Creating A 21st Century Workforce

22 minutes (125 words per minute divided by 2,700 words total)

An advertising executive in the Twin Cities likes to tell visitors and audiences that his major asset goes up and down the elevator every day. As dean of a major business school I have to agree – even the people who don’t take the elevator are major assets at our school.

The executive’s quip summarizes the recent employment environment in the United States. It’s the same thing that could be said by any number of corporate executives in fields ranging from heavy industry to financial services. People matter, and good people are hard to find.

People have become so important because knowledge has become the primary engine of our current economy. Sure, we still make things in America but even those jobs require a knowledge of computers, of systems, of quality control and so forth. A recent issue of the Atlantic Monthly magazine had a graphic on the cover of a muscled worker in a t-shirt and hard hat holding a laptop while doing his job, a precise image of the blending of the new and old economy.

In this new economy I believe knowledge is the key to this new kingdom.
Today, I’d like to discuss how recent events in the economy combine to make learning a central element for producing vibrant business community, to offer some insights from leading thinkers on the importance of training and to provide important data which clearly shows the benefit of an educated workforce. I also will showcase two examples of how labor and management can work together to create programs and facilities to meet the demands of a new world of work.

Over the past decade, the national and global economy has been transformed by mergers and acquisitions, by demographics and by technology. Despite a phenomenal economy, many workers have been caught in a web of mergers where demands have been placed on them to learn entirely new sets of skills, that is if they were lucky enough to stick around. It seems not a week goes by without a major merger announcement effecting thousands of workers.

Meanwhile, as the pool of workers declined and some regions of the country effectively reached full employment, many businesses have had to scramble to find workers. It’s been a seller’s market. Whether that changes remains a question, but the reality is that our country is aging and in a mere 20 years more than 35 percent of us will be older than age 60. Not so far into the future two workers will support every one social security recipient, or so we’ve been told.

We’ve been saved by the full assault of a labor shortage in part by computer technology. The user friendly computers of the past five years allow employees to become more productive and the design, production and distribution of products more targeted and efficient. Our productivity gains of the past decade were the highest in the 20th century and much of that had to do with the spread of computers, network technology and, of course, the Internet.

People who once moved things on the shop floor suddenly had to learn a control system to manage equipment and handle inventory. Brute brain strength, as it turns out, is much more important in this economy than brute strength.

This leaves us in a business environment where assets are less about capital and equipment or real estate holdings and more about employees. Consider the advertising executive. If his employees all left tomorrow what would he have? Chiefly, computers, desks, editing suites and other office and electronic equipment. What that would fetch on the open market would pay for about two executives.

Therein lies our challenge. Creating educated individuals will be among the most enormous issues we face this century. As Peter Drucker, among others, has pointed out, our global economy has fundamentally shifted to a knowledge-based one where the ability to learn will become a preeminent trait of successful people. This shifts the onus on to the individual to continually educate themselves. No one’s going to do it for them, or force them to learn. But if workers fail to continually retool their skills they risk becoming unemployable.

Drucker wrote the following a few years ago: “The knowledge society will inevitably become far more competitive than any society we have yet known--for the simple reason that with knowledge being universally accessible, there will be no excuses for nonperformance. There will be no "poor" countries. There will only be ignorant countries. And the same will be true for companies, industries, and organizations of all kinds. It will be true for individuals, too. In fact, developed societies have already become infinitely more competitive for individuals than were the societies of the beginning of this century, let alone earlier ones.”

Ouch! That’s a frightening proposition, at least to some people. Suddenly they’re in charge of their success, their career, their survival. On the other hand, it gives workers a rare opportunity to have more control over their careers and to seek new challenges when boredom sets in...or to survive the machinations of mergers and the palpations caused by pink slips.

