A production manager at a mid-sized manufacturing company is reviewing the company’s capacity to execute and deliver orders over the next three years. Given a growing shortage of precision welders and a high number of retirements expected among engineers, he is increasingly concerned about the company’s capacity to staff projects. While the firm has posted position openings at local education and training providers and on the Internet, the process to fill those positions has dragged on for months. The company has incurred high on-boarding costs and increased turnover rates for those they do hire, because they lacked the necessary skills and qualifications. New automation systems, increased overtime and temporary staffing have allowed the company to maintain its current level of productivity, but the production manager knows all too well that absent a real solution—and one arrived at quickly—the bigger problem will soon undermine his team’s ability to deliver orders on time and take on new business.
This example illustrates a common problem experienced by companies of all sizes across a range of industries: the skills gap is growing and directly impacting the ability of companies to compete.
Our nation’s education and workforce development systems are failing to keep pace with the development of our economy. Employers throughout the United States struggle to find skilled workers who can contribute to their companies’ growth and success. As a result—despite stubbornly high unemployment rates—many jobs are left unfilled. If employers nationwide are to maintain their competitiveness, it will require closing an ever-worsening skills gap.
The business community must be involved in more effective ways if the skills gap is to be closed. To that end, the U.S. Chamber of Commerce Foundation (USCCF) is championing a new vision for employer engagement with education and workforce systems, one that yields more effective transitions into employment for students and improved career advancement for workers.
In undertaking this task, we must accept a hard but undeniable truth—the nation’s current approach to skills development is no longer capable of meeting the needs of a rapidly changing business environment. Employers can no longer afford to wait for others to find a solution; rather, they must play a leadership role in exploring new public-private approaches to closing the skills gap.
This new approach—talent pipeline management—argues that employers can close the skills gap by applying lessons learned from supply chain management. These lessons point to the need for major changes for both employers and their partners. They provide guidance in how employers can close the skills gap by scaling leading employer practices and forging new types of partnerships with education and workforce providers. Although we are not the first to suggest the application of supply chain thinking to skills development, we believe talent pipeline management represents a bold departure from prior practice and a novel approach for addressing the inadequacies of the current system.
Talent pipeline management envisions a demand-driven system in which employers are positioned as the “end-use customer”—hereafter referred to as “end-customer”—in order to create and share value among all partners in the talent supply chain.1 This new approach will add value to employers by reducing the skills gap and providing a better prepared workforce. Education and workforce providers 5 will benefit from improved partnerships with employers and better outcomes for their students. Students and workers will benefit from more transparent and successful career pathways, including new opportunities for economic mobility for low-income and disadvantaged youth and adults who have been increasingly left behind in the new economy. Also, it will help policymakers better align and achieve higher returns from their education, workforce, and economic development investments.
We begin by examining the challenge and need for a “demand-driven” system. From there, we introduce supply chain management and explore key lessons that inform how employers can improve their partnerships with education and workforce providers. Next, the paper identifies three foundational principles for a new talent pipeline management system and concludes by highlighting implications for key stakeholders, including employers, education and workforce providers, students and workers, and policymakers.
