The Chief Diversity Officer Will Be a New Kind of Executive, If We Let Them

BY Emily McCrary-Ruiz-Esparza | October 18, 2022

Among all of corporate America’s problems with job retention, one of the most concerning is the turnover in a newly prominent role: chief diversity officer. CDOs tend to stay in their roles only two to three years, about half the tenure of other C-suite officers. For many CDOs, as well as their colleagues, this is the result of one thing: frustration.

How did a role that so many companies created with great fanfare in the racial-justice movement of 2020 become a dispiriting job for many–and what can be done to improve the situation? From Day One talked with people who’ve held the job, as well as experts in the field, to get to the sources of the problem and look toward solutions.

To start with, the scope of the job is unlike almost any other top-leadership role. “Leading our inclusive culture efforts is an honor that requires a diverse skillset and the ability to anticipate the needs of a vast array of audiences,” said Vanice Hayes, chief culture, diversity and inclusion officer for Dell Technologies. “As rewarding as the job is, it can also be taxing. At times, it can feel like you're trying to solve world peace, like you’re a teacher, a counselor, a politician, a lawyer, a historian–you name it.”

A New Kind of Career Path

As befits a job that’s freshly emerging, there’s no traditional career path that leads to the CDO position. Read the resumes of ten chief technology officers, and you will see very similar backgrounds: advanced degrees in computer science or engineering, a track record building products or designing systems, years of experience managing tech workers and operations. The resumes of chief marketing officers and chief financial officers are similarly consistent. Even new C-suite additions, like chief information security officers and chief human resources officers, have identifiable backgrounds. By contrast, leaders in diversity, equity, and inclusion (DEI) who have spoken at From Day One events have included executives who began their careers in law enforcement and the ministry.

Graduate-school programs on how-to-be-a-CDO are still relatively new, points out Rachel Marcuse, the chief operating officer at ReadySet, a DEI-focused consulting firm. “That being said, we see successful CDOs come from varied backgrounds and experiences, including finance, HR, culture, and products or services. Deep expertise in DEI is crucial and can come from a combination of professional background, education, and lived experience.”

There is little consensus on the ideal resume for a chief diversity officer, but we may not need one. Andrés Tapia, the global DEI strategist at the management-consulting firm Korn Ferry, who was himself a pioneering CDO in the early 2000s, said that when he coaches clients on what to look for in a CDO, background doesn’t matter. He looks for someone who can think strategically, integrate perspectives, communicate well, and influence powerful people in the company. “Notice how non-functionally-specific those are,” Tapia said.

Though a handful CDOs have been around for decades, the majority have been in the role only a few years. The field is developing, and the recent swell in CDO appointments is in part a reaction to the ineffectiveness of the corporate DEI programs of the last 20 years. The old way may have been wrong, but it’s not clear what the new, right way will be. Still, DEI practitioners are looking in earnest.

“Coming into the role, depending on your previous perspective, you may think ‘I got this,’ but then when you get there, you realize it is quite expansive,” said Hayes. “Your previous perspective may have been both accurate and potentially narrow or limited in scope. So the way I handle that is just through focus: How do I make sure every single person that comes to work feels like they're included? Everyone should have the right to enjoy an inclusive work culture. That’s my baseline.”

Vanice Hayes, chief of culture, diversity and inclusion officer for Dell, will be speaking at From Day One’s Austin conference on Oct. 26 (Photo courtesy of Dell)

The chief diversity officer at Indiana University Health, Lisa Gutierrez, believes that without self-awareness, CDOs will repeat the mistakes of their predecessors. One of the biggest “is to only use your lived experience. A lot of people say, ‘Well, I have a lived experience.’ And I go, ‘I do too, but in the D&I space, it’s not just my lived experience, but everybody’s.’ The practice has gone to short-handing diversity work into just a couple of things,” she said. “If I were a newer practitioner right now, I’d be looking at what didn’t work in the past, and get into the front of the line of not doing that.”

