprenticeship programs.

It’s unions who are doing it. Unions act as the intermediaries. They set up and run these apprenticeship programs for employers, for contractors. In Germany, where, apprenticeship is a way of life and as many people get their start through apprenticeship is through college and university.

Again, companies like Siemens and BASF and Bertelsmann generally aren’t the ones that run their own apprenticeship programs. Apprenticeship programs are run, set up and run by large chambers of commerce and powerful unions, whose role in doing so was actually written into law. They’re required to do this, which is why I kind of laugh every time you see some sort of delegation from the U.S. State government going over to Germany to drink the Riesling and eat the schnitzel and look at their apprenticeship programs, because it’s not replicable in a couple of ways.

One is that we don’t have these massive, so if you’re in Munich and you have your own little consulting business, you’re required by law to join the Chamber of Commerce there. So the Munich Chamber of Commerce has 400,000 members. They’re large and powerful. We don’t have anything like that. Our Chambers of Commerce are a pale imitation of what they have over in Germany. So that’s not going to work. And as a result, it’s never going to be law that Chambers of Commerce in the U.S. have to run apprenticeship programs. So it’s not replicable.

But what’s replicable is the UK and Australia. So Germany is about 15 times better than the U.S. on apprenticeship in terms of apprentices as a percentage of the workforce. They’re 15 times the U.S. That’s not surprising. What’s surprising is that the U.K. and Australia, which 30 years ago looked a lot like the U.S. in terms of having a relatively small apprenticeship sector, mostly in construction. Today, those countries are 8x where we are on apprentices as a percentage of the workforce. And it’s very common for people to launch careers in financial services, tech, healthcare, logistics through apprenticeships.

They have apprenticeships all across the economy. Now, how did they do that? They don’t have large Chambers of Commerce or powerful unions the way Germany does. The way they did that is by recognizing that employers don’t create apprenticeships on their own. It’s intermediaries who do the heavy lifting of setting up and running these programs, and they needed to incentivize the establishment of a robust ecosystem of intermediaries to do the heavy lifting of setting up and running these programs, and so that’s what they did.

They essentially funded apprenticeship programs, both the training component as well as providing pay per apprentice type funding. So intermediaries got paid for the training, they knew that they would be paid, every apprentice they trained. And they’d also get paid every time an apprentice was hired by an employer client.

And today, as I said, you have these ecosystems of intermediaries in the U.K., 1200 intermediaries that are in the business of setting up and writing these programs that knock on the doors of every large and mid-sized employer in the U.K. offering to set up and run an apprenticeship program. So you’d have to knock on a lot of doors in the U.S. to find any company that’s been approached similarly. It doesn’t, it’s not a thing here yet. And it’s not a thing because we haven’t done what the U.K. did, which is fund it.

If you actually look at the disparity in funding, public funding for apprenticeship, we spend over $500 billion a year of federal and state money on accredited colleges and universities, on college classrooms. We spend less than 400 million on apprenticeships. So the ratio is over a thousand to one. And if you compare a college student to an apprentice and say, how much support is that individual receiving? For every dollar the apprentice is receiving, the college student gets 50. So I don’t know if the right ratio is 2 to 1, 5 to 1, 10 to 1.

It’s not 50 to 1 or a 1000 to 1. So we are way out of balance with every other country, and that’s a huge problem given the skills and experience gaps that I mentioned, as well as the fact that the digital skills that employers are having a hard time finding are actually harder to learn in a classroom than they are on the job.

So you know, how great would it be if we had apprenticeship programs for all of these tech jobs? And most good jobs are our tech jobs. So that’s what we’ve done wrong. There’s other things too that I talk about in the book that we haven’t done that other countries have done. But that’s the main one. If we could fix that, we’d have thousands and thousands of intermediaries, nonprofits, and I profile a bunch of them in the book that are made these nascent intermediaries in the U.S. that are doing it without funding effectively.

