"As we know, there are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns, the ones we don't know we don't know.’
A much-maligned quote from an ex-US Secretary of Defense, may appear to be a strange source of inspiration for research into higher level skills. But in 2007, when CFE began their work in this area, it was clear that the demand for higher level skill from businesses was very much a ‘known unknown’. At that time, public policy was primarily focused on the need to reform the supply of higher level skills. It was our contention that these reforms should be informed by a more sophisticated understanding of employer demand.
Over the past two years, with support from the Higher Education Funding Council for England and regional university associations, CFE has consulted with over 1,400 employers to establish the extent and nature of demand for higher level skills. Our latest report ‘Using demand to shape supply’ brings together the results from three regional surveys, ten focus groups and the findings of similar studies such as the CBI’s ‘Stepping Higher’ report.
The research uncovered some interesting findings such as the low importance of financial cost as a barrier to investing in higher level skills training. There are messages here for public policy, as explained by James Kewin joint managing director of CFE: ‘Only 5 per cent of businesses that had not undertaken high-level skills training reported that reduced costs would make them more likely to train. Promoting the availability of public subsidy to businesses through co-funding is likely to have a limited impact.’
Our findings show that a third of employers are already investing in training at Level 4 - which defines higher level skills - or above. Of those that are not currently training at this level, over a quarter (29%) are seriously considering it in the future. These ‘soft nos’, as we refer to them, represent an as yet untapped market for providers seeking to grow their market share.
The higher education sector (universities in particular) dominates the market for academic qualifications. But the market for other higher level qualifications, such as professional or vocational, is much more open and competitive.
It is clear that there is potential for further market growth for many different types of provider. In particular, there is a great opportunity to attract firms that have not previously invested in training at a higher level and to gain a larger share of the market for non-academic qualifications.
A sophisticated understanding of both the existing and latent demand from employers for higher level skills is essential for those seeking to grow in their markets.
Our findings suggest that both employers currently training at a high level and those that do not share a common driver - their business strategy. Just over a quarter of businesses do not invest because they already have the skills they need and a further 14 percent recruit to plug skill gaps rather than up-skill their existing workforce.
For those businesses that do train at this higher level there is an underlying belief that it has a positive impact on their business. Productivity and profitability are often cited as reasons for training but in our research these do not appear to be significant drivers, being quoted by only 7percent of the employers surveyed. More significant factors cited by employers were the personal development of their employees (68%) and an increased skill level within the organisation (44%).
On the whole, employers do not view universities and private training providers as competitors in the same marketplace. Universities are perceived to offer academic qualifications delivered through traditional methods, whereas private training providers are perceived to be flexible, responsive and offer bespoke provision to address company specific requirements.
From their point of view, universities need to challenge these perceptions and raise awareness of the wide range of services they offer. Our research found low awareness of universities offering flexible, bite-sized modules, credit accumulation and transfer, and accreditation of prior experience and learning - all services highly relevant to employers.
Private training providers have set the bar high as to what service employers have come to expect from flexible, responsive and tailored provision. Several businesses involved in the research observed that a number of the ‘innovative’ delivery methods marketed by the higher education sector have been operating in the private sector for some time. In order to extend their reach into the vocational and professional market, universities need to recognise and exceed these market norms.
This will involve:
In conclusion, then, CFE believes that the demand for higher level skills is now more of a known, and less of an unknown, quantity. However, it remains true that an in-depth knowledge of the market demand for higher level skills is vital to both the development of effective employer engagement strategies and supply side reforms.
The current economic climate will undoubtedly impact on the attitudes and behaviours of some employers towards training, but our messages to providers remain the same. Those that know their market, play to their strengths, and successfully respond to the skills challenges businesses are facing, will be most likely to flourish.
Tristram Hughes is a Research Manager at CFE
The above article appeared in the July/August edition of T Mag.