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Tech Giant Follows a Different Path to Filling Open Jobs

By Daniel B. Kline - Updated Aug 13, 2018 at 10:32AM

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There aren't enough workers that fit the traditional profile for many open positions, and hiring "New Collar" employees may be the answer.

For as long as anyone can remember, the hiring process has been fairly rigid -- especially at larger companies. Potential employees had to check off certain boxes. That could mean having the right degree or certification, or it could require licensing, a specific employment history, or other well-defined requirements.

The problem is that as fields like artificial intelligence and cloud computing grow, the United States does not have enough workers whose resumes check off those specific boxes. In fact, there are more than 500,000 open jobs in technology-related sectors according to the U.S. Department of Labor.

That has led some companies to consider hiring "new collar" workers, employees who have or can gain needed skills but who lack degrees or other traditional qualifications. IBM ( IBM 1.18% ) CEO Ginni Rometty has been one of the leading proponents of this concept; her company has committed "$1 billion in training and development programs for its U.S. workforce, with an approach to filling New Collar roles that prioritizes capabilities over credentials" according to an email interview with IBM's New Collar Initiatives Talent Leader Kelli Jordan.

Workers cluster around a computer.

New collar employees generally lack four-year degrees. Image source: Getty Images.

What is IBM doing?

New collar candidates who lack four-year degrees accounted for 15% of the company's U.S. hiring in 2017. That has allowed the company to pick from a diverse pool of candidates, many of whom would not be considered by other companies.

"IBM focuses on capabilities, not degrees," Jordan wrote. "If you've got the right skills, there's a career for you at today's IBM."

The goal, according to Jordan, is to "shift mindsets in our industry and make tech more diverse and inclusive." That includes identifying candidates with non-traditional backgrounds, including those who gained their skills through coding camps, community colleges, or IBM's own apprenticeship program.

"We want to attract people reentering the workforce or relaunching their career," she wrote. "We're also looking to create more jobs for people in parts of the country where tech jobs are scarce." IBM provided a number of examples of people hired through the "new collar" program.

  • Sarah Moellenhoff, a former teacher who is now helping IBM clients such as Mercedes-Benz on its new digital stadium.
  • Thomas Blanchard, a construction worker who now focuses on helping clients transition to the cloud
  • Brett Fairchild, a U.S. Marine leading agile workshops at IBM.

"The first things I look at are the skills and knowledge that a candidate has and how it will enable them to be successful at IBM," wrote IBM Talent Vice President Sam Ladah in an email.  "We value diversity in our candidates, so how the skills were attained is secondary to the fact that the skills are current and relevant in the marketplace."

A deep commitment

IBM Services, which Jordan noted "manages eight of the top 10 commercial banks and seven of top 10 financial services companies in the world," has adopted the "new collar" model. It has been hiring employees and then helping them gain the needed skills through training and mentorships. 

"These are not just standard internships, however, these are programs that have the candidates' long-term professional career in mind," she added.

IBM has pledged to hire 25,000 new U.S. employees by 2020, including 2,000 veterans and many "new collar" roles. The company also recently launched a program with the DOL "focused on building skills in software development, data analytics, and mainframe administration" that will grow to over 100 apprenticeships in 2018.

Solving a need

Hiring and developing "new collar" workers solves two problems. First, it addresses the current labor market's shortage of candidates for certain positions. Second, it acknowledges that technology is changing quickly and a rigid skill set may not be as important as the ability to adapt.

IBM is building a workforce that will be adaptable for its changing needs. That should serve the workforce and the company well. It's a model others should, and likely will, follow. "New collar" does not mean ignoring those who take a traditional path; instead, it's about being open-minded when it comes to finding the employees who can get the job done.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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