But you could imagine if we created incentives that, big staffing companies, manpower, would get into the business of setting up and running apprenticeship programs for their clients. And big and mid-sized company would become very common for companies to have apprenticeship programs and apprenticeship pathways because we’d be effectively subsidizing it.

But, we know that the return on investment from these programs, obviously for the individual, it’s almost infinite because instead of paying, they’re not paying any tuition or taking any financial risk. They’re just getting a job that wouldn’t have been otherwise been able to get. But for the employer, as well as for government that funds it, it’s an exceptional return, a much higher return than an investment in another college classroom.

David Rice: One of the things that’s unique about apprenticeships is the combination of that on the job training with theoretical learning. And I’m curious, like if you were assessing a, an apprenticeship program where you were designing, what advice kind of like in terms of striking the right balance to ensure participants gain both practical skills and that theoretical knowledge that plugs into other areas of the job that they’re going to take, what advice do you have kind of for assessing that?

Because if you were looking at an intermediary, what would you look for in the program?

Ryan Craig: Well, let’s be clear. On the job training is typically very informal, and it’s probably not too different than, what you would learn in most jobs. When you’re working in a job, you’re learning to do the job as you go, and you’re learning other things as well.

And on the job training is not much more than that. It’s the formal component that’s different and that formal component needs to have a number of different elements. So you need the technical or digital skills that you need that employers can’t find. That’s a lot of what we see. But you also need to understand the industry that you’re working in and your job role.

So, for example, if you’re going to be a sales force administrator working for a hospital, you don’t understand the healthcare system and how hospitals actually work. You’re not going to be effective at your job. So, one of the apprenticeship programs that my group, Achieve Partners, helps run is a healthcare IT apprenticeship program where we spend the first month and a half basically just training people on to understand the healthcare system and how healthcare works.

And then finally, there’s a soft skills component as well to it. You need to know for most of these individuals, it’s their first, what I would call good job, first job in a professional setting. First job is not kind of a frontline worker job and they need to understand how to interact, whether it’s an in-person or remote work in a professional manner. So I’d say those are the three elements.

David Rice: Anytime we talk about, talent development or recruiting or anything like that, we talk a little bit about diversity, equity and inclusion these days are central to the discussion in the corporate world.

How can companies kind of ensure that the apprenticeship programs, let’s say that they partner with, reflect the inclusivity and offer the opportunities to underrepresented groups that they’re intending to?

Ryan Craig: Well, I mean, first of all, again, apprenticeships are the only pathway that offer true level playing field. So they’re as accessible to the most underprivileged, underrepresented individual as they are to someone who was born on third base thinks they hit a triple. So that what we find is that our apprenticeship infrastructure today is so, so limited that every time one of our companies launches an apprenticeship program, we have two or three hundred applicants for every seat in the cohort.

And why not? Because these apprenticeship pathways are essentially, if you’re successful, you’re going to be making six figures in three or four years in a sector that you knew nothing about and with hard digital platform skills that you didn’t have coming into the job. So whether it’s a Salesforce or cybersecurity or healthcare IT or a workday apprenticeship program, we have 200, 300 applicants for every seat.

And so we screen not on specific skills, we screen on aptitude, we screen on interest and we screen on diversity. Because if we can help, if our intermediaries can help their clients also diversify their tech workforces, it’s another win. So our cohorts tend to be majority underrepresented minority in fields where the percentage of underrepresented minorities are 5%, 10% typically.

So, yeah, we think it’s a hugely useful tool for DEI to help diversify workforces, especially in fields where that’s a major problem.

David Rice: We’re in this time where everybody’s talking about automation, right? You know, AI and other technological advancements. I’m curious, how do you see apprenticeships adapting to stay relevant in that future job market?

And it’s almost kind of inevitable because if AI is going to be replacing jobs, don’t we all kind of have to almost take an apprenticeship approach?