Why CDO Is a Different Kind of C-Suite Job

Newly minted CDOs, whether or not they have the right experience or expectations, are not to blame for turnover. The C-suite has yet to accept that the CDO is a different kind of executive. Unlike other executives who own a department and run a P&L, the work of a CDO doesn’t happen in a single department, and there’s seldom an elaborate financial statement.

“We don’t own much,” said Channing Martin, who is the CDO at the advertising company IPG. “You’re being held responsible for diverse talent coming in the organization, but you don’t own recruiting. You’re being held responsible for developing underrepresented talent or women being promoted, but you don’t own L&D, you don’t own talent management.”

The job, then, is influencing other executives to make DEI a long-term priority. “What works is when the leaders who run P&Ls start to own responsibility for DEI. That’s a game changer,” Martin said.

Tapia has found that in some cases, the C-suite appoints a CDO without much thought to qualifications or expectations because a figurehead, not an executive who influences global operations, is what the CEO wants. As a result, the key performance indicators for the role are simplistic: we want more people of color, we want more women leaders.

When this is the case, the CEO isn’t likely to value long-term strategy, and the work becomes programmatic. “If you’re not a strategic thinker, you’re going to become a tactical leader,” Tapia said. “The death knell of D&I is a tactical leader in charge because D&I lends itself to a lot of very fun programs, a lot of tactics,” Tapia said. “But they don’t bring about transformation.”

Executives like the sound of “unconscious bias training,” but “the nonsexy stuff is a structural and policy change that takes a long time,” said Martin. For example, designing a global system for employee self-identification. “That’s tedious and time-consuming and not fun. It requires legal insight, the risk team, the privacy team, the HR team, and the IT team to transform technology systems. Those are the things that really change an organization, but that could take a year and a half, two years.”

The programmatic CDO is also reduced to being reactionary. “You shouldn’t have to wait for somebody’s murder to be designing social-justice strategies,” Gutierrez said.

The Importance of Learning the Business

Many companies underestimate the amount of business acumen CDOs need. “Now you’ve got employment lawyers that are becoming HR leaders. You’ve got MBAs that are becoming HR leaders. As the HR function is being asked to be more of a business operation, you’ve got to have a skill set that can make that happen. And I think the same is going to be true for the diversity function,” said Janine Yancey, founder and CEO of Emtrain, a virtual HR training platform.

Chief diversity officers can be more effective by immersing themselves in their organization’s business, like those in the role of “HR business partner.” Said Gutierrez: “You have to understand the business of the business. The CDO has to fold themself into the natural rhythm of the business and find opportunities to change it.” For example, Gutierrez said that the “rhythm” of one of her previous employers was the Six Sigma framework for process improvement. “Six Sigma is about reducing variation. Diversity is about increasing variation, but in the methodology there are places to build variation in.”

When ReadySet advises on CDO appointments, Marcuse said, “we want CDOs to really understand the organizational mission or business and have substantial leadership or executive experience.”

Martin acknowledges how hard it is to set meaningful quantitative goals when there is no P&L. “There’s a standard of corporate governance, there’s standards around strong financial analysis. There’s no standard in DEI,” she said.

Measuring effects on employee behavior is a good place to start. For example, instead of counting the number of people who participate in unconscious-bias training, Martin says, look for the results, like when employees are celebrated on a peer-to-peer recognition platform, “how many people are responding when a woman is recognized, vs. a man?”

What are the stakes involved in CDO success? Aarti Shyamsunder, the global head of DEI at Accenture’s YSC Consulting, told Fortune recently that the cost of CDO turnover is significant, even if it may beunquantifiable. The loss is more than one of dollars and cents, “it’s about the message that it sends out, the loss of reputation, the suspicion or fear that it might cause, especially in minority group members’ minds. With all these sorts of intangible costs, it’s impossible to put an amount on it,” she said.

Tapia believes a good CDO sets the tone. “A smart, strategic, influential CDO will say to the leaders, ‘I’m happy to take the role. I am your right person, but I’m not the one that’s going to change it. You are. I’m going to work with your CEO and the C-suite because the only ones that can change anything in this organization in terms of culture and processes and priorities are the C-suite.’”

