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February 27, 2020

The Winning Solutions to Shrinking the Skills’ Gap

MHT Partners  | Education Investment Bank

In today’s tech-enabled world, it has become more difficult than ever for employees to meet the skillset requirements of employers. Unlike the past, companies have narrowed their recruiting scope away from candidates who simply have degrees to ones who possess practical competencies. These are skills that can be observed, measured and can be applied to perform a specific occupation.(1) The demand for these skills is warranted in a technological world; however, a shortage in competent workers means that these demands aren’t being met. This rising epidemic is what we call the skills’ gap. Today, 4 in 10 college graduates are being overlooked by corporations due to a lack of required skills. These same graduates are earning 30% less annually than their fully employed peers. And, there are more than 7 million unfilled employment positions due to the supply/demand misalignment.(2) This is a problem that heavily affects both the employer and employee, but also one that has broader implications on the state of the economy. But there are solutions:

Solving Problems – this is a five-step process that helps move unskilled candidates into skill-stringent occupations:

  1. Identify the top traits demanded by employers. A lack of understanding accounts for a large percentage of the disconnect between skills demanded and skills supplied. Students are increasingly going through school blindly, not fully understanding what the skill expectations are in the “real world.” Education technology platforms such as Plum.io and Workday are helping to fill that void.
  2. Assess whether applicants meet the skillset threshold. In tandem, if the skills aren’t being met, training must take place.
  3. Train workers to get up to speed with labor market demands. Bootcamp platforms such as Galvanize, Coursera and Skill Share help to equip candidates with missing skills. Contrary to popular belief, training alone is not the most important. In fact, it is useless without the final two steps.
  4. Credential – in today’s stringent job market, employers are reluctant to hire workers unless they both possess skills and are credentialed to be proficient in applying the skillset to perform specific tasks.
  5. Place workers into occupations. Platforms like Credly and Handshake help to solve this piece of the puzzle.

Supporting People – a support system has been deemed as one of the basic requirements of human existence, which also applies to people in the job market. In fact, in the continuously changing job market, support has become more crucial than ever. There are three steps that ensure a support system is in place to help fuse the skills gap, all of which can be found in technology platforms:

  1. Financing – how are candidates paying for programs that equip them with the required skills? Income Share Agreement Programs such as Vemo Education and MeasureOne are accepting tuition as a percentage of expected postgraduation income – with no payment required if training doesn’t lead to a good job.
  2. Mentorship and 3. Administration fuel the supporting process as they allow candidates to learn how to balance education, recruiting and personal lives while also helping them track the progress they’ve made towards reaching their goal of employment.(2)

The solutions to shrinking the skills gap have been revealed. Ultimately, identification, assessment, training, credentialing and support must take place to fully invoke change. The good news is that there are numerous education technology platforms already in place to help expedite these processes, and once they are executed, we will start to see a bridge in the skills’ gap and a healthier labor market.

Feel free to reach out to a senior member of our education team to learn more: Alex Hicks (ahicks@mhtpartners.com) or Rebecca Bell (rbell@mhtpartners.com).

[1] https://www.uschamberfoundation.org/
[2] The Re-Skilling Imperative: Trends in Solving The Looming Skills Gap – Talent Tech Labs

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