Ryan Craig: Yeah, look, I think you’re right. And I think the reason you’re right is that what a generative AI is already doing, it may be shrinking the skills gap, right? Like you may not need to master Salesforce in the same way in a couple of years, because there will be a sort of a natural language. You’ll be able to just, tell the system what you want to do. So there’s that element. But the other element is that it’s going to dramatically widen the experience gap that we were talking about.

So think about your first good job out of college. I know for me, probably half of the time, half of my hours were spent doing kind of menial work that today AI is like putting together presentations for clients. Right? AI is going to do most, if not all of that work. And so the employers are going to expect that entry level workers from day one are going to be doing higher value tasks, the kind of tasks that we might do, with a year or two years worth of experience.

And so they’re going to be looking for that experience out of the gate. So that’s why, I talked about the entry level cybersecurity job. The reason that entry level cybersecurity job is really not entry level anymore is that those tier one cybersecurity analyst jobs have been largely automated.

They’re using AI. And so there really is no such thing as tier one anymore. You’re coming in and you’re expected to do tier two tasks, and you can’t do two tier tasks if you’ve never worked in cybersecurity. So think about all good entry-level jobs that college graduates are either getting or wanna get today moving from tier one to tier two jobs and tier two jobs are gonna require experience.

So how are you gonna get that? There are three ways to do it. One is apprenticeship. Apprenticeship is kind of the best way to do it. But you can also believe that schools, high schools and colleges and universities do more to integrate real work projects into courses and classrooms. So, that is a possibility, what’s called work integrated learning. Requires a good deal of coordination, motivation on the part of schools and colleges and universities who typically have not been motivated to do that. But that is one option. The second one is, or the third option besides apprenticeship and work integrated learning is internships.

So internships differ from apprenticeships in that they’re not full time jobs. They’re jobs that you take while you’re enrolled in a formal educational program and for a limited duration, typically. Hopefully they’re paid, because if they’re not paid, then they’re inequitable. But, internships tend to be informal, kind of relationship based.

Catch as catch can, and there are too many schools out there that have done a good job systematizing and formalizing internships. So for my money, the best bet is a modern apprenticeship system like, most other developed countries have and that we haven’t built yet.

David Rice: You had talked about you had 300 applicants for one opening, right? How do you go through the talent matching process and identifying who that sort of ideal person is? And is it sometimes somebody you don’t expect? Maybe they just have the right…

Ryan Craig: Oh, totally. Yeah. So today our companies are doing it in a couple of ways. First of all no degree. We’re never asking for a degree.

So that’s the easy, that’s easy. The second is we do a lot of assessments where we’re assessing for what we think is aptitude and we look at who’s good, what are the characteristics of someone who’s actually good at doing that entry level job. And we kind of work backwards into an assessment so we can assess for those capabilities up front.

Where we’re going to and where some of our companies have already moved to is essentially a pre-course. So the best way to learn if someone’s going to be good at something is to give them a trial, right? We know that to be trials, job trials are four times more effective than the next best predictor of whether someone can do a job.

So we’re going to be giving candidates or, those interested in these apprenticeship programs kind of trials through, short online courses where they’ll be doing coursework that will demonstrate their, not just capability, but also interest level in the apprenticeship program. And those who complete that, sort of pre apprenticeship course will be at a minimum guaranteed in an in-person interview with the recruiter for the cohort.

So that’s one way to guarantee that you don’t just send your resume off and you never hear about the position again, which is the typical sort of job applicant experience nowadays.

David Rice: Now, there have been some companies that have attempted to start their own apprenticeship program.

I’m curious, what has been your impression of say, like, I think Google has one for example. So what has been your impression of the efforts that have been made by companies rather than you? What are some of the lessons that they’ve learned, maybe?

Ryan Craig: So I was at a meeting a couple of weeks ago where about the future of the U.S. workforce and a bunch of Fortune 500 companies were in attendance and they started bragging about their apprenticeship programs. And one of them was a big systems integrator that said, well, we’ve hired 2000 over the last 10 years. And then another one, a gigantic food service company, we just hired a new cohort of three cybersecurity apprentices.