The great thing about what all of you are doing is helping workers understand that training is the key to their success and then giving them opportunities for instruction and self-directed study. Let me share one more quote with you I think goes to the heart of the issue:

“Economists have long argued that a significant proportion of the work knowledge that one acquires in a lifetime is produced on the job. Several decades ago, much of that on-the-job training was acquired through work experience; today, businesses and labor unions are placing greater emphasis on the value of formal education and training programs — ranging from corporate universities to partnerships with community colleges and other providers — as well as relationships with public agencies, including welfare-to-work and school-to-work programs. These efforts recognize that technologically advanced learning must be grounded in real_world curricula that are relevant to changing business needs and that it be provided in flexible venues that open access to development of skills to as many workers as possible. “

That a rare moment of clarity was brought to you by Federal Reserve Bank Alan Greenspan, who spoke about the issue of training last year at the Department of Labor’s National Skills Summit. That’s about as unambiguous as he gets — you may have heard the story that it took his wife, the NBC correspondent Andrea Mitchell, three days to figure out that a comment he had made to her was actually a marriage proposal! It’s interesting, though, that Greenspan gets it, he sees that offering workers learning opportunities should be among our preeminent goals as a country.

Yet I must tell you that despite everyone’s apparent interest and support of training it remains something more available to executives and management than to employees. Only a third of the $54 billion spent on training this year goes to workers, according to an annual survey by Training Magazine. Certainly employees gain from having a better educated manager but there seems to be a population entirely missed by training opportunities, a population which may need it more than their bosses if they lose a job to a merger, an acquisition or economic downturn.

That’s why training of all employees of all levels is so important. So does the kind of education. Around 40 percent of training goes for information technology, both of employees using software programs as part of their jobs and of information technology specialists. But I’m happy to see more than half the people are receiving other kinds of training in addition to that involving computers. I’m a real fan of “transferrable skills” employees can take with them anywhere. Transferrable skills include everything from knowing how to create a PowerPoint presentation to project management. To continue succeeding as a country, we not only require workers trained to do their current jobs, but workers with a set of skills that could be of great use to a wide variety of employers.

Workers, of course, understand the changing nature of employment. They don’t need Peter Drucker or Alan Greenspan to remind them their survival depends in an uncertain world on their skills, education and wherewithal. Some collective bargaining agreements recognize this need and include among the benefits package opportunities for learning. Education is a the new IRA, as valuable as money in the market.

Several other new benefits, such as free computers and reduced-fee Internet access, have the effect of assisting workers with lifelong education. As online education grows, workers can, or will, have the option of logging on from home to take a course from their employer or from a third party vendor.

Ford’s joint program with the UAW to distribute 360,000 computers to employees is a wonderful example of a great benefit for workers and their families. As long as the benefit is not used by companies as a coercive tool to maintain constant email contact with employees this will become a popular way for training a generation of workers and their families on using the Internet.

Now a lot of corporate executives like the concept of education but they cannot see it impacting the bottom line, at least not immediately. They may support the training of workers in theory but fail to see much benefit of it in practice. Training’s effect on the bottom line, as it turns out, is often enormous. The American Society for Training and Development examined 575 firms from 1996 to 1998 to see if firms that spent money on training actually saw their total stockholder return increase.

The results are intriguing. Companies investing $680 or more per employee for training saw their stock increase at least six percentage points. The study showed firms spending the most on training saw their total stockholder return jump 37 percent, while firms in the bottom half of the study saw only a 20 percent spike. The S&P, during this period of time, grew 25.5 percent. The top half of the group, in other words, saw an increase of more than 10 percent over the S&P average. Training certainly paid for itself for those companies.

And then there’s what you are all here to discuss, joint labor-management training programs. As a group you spend more than $100 million annually on training ranging from public employee programs to those dealing in the private sector. From the state of Illinois’ Upward Mobility Program to the UAW/ Ford training partnership in St. Paul, just a short drive from where I live, the examples of joint partnerships show just how management and unions can work together toward increasing productivity and creating a better trained workforce.

