Many businesses have irrational human resources practices. How Cuyahoga County, Ohio is working to address that

How do you create an agile and growing economy? There is certainly no simple or straightforward path, but my assertion is “one business at a time.”

A region’s economy is comprised of many businesses, each of which must be nurtured to help them succeed. But businesses are run by people, and as Nobel Prize winner Richard Thaler has shown, people behave in predictably irrational ways. Thaler’s research finds that people tend to value what they have, prefer the status quo, and fear and avoid loss.

Studies show that while business leaders value strategic initiatives, they tend to underinvest in the necessary skills or fail to provide adequate resources to achieve success. This problem is exacerbated by already-burdened management teams—when faced with the possibility of increasing their workload, managers may avoid change and “protect what they have,” as Thaler has suggested.

These emotions are unavoidably human, but they can also be restrictive—for individual businesses, employees, and the overall economy.

Addressing these behaviors is at the heart of Cuyahoga County, Ohio’s SkillUp service. Launched in 2017, SkillUp uses an organizational-needs assessment to help local business leaders talk about what is and what isn’t working for their business, articulate their priorities, and brainstorm ways that Cuyahoga County might assist them. The information is used to coordinate regional services and resources to address business needs such as capital access, real estate, and government incentives. At its core, though, SkillUp is about helping business address one of their core challenges: talent development.

Changing behaviors that stymie business leaders

SkillUp helps leaders move forward through “dissonance,” a technique commonly used in cognitive behavioral therapy to allow patients to “become aware of inaccurate or negative thinking so [they] can view challenging situations more clearly and respond to them in a more effective way,” according to the Mayo Clinic. Examples of leadership behaviors that hinder business performance include owners who fear having candid performance evaluations, or employers that needlessly require prior industry experience for entry-level jobs, thus limiting the size and quality of the talent pool.

SkillUp has helped many leaders surmount such inaccurate or negative thinking. This included three small businesses we assisted in securing a business expansion loan—SkillUp first helped each business owner clearly articulate their challenges, then identify potential solutions and coordinate relevant services. These leaders were previously unaware that these resources existed and lacked the time or expertise to get them.

Similarly, a heavy-trucking client wanted to purchase and develop a property, buy equipment, and hire and train workers—but didn’t act on any of these items until SkillUp intervened. The holdup was due to Department of Transportation regulations and the poor quality of the street the property was on, which could damage trucks and equipment. SkillUp sequentially triaged each of these issues, repairing the street within one month and addressing the regulatory issues. The regional chamber of commerce also assisted with real estate acquisition and development, while structuring a training program and coordinating workforce services providers to help recruit new workers.

Better talent development produces better business outcomes

Given the critical role human capital plays in regional growth, SkillUp provides strategic workforce planning as the core of its business assistance. Training should not be a one-time event for employees. Companies must identify key business performance metrics and create strategic talent development plans to improve that performance. Good talent development planning and execution should result in enough business value and return on investment to justify the necessary financial and human capital investments, and should be continuously reviewed to ensure parity with business goals.

SkillUp’s training programs have produced measurable results for our clients. In one example, a medical transportation company was struggling with low insurance reimbursement rates and not enough workers to keep up with demand, resulting in reduced cash flow and an inability to expand. SkillUp helped brainstorm a new expansion strategy and talent development program. The company hired and trained an instructor—using a training program SkillUp designed—who now trains new hires to become certified emergency medical technicians. Through a rebate, SkillUp provided cash flow for training costs to help the business invest in a new training center and generate revenue as an open enrollment educational provider. The company has continuously revised their training programs, hiring practices, and wage rates, and has seen marked annual improvements. To date, 61% of trainees successfully completed one of three training tracks, resulting in licensure or certification and a minimum of $2 per hour in wage increases ($4,100 annualized).

In another instance, a food manufacturing company was experiencing significant regulatory compliance and safety issues due to many employees with limited English language proficiency. These workers were all refugees who spoke different languages, and had difficulty communicating or understanding employee policies and safety manuals. SkillUp created a contextualized English language training program for the business. Eighty-nine percent successfully completed training, achieved the requisite skill standard for a highly transferable skill, and received a $.35 per hour wage increase ($720 annualized).

What’s next?

As SkillUp closes out 2019, we have cumulatively delivered services to over 475 businesses in 15 industries, with 35% self-reporting to be qualified for one or more of the U.S. Small Business Administration certifications. SkillUp continues to move from output to outcome-based reporting and has engaged a local university partner to conduct customer surveying and third-party evaluation of our services.

It’s time to help our business leaders set fear aside and move forward, which will require data, patience and new service delivery models. As workforce development expert Steven L. Dawson has written, “We have not learned how to help [business leaders] redesign their businesses—leveraging their investments in their frontline workers so that they can achieve operational excellence.” Indeed, providing business and talent advisory services like SkillUp creates a distinct opportunity for other regions to deliver economic development interventions which will benefit their businesses, workers, and economy.