Emily McCrary-Ruiz-Esparza is a freelance writer based in Richmond, Va. She writes about the workplace, DEI, hiring, and issues faced by women. Her work has appeared in the Washington Post, Fast Company, and Food Technology, among others.


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Workers Want Weight-Loss Drugs, But How Can Employers Pay the Bills?

When consumers see splashy TV commercials for weight-loss drugs, they often find the the pitch irresistible. But for HR and benefits executives, they may trigger an uneasy feeling. That's because the revolutionary weight-loss drugs like Wegovy bring with them both magic and mystery–the magic is how well they can work; the mystery is how to pay for them.GLP-1, or glucagon-like peptide-1, drugs have historically been used to treat diabetes. But the development of stronger drugs like Novo Nordisk’s Ozempic in recent years, and now the approval of Wegovy and Eli Lilly’s Zepbound specifically for weight management, has led to a sharp increase in demand. That’s particularly true as more research emerges showing the drugs may also reduce the risk of cardiovascular disease, stroke, and potentially bring other long-term health benefits. Yet the medications can cost as much as $1,000 to $1,500 per month–a price that few Americans can afford unless they have generous health-insurance coverage.And unlike expensive drugs for rare conditions, the potential number of patients for GLP-1s is vast. More than 40% of Americans have obesity, according to the Centers for Disease Control and Prevention, and that is expected to reach 50% by 2030.Many doctors are thrilled about the potential for GLP-1s to change how obesity is treated, but that puts employers–where nearly half of Americans get their health insurance–in a tricky position. Here’s what employers need to know as they consider coverage for these drugs in the quickly changing landscape:High Costs, Low CoverageWhile employer health plans widely cover GLP-1s for the purpose of treating diabetes, coverage for weight-loss purposes is much more spotty right now. A survey last fall by the International Foundation of Employee Benefit Plans found that 27% of 205 employers covered GLP-1s for weight loss and another 13% did not yet cover them but were considering adding coverage. Meanwhile, Willis Towers Watson (WTW), a global insurance benefits-consulting company that serves many large employers, found about 38% of employers it surveyed cover the weight-loss drugs. Those that do cover them are seeing significant cost increases. The retail price for Wegovy comes out to $15,000 to $16,000 per year, and after rebates and discounts from manufacturers, health plans still pay about $9,000 per year, says Cody Midlam, a director at WTW’s pharmacy practice. The cost per member per month for GLP-1s has doubled each of the last three years, according to WTW’s analysis, amounting to an extra $11 per member per month last year, or about 9% of all pharmacy costs.Companies are aware of the research showing the drugs’ effectiveness at tackling obesity. Yet while doctors say that helping people lose weight could lead to less cardiovascular disease, fewer mental health issues, and savings from avoiding knee replacements or other surgeries related to obesity, long-term data on clinical outcomes remains limited. With high employee turnover in many industries, it’s tough for these employers to factor in potential future savings in healthcare costs over the life of the employee.“Those outcomes take a very long time to manifest,” says Midlam. “It’s not something that’s easily measurable on a short timescale when plan decisions are being made.” Andrew Witty, CEO of UnitedHealth Group, the largest U.S. insurer, said his corporate clients see the benefits, but first have to deal with the short-term costs. “We’re very positive about the potential for another tool in the toolbox to help folks manage their weight. We recognize that has potential benefits,” Witty said in the third-quarter earnings call last year. “But we’re struggling.”Employers Meet the DemandDespite the high costs and headlines about some insurance plans scrapping GLP-1 coverage, plenty of employers see the upside to covering the new obesity medications. Ninety-nine percent of companies already covering GLP-1s said they planned to continue doing so next year, according to a fall survey from Accolade, a healthcare navigation and advocacy company. Employers reported that after they added GLP-1 coverage, they saw higher employee satisfaction, increased engagement in other well-being programs, and improvements in other or comorbid health conditions. Midlam of WTW says his firm’s corporate clients want to “avoid member disruption” wherever possible.Doctors agree that should be a priority. Dan Azagury, M.D., medical director for the Stanford Lifestyle and Weight Management Center, says GLP-1s have been a “game changer” for many of his patients. “If you stop it overnight, whether it’s insurance, or financial, or shortages, the rebound is ferocious,” he said. “So it’s really very frustrating that they encounter that situation.” Some companies have expressed concerns about the idea of paying for a drug that employees essentially have to take forever to maintain its benefits. But while side