And given the scale of these companies, 2000 over a decade, it’s kind of laughable and three is a joke. So it’s just, the scale that these programs that companies run of their own. And again, why, you know, why should we expect companies to run their own apprenticeship programs? We don’t ask them to run their own schools to train their talent.

So most companies have gone the other direction. Most companies used to do much more on training entry level talent. And today there’s much more of it as an expectation that we want folks who were kind of perfectly suited for this role and will come and will be productive on day one. Now there are exceptions, right?

You know, the, at the top end, the Goldman Sachs and McKinsey’s of the world, they hire really smart people and they invest in training them and they’ve have business models that work too. For the vast majority of companies, it’s not that they really want someone who’s going to be productive on day one.

And so, the idea that somehow we should just wait around and hope that, employers themselves are going to, figure out how to run these programs I think, you know, the fact that we are last among developed countries on apprenticeship is kind of proof that that doesn’t work.

David Rice: And then for our listeners out there who are, working with companies that are starting to explore the idea of introducing apprenticeships into their orgs, what would be sort of your top three pieces of advice to ensure that those programs have some effectiveness from the start?

Ryan Craig: I would say look for a partner. So, we’re seeing the emergence of a whole host of partners that, you know, like Multiverse, for example, which has come over from the UK and is a broad based apprenticeship service provider that is working with, big companies like Verizon, Google to launch and run their apprenticeship programs for them. Or companies like SkillStore, which are doing it for tech apprenticeship programs or nonprofits like Apprenti.

And you’re up to do such perform the same function. So I, I think if you look at all the things that you need to do to run an apprenticeship program, I talk about in the book, there are about 10 things that you need to do that you’re not doing today. And the hardest is you’re going to be hiring and paying someone or a bunch of people who are not productive in their jobs for an extended period of time.

And that’s kind of anathema to most employers. So why not look for a partner who’s willing to take on that risk, cause they’re in the business of doing it effectively. And whether they’re for profit or nonprofit, their business model is setting up, running this program and then passing the talent onto you, reducing the risk, reducing the cost.

I mean, I would say, think about all the things your company partners on or outsources to specialized partners. Apprenticeship should be one of those. Apprenticeship should be one of those things. And so I think that the, kind of to do it ourselves, there are lots of companies who have the idea to do it and they look at what’s involved and then they kind of give up. Or they look at what’s involved and they hire three, and that’s kind of the end of it.

So the way to scale again is to tap this emerging network of intermediaries that we’re seeing and that network is going to grow much larger as we begin to figure out the public policy on this.

David Rice: Yeah, it’s interesting. I think you just touched on something really important in that, it’s one thing that you, we have these expectations of folks when they come out of school and then they don’t have the skills.

And I think for them, they think they’re going to go into a job and really grow and learn. And it’s actually kind of a painful experience in the beginning for them. So, and that there’s a cost to the business and sort of a cost to morale through the experience that happens. So I think it’s a really important thing that we’ve, we do start to explore this.

Ryan Craig: That’s interesting. Yeah. You know, I mean, you could say that, yes, lots of people have kind of demoralizing, almost hazing experiences in their first jobs. Apprenticeship programs are not that because the people who are involved with that take more of a, education training aspect to it where, and there’s a mentor formal mentoring component built into it.

And the expectation is that you’re, that you don’t know what you’re doing on day one. And that, for most of these programs, you’re kind of spending three months in a classroom before you’re being asked to do any, substantial and it’s that kind of commitment. But again, hard for a company to do themselves.

David Rice: Absolutely. Oh Ryan, thank you for giving us a little bit of your time today. I appreciate it. That’s I think this is a really important topic and I hope to see more employers exploring it.

Ryan Craig: It’s great. Well, thanks David. Good being with you.

David Rice: If you’re interested in hearing more from Ryan, be sure to follow him on LinkedIn and you can pick up a copy of Apprentice Nation on Amazon or download the audio version on auto.

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Until next time, I hope you find some fresh air and laugh at something silly.