This paper presents an initial study of the benefits and costs faced by firms with apprenticeship programs. Recent policy focus on skill development and worker training has not been matched by a detailed understanding of the business case for apprenticeship. Based on conversations, site visits, and data collection with 13 organizations, we created a detailed set of major decision points and a roadmap to help firms understand how to measure benefits, cost, and return on investment. In addition, we performed detailed analysis of data from two firms, finding internal rates of return of at least 40 percent for both firms.
Whether a firm is just beginning a program or is looking to re-evaluate their current program, firms should consider the following seven questions to determine how to align their apprenticeship program with their goals.
- Is apprenticeship integrated with your production and other strategic priorities?
- Where does apprenticeship fit in your overall talent development strategy?
- What value can partnerships provide?
- How should you develop and deliver the classroom curriculum?
- What are the best ways to implement on-the-job training and incorporate apprentices into the workplace?
- How do you decide between a competency-based and a time-based apprenticeship program?
- How many apprentices do you need?
As noted earlier, these questions are not one-time decisions. For one, firms we spoke with noted that they didn’t always make the right decision the first time around and that their current apprenticeship program was more successful because of corrected mistakes they made the first, or even second, time around.
These decisions ultimately impact the costs and benefits of an apprenticeship program. While it might seem attractive to a firm to provide classroom instruction on-site or to administer their program in-house, these decisions come with costs and for some firms, prohibitive costs. The roadmap to measurement helps firms identify the costs and benefits associated with apprenticeship so that they can structure an effective and cost- effective program.
Roadmap for Measurement
To best measure the ROI of an apprenticeship program, firms should collect data even before implementing their program. Evaluating success is much easier if firms collect data as early as possible. Regardless of when data collection begins, firms should keep in mind clear alternative scenarios, or “counterfactuals,” to evaluate how apprenticeship compares to other ways of building a skilled workforce (such as hiring off the street, using temporary or contract workers, or paying existing staff overtime, as well as various training models).
The following steps will help any firm measure the return to investing in apprenticeship and make use of what they learn along the way. Although they may seem obvious, few firms had actually thought about their apprenticeship programs in this way. The six steps towards better measurement are:
1. Identify and count all costs for apprenticeships—and all other hires.
2. Think broadly about the benefits of apprenticeships today and tomorrow— productivity, flexibility, quality, turnover, employee satisfaction, etc.
3. Look across the company for data to measure those benefits. Begin collecting data early and often.
4. Keep in mind organizational changes other than the introduction of an apprenticeship program, as well as external factors, that may affect performance.
5. Share the data analysis across the company.
6. Make changes based on the analysis.
Chosen excerpts by Job Market Monitor. Read the whole story at The benefits and costs of apprenticeship: a business perspective