effects, including vomiting and gastrointestinal issues, can be unpleasant for some people, doctors like Azagury say they know how to help patients manage them, and that they are seeing more patients have a positive response to GLP-1s than to previous generations of weight loss medications. Holistic Care, Not Just PrescriptionsEven when employers decide they want to help their employees lose weight, there are still lots of details to consider. As companies approach designing their insurance plans for 2025 and beyond, they are trying to figure out how many employees are likely to use GLP-1 drugs if coverage is offered, whether there should be limits on who can get the drugs, and what kind of requirements they should use to prove the drugs are medically necessary. Most companies that cover GLP-1s use some cost-control strategies, according to the International Foundation of Employee Benefit Plans survey. Many use prior authorization, step therapy during which patients must try lower-cost drugs first, or specific eligibility requirements.Typically, eligibility requirements have been tied to the standards on the FDA labels for these medications. But some employers are considering restrictions such as only covering the drugs for people with obesity but not those who are overweight, says Tracy Spencer, a pharmacy practice leader for benefits consultant Aon. If they add those limits, she warns that employers should be aware that could change or jeopardize the rebates they get from the drug manufacturers, so they need to predict whether the savings they get from limiting the drugs’ use will offset the loss of the rebates.Benefits consultants like Aon and WTW are also seeing employers shift the way they look at GLP-1 drugs to view them as one piece in a broader strategy to address cardio-metabolic issues.That might mean employers choose to cover the drugs for targeted indications, such as covering Wegovy not for weight loss on its own, but for people with increased risk of cardiovascular disease, which Medicare recently announced it would do. It can also mean pairing GLP-1 coverage with required lifestyle modifications or participation in a virtual weight-loss or coaching program. Employers often have access to virtual health programs through their pharmacy benefit managers, and many have tried these to target diabetes in recent years. The biopharmaceutical company Moderna, which offers coverage of GLP-1s for diabetes and weight management, is one company that has tried this strategy. “In 2023 we saw a spike related to weight-loss management: We looked at claims data, and after mental health, obesity and weight management were the second drivers,” Jeffrey Stohlberg, Moderna’s director of corporate benefits, said at a From Day One conference earlier this year. So the company started using the virtual weight-loss management program Wondr Health, where an employee can work with a physician specializing in weight loss. “It’s not a path to GLP-1s, but [the physicians] can provide medication for that person,” Stohlberg said. Labcorp also announced in February that it would provide U.S. employees on GLP-1s with virtual care and medication management through WeightWatchers for Business. Other companies such as Omada Health and telehealth providers like Teladoc and Ro have launched similar offerings over the last year. Medical providers agree that a holistic approach is needed, but Angela Fitch, M.D., president of the Obesity Medicine Association and co-founder and chief medical officer of the obesity-focused primary care startup knownwell, worries that requiring a standard weight-management program for every person is another barrier and potentially a waste of money if the program doesn’t have solid evidence behind it.“You can offer lifestyle [strategies] in addition to medication,” she said, “but it should be driven by that shared decision making discussion with the clinician.” If insurers want to make sure patients are getting holistic care, she would rather have them require patients to get their prescriptions from a qualified physician who does a true evaluation so that solutions can be personalized. In her role with the Obesity Medicine Association, Fitch often advises employers on their health plan designs, so she understands that costs are a major concern for companies. But in her primary-care practice and others like it, she says her staff are “burning out” as they spend hours each day trying to navigate all the new and often strict and confusing insurance requirements for these medications. “We have got to deal with costs,” Fitch said. “But it should be transparent and flexible.” She worries that overly rigid restrictions are “adding to the bias and stigma of obesity” by signaling to patients that their weight is their responsibility to treat on their own. Her major advice is to view obesity with the nuance that people view other chronic conditions. “You do not need a GLP-1 management solution. You need a comprehensive obesity-care solution.”Abigail Abrams is a health writer and editor. Currently she is the senior manager of content operations for Atria. Previously, she was a staff writer on health and politics for TIME magazine. Her freelance work has appeared in the Washington Post, the Guardian, and other publications.

