Businesses Win That Develop Worker Skills
US competitiveness depends on doing a better job of developing the skills and knowledge of workers, economists say. Investment in technology alone can't solve slow productivity growth and restore a rising standard of living.
BOSTON — A YEAR and a half ago, Aetna Life & Casualty began "reengineering" its business - revamping operations to better serve customers.
The effort is still under way, but one result so far is that many clerical workers who process claims have new job assignments with more responsibility.
Aetna's moves are being mirrored at thousands of United States companies that are faced with tougher competition from across the street and around the world. The businesses that win, experts say, will be those that best develop workers' skills.
"Human-relations skills and teamwork and customer service" are increasingly important, says Bruce Katcher of the Wyatt Company, a human resources consulting firm in Wellesley, Mass.
"Ten years ago everybody thought we were having rapid de-skilling" of the work force, as automation made craftsmen obsolete, says Thomas Bailey of Columbia University's Teachers College. Instead, he says, jobs are becoming more demanding.
At Aetna, the workers filling the new slots as "claims service representatives" are now the customer's first contact with the company. Before it would have been unusual for them to talk with the customer at all. If a client's car was damaged, the insurance claim would have gone first to the independent agent that sold the policy, says Peter Elliott, a training specialist with the Hartford, Conn., company.
Aetna's workers have been trained to make an appointment to have damage appraised, to help customers get a rental car, and to give them the name of the employee who will handle the case thereafter. The result is faster service for customers, Mr. Elliott says.
For decades, companies organized work for mass production of standardized goods, from Model Ts to telephones. Managers viewed labor as a cost to be minimized. Today, consumers expect not just low-cost products, but also greater quality, convenience, and variety. Firms race to introduce new products. Labor is a resource that must be developed to meet these standards.
Whether the industry is banking or textile manufacturing, "a few basic goods have given way to dozens of items," Professor Bailey notes.
Some observers say the US faces a shortage of skilled workers for this more competitive economy. A survey by the National Association of Manufacturers last year found that skilled craft workers are in short supply across the US. Many companies said they cannot reorganize work activities because employees can't learn new jobs.
"Workforce 2000," a much-publicized 1987 study by the Hudson Institute, warned that the fastest-growing jobs are in high-skill fields, while demographic changes portend a smaller supply of trained workers. Educationally disadvantaged minority groups are becoming a larger share of the work force.
But another think tank takes issue with this "skills mismatch" view. The Economic Policy Institute (EPI) says "Workforce 2000" categorized women as "disadvantaged" workers, even though they attain higher education levels than men.
The real problem may be that US employers are not boosting the skill level of jobs fast enough to match international competition, say EPI researchers Lawrence Mishel and Ruy Teixiera.
Anthony Carnevale, economist with the American Society for Training and Development (ASTD), says both sides of the argument lead to the same conclusion: "The point is, we want the economy with the high skills and the high wages."
Income can rise only as Americans work smarter, producing a higher value of goods per hour at work. The slow growth of US productivity - about 1 percent a year in the 1980s - helps explain why average wages have not been rising.
So how can businesses make productivity rise again?
Technology and automation can help. But from 1929 to 1982, education and on-the-job learning brought at least twice the gains in productivity that new plant and equipment did, according to research by Edward Denison, a Brookings Institution scholar.
There are signs that training and development programs are becoming a higher priority for US businesses, according to the ASTD, which represents corporate training professionals.
In the recent recession, for example, only one-third of the nation's biggest companies cut their training budgets, even though more than half of these companies shed workers, according to a recent ASTD survey. Some companies increased training as they tried to do more with fewer workers.
The ASTD is midway through a three-year campaign called "Train America's Workforce." The goal is to close the "training gap" between the $30 billion a year companies spend on formal training and the $44 billion that the ASTD estimates is needed.
The ASTD estimates that US businesses spend another $180 billion on informal training each year - such as when a colleague helps a new worker learn a job.
Last year, the Wyatt Company asked a cross section of US workers if their employers had provided them with enough training to do their jobs. Only 47 percent said yes, 22 percent said no, and the rest were neutral. In companies with fewer than 500 employees, only 42 percent said they were getting enough training.
"Most companies don't have a good sense of how they allocate their training dollars," says Mr. Katcher. "They're just beginning to look more at that."