In Illinois, Upward Mobility came about during negotiations between the American Federation of State, County and Municipal Employees in 1989. The program allows state employees to take courses to prepare for higher paying jobs within state government. The courses are free if taken at state institutions and partly subsidized if the employee attends a private school. More than 1,700 employees per year take courses to get better jobs in five areas — office services, accounting, human resources, data processing and health care. Interestingly, the program crosses the union’s bargaining units and divisions — a correctional officer can train to become a nurse, for example.

Kathy Wood, the program’s coordinator at the union, says some employees have used the program to move up the career ladder three or four times. Others have used it to obtain masters’ and PhD. What the program does well is direct employees to the education they need to move into a job they express an interest in. For years many employees looking to climb the career ladder would opt to get a master’s in public administration, even though no job at the state required that degree. This program allows them to focus on getting precisely the training they need to move into a higher paying position.

Not all managers love the program. They don’t like the fact some employees are training for jobs outside their divisions. Others are bitter that the training is free, so the effort doesn’t look like much of a sacrifice at all. Or they don’t like the fact employees have the option of taking a course during working hours. Even so, Wood credits some managers with calling her to suggest particularly bright employees, often in clerical positions, for entry into the program.

Upward Mobility, in the end, is a win win for the state and the union. The state gets to hire internally, always a more affordable option than the open market, and the union helps create for its members an opportunity for advancement. It clearly shows how a state government can work with unions toward the goal of educating the workforce.

St. Paul’s program is different. A few years ago the UAW and Ford spent $2.3 million and the state of Minnesota chipped in another $5 million to create a state-of-the-art training facility. Built in 1925, the St. Paul Ford Plant is one of company’s oldest. It manufactures Ranger trucks. A few years ago the union enlisted the state and the company in an effort to build a structure based on a Ford training center near Canton, Ohio. The union wanted the plant to remain competitive in Ford’s system and with other automakers. After many discussions, the state agreed to pay most of the cost in return for access to the facility.

The training center opened in 1998. Filled by large windows offering lots of natural light and a lobby graced by a large mural depicting UAW workers, the plant boasts an appealing design. The technology is utterly fascinating, with robotic center, an electronics training room, a machine shop and an auto diagnostic area. A 180 seat auditorium and classrooms fill out the educational calling of the building.

The center offers free classes to employees on skills directly relating to their jobs, as well as in such areas as GED, advanced computers, math and communications. Spouses are welcome to attend, for free, the classes not directly related to the plant’s activities.

When I visited the training center I even noticed a “great books” discussion being held that day for plant employees. Though the center is there to teach employees to increase their skills on the job, and to train future workers about manufacturing technology, the training center offers other lifelong learning opportunities. More than 500 classes a month are held at the facility.

Rob McKinsey says the training center has helped better Ford’s relationship with the local Highland Park community and with the union. Kinsey, the head of the local UAW local in St. Paul, says the training center helped Ford in two ways. First, the company created closer relationships with the local community. It listened to suggestions and put up a building everyone can be proud of and that non-plant employees have opportunities to use. Secondly, it brought the union and the company closer together. Ford made an investment in its workers and the union made an investment in their members.

They just happen to be the same people.

In a sense, the UAW invested in Ford’s own success by its willingness to pay for a facility that should help the plant remain competitive. Ford has training centers at all its 70 plants in 19 states, but only the Ohio center has the sophistication of what the state, the UAW and Ford put together in St. Paul.

It’s quid pro quo, for sure, but the quid pro quo we can all agree we’ll likely see more of in the coming years. We live in a country where, at last count, only two percent of all employees have ever attended an adult education course. That number needs to dramatically improve and the efforts of people in this room will go a long way toward increasing that percentage. When President Bush invited technology CEOs to his ranch last December, one of the attendees remarked that the jobs in the future will go where the talent lives. That could be China. That could be Europe. That could be South America.

For now that’s the United States. But there’s no guarantee we will be able to maintain that stature in the 21st century without a full-fledged commitment to lifelong learning by corporations, unions and educational institutions and an understanding by workers that training and retraining will be central to their success. Thank you for your time.