Abigail Abrams | April 15, 2024

What Transparency Can Expose: an Obvious Need for Organizational Change

In the realm of corporate values, few terms have been more universally embraced in recent years than the notion of transparency. Among its many applications, organizations have deployed it to contend with sticky social matters and public scrutiny of corporate ethics.  At the World Economic Forum’s annual conference in Davos this year, speakers repeated the term like a mantra, reflecting a movement that has been building for a while. Fast Company reported that at the summit in 2021, more than 60 businesses announced a “commitment to transparency” about their effects on society and the environment. In response to pressure from stakeholders on all sides, executives from TikTok, Glassdoor, Google, YouTube, Zoom, Boeing, Twitter, and the White House have all made public commitments to transparency in recent years.Yet lately it has been dawning on leaders that this magic, window-cleaning solution can make things worse, especially if what has been exposed seems to be hypocritical, poorly thought-out, or further obfuscation rather than moral clarity. The most notorious recent example came last December, when the presidents of Harvard, MIT, and the University of Pennsylvania gave hedged, lawyerly responses when asked in a congressional hearing whether calls for the genocide of Jewish people would violate their school’s conduct rules. Their answers frustrated stakeholders on many sides of the issue.Seeing the havoc that failed transparency can wreak, Harvard is second-guessing the value of transparency, and is considering keeping mum on divisive matters altogether. The Harvard Crimson reported in February that the school’s interim president is expected to announce that the school is considering a policy of “institutional neutrality,” in which it will make no statements on politicized matters. Leaders at other universities are in favor, it appears. During a recent panel discussion on the matter, Yale Law School professor Robert C. Post remarked that “when we speak outside of our lane, we invite reprisals, we invite regulations, which we cannot defend in terms of our mission,” he said. “There may be reasons to do it. But they have to be pretty good reasons because we’re vulnerable, we're especially vulnerable right now.” The public is not ready to retire the notion of transparency, however, so organizations need to take a more considered approach to it and the policies that it exposes. “Corporate values aren’t optional, and they’re more controversial and contested than ever,” writes Alison Taylor in her new book Higher Ground: How Business Can Do the Right Thing in a Turbulent World. “[Yet] aiming to base your values on commitments on the full range of stakeholder pressures and demands is a recipe for incoherence and fragmentation.”This has become the principal dilemma for leaders who want to run an ethical business, argues Taylor, a clinical associate professor at the NYU Stern School of Business. “It shows up in HR teams doing employee engagement surveys and trying to make themselves look good. It shows up in these glossy sustainability reports about all the wonderful things [the company] is doing,” Taylor told From Day One. “The thing that has changed is that those defenses don’t work anymore.”The Age of Clarity and CandorThe theory is that if you bare it all, the company will be rewarded for its candor. “If a single concept drives today’s businesses, regulators, journalists, and NGO activists, it’s that transparency is the route to accountability,” Taylor writes in her book. Yet all this new data-dumping, press-releasing, and report-publishing hasn’t necessarily reconciled what companies say vs. what they do, though trust in business has generally grown over the years, especially when compared with trust in government. Yet company after company, ranging from Boeing to Wells Fargo, have taken a shellacking for saying that they’ve fixed problems when they haven’t actually changed the culture or system that caused harm in the first place.In fact, disclosure is easily weaponized, Taylor argues. The companies that release details of their ethical transgressions or corporate misconduct can put the target on their own backs. In her book, Taylor tells of the story of a clothing company, operating in an industry known for its negative environmental effects and human-rights violations, that published a list of its suppliers in the spirit of transparency. They were among the first picked off as the target of a class-action lawsuit alleging forced labor. “The retailer making a good faith effort to be responsible and accountable was first in line for denunciation and punishment,” Taylor writes.Contending with a Public Wary of Good IntentionsAs companies see