Study shows how business apprenticeship programs can benefit companies and increase job opportunities

Business apprenticeshipsWhile the benefits of apprenticeships to those who participate in them are well known, there is little information on how these programs can improve the way businesses operate.

A recently released study, The Benefits and Costs of Apprenticeships: A Business Perspective, conducted by Case Western Reserve University and the U.S. Department of Commerce, however, highlights the benefits and analyzes the costs of business apprenticeship programs. And the case studies provided might inspire other companies to start their own programs. More apprenticeship programs will benefit those in reentry, who often have the ability but lack the training and skills to find well-paying employment.

Apprenticeships are no longer just about skilled trades and the construction industry. Health care, information technology, banking and other fields are successfully creating apprenticeship training programs to fill the rapidly growing need for skilled workers in those fields. The lack of skilled employees and its effect upon the economy is one of the reasons the Department of Commerce decided to do this study – and that companies are creating apprenticeship programs.

Study covered 13 companies

The study examined 13 businesses from a variety of occupations, industries and areas of the country that had ongoing apprenticeship programs. The shortest one studied lasted just one year, the longest more than four years.

In general, an apprenticeship involves paid on-the-job training, often with classroom instruction; and a mentor for each participant. It also offers certification to those who complete the program, indicating that they have the knowledge and training to do the job.

Reasons to create an apprenticeship program

There are several reasons why companies may want to create an apprenticeship program. These include to:

  • create a pipeline of skilled employees, who may be more loyal because of the training and opportunity they received.
  • be able to recruit better, more motivated employees.
  • train workers to the company’s specifications and develop future leaders.
  • improve worker productivity and the bottom line.
  • receive tax credits (in some states).

The cost to companies for administering the programs studied ranged from less than $25,000 to more than $250,000 per apprentice. But the economic return made it worth it, as indicated by two of the companies studied in depth.

The Dartmouth-Hitchcock Medical Center in Lebanon, NH, used apprenticeships to help expand and reorganize its services. The program trained medical assistants, the addition of whom helped reduce overtime and increase revenue from appointment bookings. The internal rate of return was at least 40 percent.

Siemens USA saw a 50 percent rate of return for its machinist apprenticeship program, which was created to fill the manufacturing capacity at its Charlotte, NC, plant. The plant makes and repairs generators for electric utilities.

How business apprenticeship program benefits are measured

According to the report, apprenticeship model benefits can be measured in three areas:

  • Production: They lead to increase in output and decrease in errors.
  • Workforce: They promote reduction in turnover and improvement in recruitment.
  • Soft skills: They help develop improved employee engagement, and a better ability by participants to solve problems, perform a variety of tasks and work independently.

Companies may use a variety of models, and which one they choose can drastically affect the cost of setting up a program. Among the possibilities are to work together with other companies, with community colleges and other educational institutions, with unions or with nonprofit organizations.

In order to be successful, companies must balance their own needs with the needs and aspirations of their potential apprentices. They need to also be aware of current employees, who must see the apprentices as team members who can help the company grow and prosper, rather than threatening competition.

Through apprenticeship program examples cited in the study, readers can get an idea of

  • the benefits of partnerships.
  • the strategy behind developing classroom training.
  • the best way to carry out on-the-job training, and
  • how to estimate the number of apprentices to hire.

One section of the study helps companies determine the costs and measurable benefits of an apprenticeship program. It also elaborates on improvements that have been made as a result.

A series of case studies give readers in-depth knowledge of how several companies carried out their apprenticeship programs. They include programs for training everyone from medical assistants, drug store managers, computer programmers and IT interface analysts to injection mold setters, tool and die makers, parts assemblers and quality technicians.

New ROI tool measures the benefits of apprenticeships

For those seriously interested in starting an apprenticeship program, the Economics and Statistics Division of the U. S. Department of Commerce has released the beta version of its new return-on-investment calculator to help business executives understand how a program could benefit their company. The calculator can help translate ideas into dollars and cents.

And as an initial step in the process of exploring the option of creating an apprenticeship program, using the calculator will help companies decide whether it makes sense to pursue the idea further.

Employers who are thinking about launching an apprenticeship program may also want to check out the Employer’s Playbook for Creating an Apprenticeship Program published by Dow, Alcoa and Siemens with support from the Manufacturing Institute.


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