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Report

The role of employers in addressing the skills gap

Editor's Note:

This is the sixth and final section of "Employer Perspectives on Workforce Development," a series that examines how business leaders are adapting to the future of work.

Employers have an important leadership role to play in providing viable pathways into the workforce, particularly amid uncertainty about exactly what the future of work will look like. This leadership can take many different forms, from partnering with local high schools, to creating internal skills development programs, to identifying the skills they need and communicating these skills to local education and community partners.

The four manufacturing employers interviewed for this series are each taking an approach to workforce development tailored to their company’s needs and the local labor market landscape. While their specific approaches vary, several common themes emerge from the perspectives shared throughout this series.

Addressing the skills gap

To begin, the employers interviewed in this series acknowledge the urgency of addressing the skills gap in light of hiring challenges. John Hazen White Jr., CEO of Taco Inc., cites the impending exodus of baby boomers as a primary source of concern, while Lauren Mynsberge at Batesville Tool and Die (BTD) says that the company has “tried various new approaches to attracting and retaining workforce, yet we still can’t find employees.” Dan Peterson, vice president for industry and government affairs at the Cook Group, explains that “a big challenge for us is finding enough people that are capable to do the work.”

“[F]ast-paced technological advances are making it difficult for employees, employers, and educators alike to identify the skills that job seekers need.”

These hiring challenges are part of a broader landscape in which fast-paced technological advances are making it difficult for employees, employers, and educators alike to identify the skills that job seekers need. Suzanne van de Raadt at Arconic describes the challenge of facing the unknown: “[The] biggest challenge is we don’t know exactly where we want to be, so it’s a journey.”

Internal pathways for skills development and promotion

Facing these challenges, several employers highlight their creation of internal pathways for skills development and promotion. BTD has recently developed a “Pay for Skills” program in which employees have opportunities to earn raises through mastering different levels of skills development. This program also integrates an educational pathway: Earning credentials and degrees is rewarded with a raise. Cook Medical has also invested in creating a program through which employees can develop skills and education aligned to their careers at Cook and, in doing so, advance in the company.

The employment landscape in the United States is characterized by a lack of clarity around the skills that employers require and underdeveloped pathways from high school to the workforce. In this context, it is no surprise that job seekers often have incomplete or inaccurate information about the skills that potential employers will find valuable. The approaches at BTD and Cook provide examples of how companies can play a leadership role not only in clarifying the skills that they seek, but also providing opportunities and incentives for potential and current employees to develop relevant skills and knowledge. This type of leadership is essential in addressing the skills gap.

While intermediaries like workforce development boards can help clarify potential pathways into the workforce, employers are perhaps in the best position to identify the skills that they need. For example, this series discusses Arconic’s recent endeavor to identify skills and knowledge gaps within their company; external organizations are not necessarily as well positioned to undertake this type of assessment. In the decentralized workforce landscape, employers should take proactive steps to identify the skills they require and create avenues for potential and current employees to develop these skills.

Partnerships with education institutions

Throughout this series, partnerships with education institutions repeatedly surface as a crucial strategy in providing employees with opportunities to develop the requisite skills and knowledge. Again, these approaches vary across the employers interviewed in this series. Taco has partnered with institutions of higher education for decades to provide educational opportunities for their employees. Arconic’s internship program relies on local partnerships, while BTD and Cook both partner with Indiana’s Ivy Tech Community College system to offer credential and degree pathways at no cost to their employees. Partnerships with local high schools are also valuable components of workforce development strategies, such as BTD’s co-op program.

“[P]artnerships with education institutions repeatedly surface as a crucial strategy in providing employees with opportunities to develop the requisite skills and knowledge.”

These on-the-ground perspectives reinforce experts’ calls for employers to invest in such partnerships. Employers and educators have different strengths with respect to preparing individuals for the workforce. By working together, they can help create viable pathways that benefit employees, employers, and the wider community. State and federal governments should fund research and development efforts to understand which types of employer-educator approaches are most effective and how to scale these approaches. This research can inform evidence-based recommendations that inform new partnerships.

Another dimension of closing the skills gap: Transparency in postsecondary credentials

Given that much of this series has discussed the value in employer-educator partnerships to help employees and job seekers earn postsecondary degrees, it is important to acknowledge the astonishing variety of postsecondary programs. The Georgetown Center for Education and the Workforce reports that “[p]ostsecondary programs of study more than quintupled between 1985 and 2010 – from 410 to 2,260.” What competencies do students gain from each program, and what value does each type of credential hold for employers? The authors of the report warn that these questions are very difficult for learners and employers alike to answer. Without clear information, students are ill-equipped to identify which programs will prepare them for the job market, and employers are not well-positioned to identify which programs meet their needs. Thus, it is increasingly important to clarify what competencies students can expect to gain in a program, and how well a program aligns with employer needs.

“Without clear information, students are ill-equipped to identify which [educational] programs will prepare them for the job market, and employers are not well-positioned to identify which programs meet their needs.”

In this environment, how can we ensure that investments in these programs by job seekers, employees, and employers pay off? The authors of the Center for Education and the Workforce report emphasize the need for greater transparency with respect to postsecondary credentials. The report highlights state leadership, providing examples of efforts in eight states to increase transparency through integrating workforce and postsecondary data. These databases, particularly if they are public-facing and include actionable information, “can be used to improve postsecondary education and training programs, connect learners and workers to career pathways, and satisfy employers’ workplace needs.”

States are not the only ones leading the way in terms of increasing the transparency of postsecondary credentials. The Credential Engine, a nonprofit organization, is working to systematically catalogue all available postsecondary credentials using “a common description language.” This system allows for easier comparison across available credentials by employers and individuals.

These efforts toward increasing transparency about the value of specific postsecondary credentials, particularly in the context of workforce development, illustrate innovative solutions as well as the challenges that remain in addressing the skills gap. Indeed, the need for greater transparency raises additional questions about accountability: What accountability systems should be in place for credential programs, and who is responsible for holding these programs accountable? These questions are beyond the scope of the present analysis. But like so many other dimensions of addressing the skills gap, identifying answers to these questions and implementing solutions will likely require collaboration among policymakers, educators, and employers.

Conclusion

As discussed in the introduction to this series, in the decentralized landscape of workforce development, many stakeholders have an important role to play in addressing the skills gap. Cross-sector collaboration is key to identifying policies and practices that create clear, accessible opportunities for individuals to develop the skills that employers require. In this context, employers, educators, and policymakers alike bear responsibility for creating innovative solutions that address the skills gap. At the same time, individuals and organizations within each sector have particular strengths that they can draw upon to generate new insights into workforce development strategies.

“[I]n the decentralized landscape of workforce development, many stakeholders have an important role to play in addressing the skills gap.”

This series focuses on the leadership role that employers can and should play in terms of facilitating skills development among potential and current employees. This role makes sense, considering that employers are uniquely situated to diagnose their own workforce needs and are responsible for hiring, developing, and retaining their employees. Nonetheless, it is far from a forgone conclusion that all employers will exercise this leadership. The analysis in this series implies that to forfeit this leadership role and to neglect collaboration with educators and policymakers would be a mistake.

The employers interviewed for this series are uniquely investing in addressing the challenges that they face as the nature of work changes. While these approaches differ, each illustrates a commitment to developing skills and knowledge aligned with their needs among potential and current employees. Across these different perspectives and experiences, a shared lesson emerges: Employer leadership in creating innovative strategies to hire, develop, and retain employees is crucial to maintaining a strong workforce in today’s rapidly evolving environment.

Visit the “Employer Perspectives on Workforce Development” series homepage.


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