that their attempt at transparency can get them in trouble, many flatten their reporting into glossy packets and palatable stories. Some disclosures are required by law, yet by and large, these reports are voluntary. To steel themselves against criticism, especially involved tricky issues, many organizations appoint leaders charged with improving company culture and creating a more equitable workplace: chief culture officers, heads of compliance and integrity, and leaders of diversity, equity, and inclusion (DEI). To be sure, many who sit in these offices are formidable forces. Figures like Yelp’s chief diversity officer, Miriam Warren, and Bumble’s founder Whitney Wolfe Herd set high bars for the influence executives can have on equity and integrity inside and outside an organization.But some of the leaders installed in these roles are faced with the uncomfortable truth that their position is corporate PR. Taylor sees this often: People take jobs and think of themselves as organizational change agents, only to find that senior leaders think of them as defense mechanisms to protect corporate reputation and, in the case of compliance teams, to deflect regulators.For instance, the chief diversity officer is typically charged with making the business more demographically diverse and equitable for people across every department at every level of the business, yet many of them work with very limited resources. It's no wonder that turnover for the job is high.From Token Hire to Meaningful InfluenceOnce a company decides that it won’t favor transparency more than change, good things start to happen. This is when those leaders originally appointed as tokens can use their positions. If Taylor were to find herself in a role and learn that her presence was manipulative PR, she said, “I would make an argument about transparency needing to adapt the organization to a new generation. You can’t control the narrative, so hiring a load of people to do window dressing has become a waste of money. We can’t rely on confidentiality agreements, and we can’t rely on telling a good story.”Companies have to assume that young workers in particular are ready to undercut nice, neat stories and pounce on corporate misdirection, she says. Where a glossy report no longer suffices, those once-impotent appointees can play a valuable role, holding the company accountable from the inside before an angry public holds them accountable in the open air.Now that the public is suspicious of public declarations of corporate goodness, “no one believes it. There’s a total ‘gotcha’ mindset. Everyone rolls their eyes, and now there’s all this greenwashing and woke-washing litigation,” Taylor said. “It’s a pointless investment. You need to stop treating these as messaging challenges and treat them as organizational strategy challenges.”‘A Less Varnished Assessment of Activities’Taylor’s Higher Ground is loaded with case studies, action outlines, and advice. Not only for avoiding corporate blunders, but also correcting the bad habits and outright crookedness that cause them. Be a “first mover,” setting the example for peers, she writes. Companies often wait until a public scandal to start talking, but this tends to create chaos. She cites the example of Google releasing its transparency report on how it works with law enforcement in 2010. “This was not the result of a specific scandal but an effort to correct widespread misunderstanding.” Its success was due in part to the company being clear about what it can and cannot influence.Sure, there will be companies that invite scrutiny with their reporting, but that’s why Taylor warns against bending too deeply to public opinion and impatience that lures firms into dangerous waters. Don’t succumb to the pressures of social media, which turn companies into reaction engines, she advises. Wait long enough, and sensationalized social-media storms pass. Similarly, transparency often generates “impatient calls for an issue to be addressed instantly,” when real change takes time.Finally, forget about having 100% control over the stories told about your company and control over the behavior of your employees, which some companies increasingly see as liabilities, as evidenced by the new popularity of surveillance tools.Taylor believes that many corporate leaders sincerely want to avoid superficial reporting and put-on commitments to transparency. In five years of speaking to investors about sustainability reports, Taylor writes, “they told me again and again how much they–and their companies–would benefit from a less-varnished assessment of activities.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, the Washington Post, Quartz, and Fast Company.(Featured illustration by Fermate/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | March 24, 2024

