Computing a return on investment (ROI) that industry make in apprenticeships is complex and is different for every business. Businesses invest heavily in the education and training of their apprenticeships. AACC, through the ECCA initiative, has found that the weight of evidence supports that the typical business soon begins to receive value in return. Usually this is true because the apprentice quickly is put into a position and produces for the company. There are other benefits that industry realize from their apprenticeship programs, which may include reduced recruiting costs, a more predictable and reliable supply of skilled labor, improved employee retention, and improved employee productivity.
Most related training instruction (RTI) for registered apprenticeship programs are taught by community colleges. Depending on the role the college plays related to apprenticeships, the partnership with industry offer different benefits to the business and the apprentice, which include:
- Providing apprentices an accelerated pathway.
- Creating a new pipeline of degree seekers such as adult learners and diverse populations.
- Enhancing the competitiveness of local businesses by enlarging the pool of highly trained workers.
- Strengthening relationships with local employers.
- Development of new cutting-edge postsecondary learning opportunities
- Ability to create and implement training to meet the skills gap in high-demand, high-skilled occupations.
Businesses that use registered apprenticeships to recruit and train employees in a cost-effective way are discovering a remarkable return on investment (ROI). When detailed data are collected and used to evaluate the apprenticeship program, the ROI can be even greater.
Executives should include these and other cost components when conducting an ROI calculation:
- Costs of designing and developing the program.
- Costs of all materials provided to each apprentice including personal protective equipment, if applicable.
- Costs of supervisors’ and mentors’ time.
- Costs of the facilities, tools, and equipment need for training.
- Wages and benefits.
- Administrative and overhead costs.
Additionally, ROI can be more than a mathematical calculation, and other qualitative factors may be used to continuously improve apprenticeship programs for future students. The ability of the executive to highlight these additional benefits for employers and their stakeholders will be important in building the relationship with employers which are vital to expand registered apprenticeship programs. Some questions that a college executive may want to consider addressing with employers:
- Are apprentices engaged in the program?
- What did they learn through their engagement?
- Can apprentices accurately apply the knowledge in the workplace?
- How does the application of knowledge benefit the employer?
ROI is most meaningful when program evaluations are calculated continuously so that program benefits are known and can be approved upon. This allows for quick intervention and the implementation of corrective measures to achieve the desired results. AACC has found that there are ways to calculate ROI that are easy, inexpensive, and effective. One of the benefits of tracking ROI is the opportunity to adjust the training program along the way. Many ROI calculators exist that help businesses predict the benefits of investing in an apprenticeship program. Employers may consider using one of the ROI calculators presented below in deciding to establish or continue an apprenticeship program.
There are many studies that have been done on the ROI for industry which AACC supports and are listed below.
ECCA Successful Stories and Promising Practices
- Edison State Community College (Ohio)
- Lee College (Texas)
- Mohawk Valley Community College (New York)
- El Camino College (California)
- Dabney S. Lancaster Community College (Virginia)
- Joliet Junior College (Illinois)
McCarthy, MA., Palmer, I., Prebil, M. (2017). Connecting apprenticeships and higher education. New American. Center of Education and Skills.
Reed, A., Yung-Hsu Liu, A., Kleinman, R., Mastri, A., Reed, D., Sattar, S., Ziegler, J. (2012). An effectiveness assessment and cost-benefit analysis of registered apprenticeships in 10 states. Mathematical Policy Research
Spiker, K. (2019). Partnering up how industry partnerships can bring work-based learning to scale. National Skills Coalition, 1-12.
The Next-Gen IMT Apprenticeship: A Return on Investment Study (Jobs for the Future)