17 Jan. 2017 | Comments (0)
Gap Inc. understands both hiring math and competitive strategy when it comes to filling entry-level jobs in its 3,000-plus Gap, Banana Republic, and Old Navy stores. Across the U.S., nearly 6 million entry-level jobs will be created from 2012 to 2022, according to the Bureau of Labor Statistics. With low unemployment, the competition for talent remains fierce. Gap is joining a growing corps of large companies that are turning to an overlooked pool of entry-level talent: the 5.5 million 16-to-24-year-olds, called “opportunity youth,” who are out of school and out of work. About half of these young people, once known as “at-risk youth” or “disconnected youth,” are black or Hispanic, and two-thirds face difficult life circumstances. Many come from families with incomes below the poverty line and suffer from lack of educational and career supports.
The trend sees big companies such as CVS Health, State Street, and American Express evolving small hiring programs for opportunity youth, driven by corporate social responsibility, into core business strategy (see our study “Hidden Talent: How Smart Companies Are Tapping into Unemployed Youth”). The strategy offers them a rare trifecta: It’s good for the company, youth, and society. Consider two men with the same education, place of residence, and family background. If one spends a year unemployed before the age of 23, 10 years later he can expect to earn 23% less than the other. For women, the spread 10 years out is 16%. Meanwhile, the alternative — housing subsidies, unemployment insurance, health care subsidies, even incarceration costs — generate huge social costs.
Tapping into this talent has implications for HR management, calling for new approaches to screening talent, including sourcing, selection, and role definition.
Sourcing for Commitment
Virtually every company we spoke to relied on nonprofit intermediaries to find candidates who had committed to training programs or apprenticeships in both hard and soft skills for the chance of stepping onto a career ladder.
Gap Inc., for example, announced it will hire 5% of all entry-level store employees from graduates of its This Way Ahead (TWA) paid store internship program by 2025. Gap Inc. relies on TWA to teach job readiness and life skills to teens and young adults from low-income communities while also generating proven talent pipeline and business benefits. By 2020 the company expects that 10,000 teens and young adults will have participated in TWA. About 75% will receive offers for permanent positions, and company data shows that employees brought in through TWA stay twice as long as their peers. That’s strategic because 51% of store managers started as entry-level associates.
Year Up, a large source of opportunity-youth trainees in the U.S., now has more than 13,000 alumni across 16 cities. It teaches young people the dress, demeanor, and collaboration skills expected in a professional setting as well as the technical skills for careers in IT, operations, finance, sales and marketing, or customer service. Similar intermediaries include BankWork$ for the banking sector, YouthBuild in construction, and iFoster in the grocery industry.
Meanwhile, Starbucks, CVS Health, Walmart, and JPMorgan Chase joined with more than a dozen other large U.S. companies last year to launch the 100,000 Opportunities Initiative, a bet to get a large number of low-income young people who wouldn’t typically have these opportunities into jobs in short order. Today nearly 40 employers partner with the initiative to offer internships, training programs, and jobs for opportunity youth who face systemic barriers to employment and education.
Screening In for Aptitude
Sourcing eager talent is just part of the new equation. HR managers who want to capitalize on such talent need to adjust their approach from screening out candidates for lack of credentials or specific experience to screening them in for aptitude and competencies. A study conducted by Innovate + Educate, which uses research-based strategies to address the U.S. national skills gap, found that while only 1% of unemployed New Mexico young adults met criteria for jobs that required a college degree, 33% cleared the hurdle when measured by skills and aptitude.
In a similar vein, hiring technology today uses key words to identify formal education or experience across thousands of résumés at a time. In their current form, these algorithms likely screen out capable youth. Analytics firm Knack, with the support of the Rockefeller Foundation, piloted game-based talent analytics to compare the aptitude of opportunity youth and current jobholders at four companies. Of the 600 young people who participated, 83% scored at or above the level of the company’s average performers on aptitudes required for succeeding at one or more roles. While still evolving, these solutions offer potential for screening in high potential hires.
Defining Strategic Roles
A 2015 study that we conducted with the U.S. Chamber of Commerce Foundation found that the companies with the most-successful opportunity youth HR programs had both a C-suite champion for the approach and a champion closer to the front line who could identify roles for these candidates that would provide clear value to the firm and the young people.
At American Express, which began hiring opportunity youth in small numbers in 2007 through Year Up, support came from the top: CEO Ken Chenault proclaimed on 60 Minutes that the Year Up relationship was a win-win for the company and the urban communities American Express served. But it was Destin Dexter, vice president of technology, who scaled the company’s efforts to meet business objectives related to hiring entry-level IT talent in a highly competitive market.
After a pilot at American Express’s Fort Lauderdale offices, she launched an eight-week software engineering boot camp with Year Up and Gateway Community College in Phoenix, a major technology hub for the company. They screened candidates for comfort with logic and numbers, and then brought them to class. “They brought aptitude, and they were ready to learn,” says Dexter.
Today Dexter brings on 80–100 Year Up interns annually for tech jobs ranging from software engineering to customer service. These interns have a 72% conversion rate to full-time, versus about 60% for traditional interns. Year Up candidates also stay an average of 44 months, versus 18 months for traditional hires.
“We initially approached the Year Up partnership as a great way to support the local communities where we live and work,” explains Dexter. “But over time it became clear that the program could be a breakthrough way to source entry-level talent.”
Or, as Brent Hyder, Gap’s chief operating officer (who once was an entry-level employee himself), told Forbes magazine after his firm’s announcement, “Youth employment is our lifeblood.”
This blog first appeared on Harvard Business Review on 11/03/2016.
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