Globally, there is a disconnect between students and jobs. According to McKinsey’s recent Education to Employment report, around the world ‘75 million young people are unemployed, but businesses can’t find enough skilled workers to fill job vacancies.’ Meanwhile, businesses frequently complain that they don’t get the calibre of graduates they need to fill the roles they have, particularly in STEM subjects.
Why has this situation come about – particularly considering that fees for universities have increased at eye-watering speeds over the past few years? And what can universities do about it, to better match their students with the jobs that businesses want to fill?
First, let’s consider some context. The McKinsey report reveals some fairly dramatic figures.
- Half of young people are not sure that their post-secondary education has improved their chances of finding a job.
- Almost 40% of employers say a lack of skills is the main reason for entry-level vacancies.
Against this figures, let’s look at some equally startling statistics about how much is invested in our young people’s education. At the Center on Education and the Workforce at Georgetown University, Anthony P. Carnevale and Nicole Smith reveal that in the US,
- Approximately $1.5 trillion or 11% of GDP is spent on human capital or skills development each year.
- Elementary and secondary education takes the largest share of this: $608 billion (41% of spending).
- Together, formal and informal training by employers represents $454 billion (30% of spending): $313 billion on informal training and $141 billion on formal training.
- $380 billion is spent on higher education, which primarily consists of formal education programs at colleges and universities.
Some $380 billion is spent on higher education – and yet employers can’t find the right graduates for their jobs? Something is amiss somewhere along the line.
The McKinsey work points to several fault lines that it believes are causing this problem. A broad summary of its view would be:
- Workplaces, educational institutions and students are operating in ‘parallel universes’. Fewer than 50% of young people and employers believe that new graduates are adequately prepared for entry-level positions. But 72% of education providers believe new graduates are ready to work. A similar disconnect appears when asked why students fail to finish courses – 39% of education providers state drop-out rates are because courses are too difficult, but only 9% of students agree, citing affordability as the main reason.
- Education-to-employment is an obstacle-strewn road. Getting the enrolment means overcoming issues of cost and ensuring you’ve chosen the right course. Once underway, there are issues with building skills – 60% say that on-the-job training and hands-on learning are the most effective instructional techniques, but fewer than 30% are enrolled in curricula that prioritise such techniques. Finally, there is finding the job at the end – a quarter do not make a smooth transition to work, as their first jobs are unrelated to their field of study and they want to change positions quickly. In emerging markets, this number rose to as much as 40%.
- The current education-to-employment system fails for ‘most’ employers and young people. The McKinsey research reveals that only 31% of employers get the talent they require.
How we reached this situation
Part of the problem has been the way the competencies that society needs has shifted so quickly from production-based to information-based skills. As Carnevale and Smith at Georgetown put it, ‘In the past, employers viewed workers with solid occupational-specific skills as sufficient for success on the job. But as workers are increasingly called upon to make decisions at the point of production or point of sale and display good interpersonal skills when working in teams or with customers, the confidence that engenders success in these areas springs from a positive sense of self-worth or self-esteem.’
In consequence, traditional universities are suffering an assault on several sides from MOOCs, vocational training and for tech educations, coding bootcamps. There is a risk that if traditional universities don’t adjust to today’s fast-changing circumstances, they may find themselves gradually but inexorably being squeezed out by providers that are more flexible about how students learn, tailor themselves to students’ needs, can offer more guarantees of jobs at the end of the process, and come out cheaper overall. When students are being increasingly under pressure from galloping tuition fees, price becomes much more of a stalling factor than it used to be – it can be the difference between committing to a course, and not going at all.
Whilst alternative approaches to education are not going to make the walls of our oldest universities tumble down just yet, there is a slight sense of inevitability about the way technology is making distance learning ever more enticing to cash-strapped students. If you get the job at the end of the day, who needs to spend three or four expensive years in a cloistered bubble? Ryan Craig, Managing Director at University Ventures, argues that this point is pertinent to the future of tertiary education. The question Craig poses is – ‘how to use technology to develop and deliver shorter, less expensive, 100% digital (and therefore accessible) postsecondary programs that lead to credentials that employers will recognize and value.’ The answer to the question, if there is one, ‘will be critical to the future of colleges and universities.’
