As the pandemic wears on, we still have more than 6 million people unemployed—but also more than 11 million open jobs. Many factors are at play, but there’s one overwhelming one: Millions of people don’t want to go back to their old jobs, and they aren’t qualified for the jobs they want.
It’s become a regular occurrence to meet with CEOs of technology companies who tell me they cannot find the talent they need to fill well-paying positions. For three decades, I participated in those talent conversations as a leader at data, technology, and consulting companies, and it’s been eye-opening to be on the other side as a university president for the past year and a half.
I’m heartened by the fact that higher education is finally coming around to the idea that it’s a marketplace that serves students. Although the broader benefits of higher education to learners and society are important, the idea that colleges have consumers whom they must serve is fundamental to the higher education sector.
Initiatives that rely on this idea, such as the Presidents Forum’s Learners First framework and the book Students First, are vital for improving learner outcomes. They have also unearthed a surprising insight: We can’t meet learners’ needs by focusing solely on their educational journeys. An increasing share of learners are working adults, career changers, and others who are turning to higher education in search of concrete career outcomes—and meeting their needs depends on ensuring they are successful in their careers.
To do that, higher education must pay much more attention to the needs of employers. Acknowledging that higher education is a market that serves learners is an important start, but in reality it is a two-sided marketplace serving both learners and companies and other organizations in need of talent. Many notable innovations in the past two decades are two-sided marketplaces, including Uber and Lyft, which revolutionized travel by making it safe and even efficient to ride with strangers; Airbnb, which has disrupted the hotel business; phone and computer application stores; and even social media giants that serve and connect users and advertisers.
It is important for institutions to recognize both sides of the market so that they can respond effectively to the demand signals that both sides are sending, which have long gone unheeded or gotten distorted because of misconceptions about who institutions are serving.
In other two-sided marketplaces, if supply and demand are unbalanced, the marketplace will offer incentives or regulations designed to balance them out. For example, ride-sharing companies are currently facing driver shortages, so they are offering higher pay and other incentives to try to attract enough drivers to meet rider demand. In higher education, employers are clamoring for more graduates in skilled fields such as cybersecurity and other areas of tech, but institutions are not adequately responding to those signals and incentivizing entry into those fields to produce more graduates.
Part of the reason institutions have struggled to balance demand signals is because they misunderstand the transactions involved. To serve learners well, you have to serve the people who are looking for talent, too.
Demand forecasting in any industry is hard—maybe even more so in a two-sided marketplace. But the challenges provide a roadmap for focused innovation in higher education:
Lag: This is a common problem in many industries in which decision-makers have to predict what the demand will be for their products at the time when the commensurate supply can be ready. For example, the auto industry needs years of lead time to design and produce cars, and the Christmas tree industry has to start growing trees years before consumers buy them. In the spirits industry, the lag can be as much as a dozen years to produce scotch.
Higher education leaders face a similar challenge in the length of time it takes to complete degrees. During that time, the labor market may change dramatically, making it hard to predict what the demand for skills will be when a class of learners completes its program of study.
To solve this challenge, higher education must work with labor market experts to develop better tools to forecast future labor market demand—and then adjust program or degree offerings to solve for those needs. Additionally, we can shorten the amount of lag time that learners experience before their education pays off by embracing shorter-term and stackable credentials, ideally ones that are created in consultation with businesses to address their most pressing staffing challenges.
Meeting competing needs: Both learners and talent seekers have a wide range of interests and needs, and too often learners’ interests and self-beliefs are not in line with talent needs. Connecting those interests to labor market demand requires a great deal of creativity and innovation. Take, for example, ride-sharing companies. A decade ago, we all wanted to get places quickly and cheaply, but none of us thought that we should do so by riding in the backseat of a stranger’s car. Companies helped connect a known need (transport) to a new means of achieving it. In the same way, we need to help people connect a known need—the desire to thrive in a digital workplace—to new means of achieving it.
Lack of differentiation: Similarly, institutions need to differentiate their programs and credentials more sharply. Whether they are certificates, certifications, degrees, or micro-credentials, there are close to one million unique postsecondary credentials in the U.S. that lead into various sectors and jobs. As a result, the market for higher education credentials is incredibly complex. Recent credential transparency initiatives are a helpful start, but they still must better connect learners and talent seekers to identify clear paths to success.
Lack of communication: Higher education needs to establish stronger and more frequent communication channels with business. Crucially, institutions should make sure they’re hearing from the people who are making direct decisions about hiring, who can be different from the voices representing talent seekers in national conversations and those around the table at industry advisory groups on campus.
If we hope to realign a labor market that has gotten out of whack, we must understand higher education as a market that serves both learners and businesses and embrace the challenges that come with that. Now, higher education leaders and stakeholders must begin the hard work that is necessary to address those challenges and ensure that learners can truly thrive.
Tom Monahan is president of DeVry University. He has served as chairman and CEO of CEB, a global tech-enabled data and content firm, and on the board of several other private equity-backed and NYSE-listed companies, including Transunion and Convergys.