Apprenticeships: a Classic Solution to the Modern Problem of Worker Shortages

The U.S. labor market has become like a crazy quilt: mass layoffs in certain industries, along with dire shortages of workers in businesses ranging from accounting to trucking. To close the critical gaps, industries are turning to modern versions of an age-old institution: the apprenticeship. “Apprenticeships are the most promising solution to addressing the current labor shortage. Why? Because apprenticeships are jobs first and foremost–jobs that pay a living wage–not just training programs,” Ryan Craig, author of Apprentice Nation: How the Earn and Learn Alternative to Higher Education Will Create a Stronger and Fairer America, told From Day One. “They’re accessible to anyone with the potential and willingness to work hard–and much more accessible than tuition-based, debt-based college, or other training programs.”Causes of the labor shortage are many: A workforce quickly aging into retirement, the slowing of population growth, the burdensome cost of post-secondary education, lack of access to affordable childcare, and an increase in entrepreneurship. All of these have contributed to a shrinking workforce. As of January, the U.S. labor force participation rate is 62.5%. A couple decades ago, at the beginning of 2001, it was 67.2%.Employers are attacking the problem on many fronts. Some are pulling out the stops to retain older workers who might otherwise retire, and some are coaxing the semi-retired back to the office with flexible new arrangements. Others are dropping four-year degree requirements to broaden their talent pools, or bulking up benefits packages to include childcare, paid leave, and fertility benefits to attract and retain workers. Apprenticeships have joined that medley of solutions, with employers, advocacy organizations, and policymakers exploring and investing in the “earn-and-learn” model to fill talent pipelines from hospitality to healthcare to finance. Apprenticeships Beyond Blue CollarsApprenticeships represent a mutually beneficial way of hiring and training workers. Apprentices get on-the-job training, related instruction (often in a classroom or virtual classroom), and a paycheck all at the same time. Employers get the workers they need, trained to their specifications. In the U.S., apprenticeships are most often associated with skilled trades–it’s normal for plumbers, electricians, construction workers to complete apprenticeships–yet white-collar professions are only beginning to forge a connection with earn-and-learn programs. In 2020, professional services firm Aon announced that it would invest $30 million in its apprenticeship program over the next five years, with a goal of creating 10,000 apprenticeships in the U.S. within Aon and its partner organizations by 2030. In 2022, IBM committed to putting $250 million toward apprenticeships and other “new collar” programs by 2025.Aon’s program includes three tracks: insurance, HR, and IT. Apprentices take courses in insurance and business administration at partner colleges. Francheska Feliciano, the director of Aon’s apprenticeship program, told From Day One that career changers have found a home there. “We have found that those that thrive in our program tend to be career changers, but our program has a wide range of candidates with varied backgrounds, customer service, hospitality, or other service type roles.”Last year, the Biden Administration announced that it will invest $330 million to expand federally registered apprenticeships programs. In July, the Department of Labor awarded $17 million to expand existing apprenticeships and promote the model in new industries. In November, Maryland Governor Wes Moore committed $3 million to developing apprenticeships for public-sector jobs and $1.6 million toward the development of hospitality industry apprenticeships. “Maryland has set ambitious goals for expanding apprenticeship and we mean to meet them,” said Portia Wu, Maryland's Department of Labor secretary, in a press release. “Registered apprenticeship is key to our state’s economic success. We’ve already hit historic highs in apprenticeship adoption and today’s investments will accelerate our progress.”Alleviating the Local Labor ShortageApprenticeships could help solve local labor shortages for companies whose workers must be on-site–crucial for skilled trades like manufacturing or nursing–which are experiencing a pipeline problem of their own. Rather than recruiting the skilled talent from elsewhere, employers can use apprenticeships to develop the talent in their community. As housing inventory trails demand, employers who can tap their local talent markets will have the advantage, said Renee Haltom, the VP of research communications at the Federal Reserve Bank of Richmond, during a panel discussion last month at the Richmond Economic Forecast  “The regions that figure out housing are going to be ahead of the curve in terms of dealing with the coming demographic shifts,” Haltom said, referring to the aging U.S. workforce. Annelies Goger, who studies how to scale earn-and-learn models at the Brookings Institution, sees the advantages for local employers. Apprenticeships are a way to draw on local talent, and employers are more likely to retain locals than workers who have relocated, she told From Day One. “Rising rents have made it hard for employers to find and retain people only with the normal ways they’ve recruited people, so they’re looking into a lot of other ways and channels for finding talent,” Goger said. Apprentices