Look at the gradual success of disruptive providers like Udacity, which offers ‘nanodegrees’. Starting out as a MOOC, Udacity has developed nanodegrees ‘in partnership with leading technology companies (“built by industry”),’ Craig explains. ‘The thinking [is] that Google’s involvement in the Android Developer Nanodegree improves the curriculum; the Google brand doesn’t hurt either. Udacity has done the same with iOS (Apple), Tech Entrepreneur (Google) and its other programs (by a committee of leading technology lights).’
Udacity is slowly but surely making progress. ‘A New York Times profile of Udacity on September 17  revealed that Udacity has 10,000 students enrolled in Nanodegrees – a number growing by 30% every month.’ If, as Craig points out, ‘10,000 students are paying $200 per month, that’s annual revenue of over $20M – perhaps enough for profitability.’
The aim of such courses is to be ‘shorter, cheaper and more accessible’ and create ‘credentials – badges – that employers will recognize and value as an alternative to the existing, expensive and constantly derided degree-industrial complex. To this end, both companies are trying hard to link their content to employers. Udacity’s Nanodegrees carry with them the names of the world’s most famous technology companies – where traditional universities rely on their long-established brands, Udacity piggybacks today’s tech giants to boost its brand for it.
Universities at least need to address these side-swipes from badge-based providers. Consider a few more damning figures from McKinsey:
- A third of employers say they never communicate with education providers.
- Of those that do, fewer than half say it proves effective.
- More than a third of education providers say they are unable to estimate the job-placement rates of their graduates.
- Fewer than 50% of graduates state they had a good understanding of what disciplines lead to professions with job openings and good wage levels when they chose their course.
A final criticism of traditional degrees comes from Google itself. Degree grades are, believe it or not, ‘worthless as a criteria for hiring,’ according to Google’s Senior VP of People Operations. If this is the view of our leading tech company, which is now busily partnering itself with badge-based providers like Udacity and Coursera, surely traditional education has to sit up and take notice.
Looking for the solutions
So, what’s to be done? If universities in the form we understand them are going to survive, then surely the key point is simple to say, but hard to do in practice. It’s essentially for learning organisations, businesses and students all to engage with each other more.
The McKinsey research suggests several desirable outcomes – all from the top-line points of universities, businesses and students needing to communicate with other more effectively, collaborate more and stop seeing university education as a linear process where the ‘job offer’ only comes at the very end.
In essence, the way forward can be described as follows:
- Have new incentives and structures. Stakeholders need better data to make informed choices and manage performance. Give data to students and parents about career and training options.
- Offer more workplace data. Information about what happens to students after they graduate is not routinely offered by learning organisations – it could and should be. What are the job placement rates? How long does it take students to get to an average salary role? What proportion of graduates reach high salary roles?
- Connect more effectively with business. Transformative solutions involve multiple providers and employers working within a particular in industry or function. These collaborations solve the skill gap at a sector level; by splitting costs among multiple stakeholders (educators, employers, and trainees), investment is reduced for all.
- Take a high-level view of education. In practice, this might mean creating the role of a ‘system integrator’, who works with education providers and employers to develop skill solutions, gather data and identify and disseminate positive examples. The integrator can be defined by sector, region, or target population.
To this we could add: encourage students and parents to self-inform more. The internet is full of information, but it can be hard to track down helpful information. Instead of allowing our students to go to learning organisations largely in ignorance of job expectations and in the dark about what their futures might be, help them to think more strategically about their careers from an early age. That will help them choose their course in an informed way, plan their student years more effectively and have an eye on what they want their key outcomes to be when they graduate.
The conclusion from the McKinsey work is that successful programmes do things differently. They ‘step into each other’s worlds’. Employers might help to design curricula. They might offer their employees and faculty, and they might let students spend as much as half their time on job sites. They might then get them hiring guarantees. The best programmes work with their students early and intensely. They avoid the linear obstacle-path of enrolment, skill-building and job offer by treating the education-to-employment journey as a ‘continuum’ in which some employers even commit to hire youth before they are enrolled in a programme to build their skills.
And finally, to adapt the structures of traditional business education to a more fully-aligned model. Get students to spend more time trailing employees in organisations. Integrate internships as part of the degree, not an add-on or something for graduates to organise for themselves once they leave university. Have more in-university training, as well as academic education. Have more lectures from organisation employees during the course of the degree – current doers, not people who used to be doers or who watch others doing.
In short, make education less passive. Make it the platform from which graduates can step seamlessly into their first role – not a launching pad that requires a leap of faith that can seem daunting and hard to attain for many of today’s students. It’s achievable, but not easy. But today’s students will, increasingly, demand and deserve it.