How on-the-job training became the new graduate degree

When you think of fields that require advanced technological training, “retail” probably isn’t one of them. But whether we’re talking about people selling sweaters at the Gap or workers pulling orders in Amazon warehouses, many of the actual employees in the sector would beg to differ.

The number of tech-related job openings among major retailers has risen dramatically in recent years—up to 23% in 2019 from 10% in 2016. And that’s not just for executives. Entry-level workers dealing with AI-powered smart carts and online ordering platforms increasingly need an understanding of programming and data analytics to maintain sophisticated equipment and make sense of the reams of customer data they collect.

It’s not just retail that’s seeing this shift. Employers in sectors as diverse as healthcare, education, government, technology, and customer service are seeking in-demand skill sets that average entry-level workers, or even those with college degrees, may not be equipped with.

As the CEO of a workforce analytics startup, this is something I’m very familiar with. We’re constantly searching for qualified tech talent and competing against larger organizations with deeper pockets. The reality is, the education system simply hasn’t kept pace with the changing technology that’s revolutionizing so many workplaces. In the course of helping other businesses analyze their own people challenges, I’ve seen up close how many employers struggle to fill this gap.

Related: Will you still need a college education in 2040?

So, what’s the fix? Offering employer-supported education is an obvious solution, although not a simple one. Developing in-house training ensures your workforce has the skills your business needs, but it also makes them more attractive to competitors—and we’ve certainly lost our fair share of great employees to our competition.

But the simple truth is becoming increasingly apparent: Employers no longer have the luxury of staying out of the education game. Train now—or pay later.

Rethinking the ROI of on-the-job training

Many employers are still reluctant to invest in training, or more importantly, retraining their workforce for future demands. To overcome their inertia and cost aversion, it may help to look at the facts.

For starters, there are clear benefits to hiring and retention. Education is quickly becoming a much-valued perk among new hires in a competitive labor market and a powerful tool for keeping top performers. According to a 2018 report from LinkedIn, 94% of employees would stay at a company longer if it invested in their career. Additional studies show retraining and reskilling employees is almost always cheaper than hiring new talent. Considering that the cost of rehiring, onboarding, and opportunity loss can add up to 150% of the resigned employee’s annual compensation, this is an obvious justification for retention and reeducation.

Related: You don’t have to spend big to train your employees

On the surface, the cost of training employees on advanced skills can seem prohibitive, particularly if it makes them more vulnerable to poaching by competitors. But the return on investment in employee education outweighs the cost of “train drain.” Employees that do eventually leave will be more productive, and happier, during the time that you still have them, and they’re more likely to reflect positively on your organization, which can lead to hiring referrals.

At our company, the return on investment in education is massive, not even counting the boost to the employer brand. (More than half our Glassdoor reviews mention education as a significant draw.) As the cost of post-secondary education skyrockets, employer programs that offset that cost in the form of co-op placements, apprenticeships, or education stipends can be more valuable than a raise.

But beyond HR returns, retraining will also dramatically improve on-the-job productivity and efficiency. For some businesses, this is a matter of survival. As gaps in formal education needs widen, it’s left to employers to equip their workforce with critical skills needed to make use of current and future technologies.

Amazon, for instance, has already committed to spending $700 million to retrain a third of its U.S. workforce by 2025 in areas such as software engineering and IT support. Meanwhile, Microsoft is working to “upskill” 15,000 employees with training in AI by 2022.

But even employers that have overcome the sticker shock of upskilling their workforce still need to figure out how to do it. And workforce education, it turns out, is undergoing its own seismic shift.

The evolution of workplace education

My very first job was at IBM. I stayed with the company for 25 years, going from a software developer to a senior executive. During that time, in addition to an annual requirement to spend 15 days on training, I went back to school on three separate occasions at the company’s expense. Not only was the training essential to prepare me for the assignments ahead; it also generated a lifelong network in other companies and industries.

But not every company can afford to do this, and realistically, not every company should.

Taking employees offline for weeks or months at a time may not be realistic, or helpful, for many positions in many organizations. Forward-thinking employers are experimenting with other ways to continually upskill and educate people, while also maintaining workflow and productivity. What this looks like in practice varies a great deal based on the needs of specific sectors.

Walmart, for example, has taken advantage of the time saved by automating tasks such as checking customers out to train sales associates on better customer service, including using virtual reality goggles to simulate a rush of shoppers on Black Friday. Other big companies, such as AT&T, offer online courses that employees can complete to earn certification “badges” and build in-demand skills. Meanwhile, JPMorgan Chase has partnered with MIT to identify training opportunities within its existing workforce. In my industry, agile methodologies and buddy systems are often used to bake skills training into regular projects.

Clearly, there’s still a place for post-secondary training and advanced degrees. Many roles require a deep grounding that can only be achieved in a classroom context. The rub, however, is ensuring curricula evolve as fast as the changing job demands. E-commerce giant Shopify engineered a creative fix: designing its own, accredited four-year “dev degree” in partnership with area universities. Our own company engages in co-op programs that allow students to get real, paid work experience while they’re completing their studies. In the future, we may see more partnerships between post-secondary and industry to develop syllabi applicable to today’s realities and tomorrow’s demands. It’s estimated that in the near future, the continuing education “students” will outnumber first-time degree seekers.

The issue of educating our workforce is complicated. Even as we prepare for the impact of increased automation and technology-driven change, we can’t predict exactly how this will affect our careers. Also, it’s unclear whether our slow-moving, tenure-oriented educational institutions will be able to keep up with the academic requirements and changing business models.

I really don’t know what advice to give my grandchildren in terms of what to study in school to prepare them for career success, other than life-long curiosity, flexibility, and balance.

What’s abundantly clear, however, is that in the coming years, workers will need to upgrade their skills on a near-continuous basis in order to stay current and marketable—and employers may not be able to rely on our current education systems to fill that gap. Employers that don’t offer some form of training or education will almost certainly suffer from crippling talent shortages—if they’re still around at all.

John Schwarz is the founder and CEO of Visier, a cloud-based analytics platform, and served as president of Symantec.