Enter Finance and AccountingIn accounting and finance, more workers are retiring than are entering the field. According to a 2024 analysis by the U.S. Chamber of Commerce, “even if every unemployed person with experience in the financial activities or professional and business service sectors were employed,” the report reads, “only 42% and 44% of the existing job vacancies in these industries would be filled, respectively.”In 2022, the Association of International Certified Professional Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA) launched the first federally registered apprenticeship for finance and accounting professionals, and in its first year signed up 17 employers from 15 industries, including healthcare, industrial gas, banking, and manufacturing. One hundred apprentices have registered with the program in its first year.When AICPA and CIMA set out to create apprenticeships, the aim was to address the worker shortage in the accounting and finance field with early career talent. “When we started talking to employers who would want to hire people from these programs, we found that they were more interested in reskilling workers,” said Joanne Fiore, AICPA’s VP of pipeline and apprenticeships. Rather than recruit new talent, employers wanted to use apprenticeships  to retain their current workforce and train them as strategically minded contributors. The purpose of the Registered Apprenticeship for Finance Business Partners is to develop management accountants for the finance function of the future–not just number-crunchers, but “key players in strategic decision-making and broader business transformation,” said Fiore.Even if this program is able to shrink the skills gap, the labor shortage is likely to persist. There just aren’t enough young people entering the field to balance out their retiring elders. One problem: the profession has a reputation for being, well, dull.To fill the talent pipeline, and help rebrand the profession, AICPA and CIMA have piloted a youth apprenticeship program in Maryland high schools, aiming to drum up excitement and interest in the field among young people.Customizing the Programs Organizations, employers, and educators have found ways to tailor apprenticeship programs to their needs. They’re not just for recruiting, they can be deployed for talent development as well. “With the digital transformation of our economy, tens of millions of jobs now require workers to use tools to build things–only the tools are digital and workers no longer need to wear hardhats,” said Craig, author of Apprentice Nation.Often, those skills are software related. Where hospitals and healthcare providers use Epic, marketers use HubSpot, and HR uses Workday. “Companies are increasingly demanding that applicants for these jobs already have these platform skills–skills which are much harder to learn in a classroom than on-the-job via an apprenticeship,” Craig said.“Apprenticeship brings an organic culture of learning into any workplace and helps business perform better,” writes Jean Eddy in Crisis-Proofing Today’s Learners: Reimagining Career Education to Prepare Kids for Tomorrow’s World. “An apprenticeship program breathes new life into workplaces and lets employers quickly tap into a culture of learning that so many now are desperate to build.”Scaling Earn-and-Learn to Quell the Labor ShortageApprenticeships are difficult to start, and they’re difficult to scale. Few employers have the infrastructure to both employ and train unskilled workers at the same time, and most require the help of intermediaries like the AICPA and CIMA, which provide the instruction and the infrastructure.While it may be a while before apprenticeships alone make a dent in the labor shortage, analysis of the success of existing programs is promising. Not only are retention rates high–Aon, for instance, retains 80% of its apprentices–the Department of Labor estimates that employers get a 44.3% return on investment for apprenticeship programs.“While traditional apprenticeships emphasized hands-on skill acquisition under a mentor, modern apprenticeships often integrate technology-based learning, including virtual simulations and online coursework, to complement on-site training,” said Katie Breault, SVP of growth and impact at YUPRO Placement, a recruiting firm focused on skills-based hiring. Finance and tech roles are particularly suited to apprenticeships, she told From Day One. “Industries undergoing digital transformation, for example, greatly benefit from such programs. They offer real-time learning opportunities, crucial for staying relevant in dynamic fields.”The problem with apprenticeships as a solution to the labor shortage is that we just don’t have enough of them yet, said Craig. Plus, in his estimation, they’re under-funded and under-marketed on both the demand and supply side. “Many young people and their parents think of apprenticeships as a ‘second tier’ option–if they think of them at all,” he laments in Apprentice Nation. White collar employers may be thinking much the same. Yet as investment continues and apprentices pop up in surprising places, like the finance department, enthusiasm may spread. “It certainly fits the accounting profession,” Fiore said. “And if it fits the accounting profession, my sense is that it will fit many professions.”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the BBC, The Washington Post, Quartz, Fast Company, and Digiday’s Worklife.(Featured photo by Amorn Suriyan/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | February 14, 2024