Making The Case For Hiring Opportunity Youth

Three years ago, we set out with the Rockefeller Foundation to address a very challenging question: With nearly six million youth out of school and out of work (termed “opportunity youth”), how can our country address youth employment at scale? Getting there would require a strong business case to justify shifts in business practice. At that time, few companies were hiring significant numbers of opportunity youth; fewer still were able and willing to share specific data on their results. Today, though, the case is being made by a growing cohort of companies across a number of industries.

These youth are a solution to a looming talent shortage. According to our analysis of Bureau of Labor Statistics data, nearly six million entry-level jobs will be created through 2020. Leaving those jobs unfilled will cost companies a bundle in both productivity and revenue.

The business case for hiring opportunity youth is compelling, with retention differences ranging from 20-plus percent to three times higher in the companies we studied. Retention alone provides a significant ROI. Consider this retail sector example: The average employee makes $21,000 per year and costs about $3,400 to replace.  Turnover is 5 percent per month, or about 60 percent per year.  That means annual turnover costs for a company with 5,000 entry-level retail employees will be just over $10 million per year.  Cutting turnover in half, even with paying a workforce intermediary $5,000 to source and train each worker, would save $2.5 million per year.

2015 © Cat Laine.

2015 © Cat Laine.

A great example of how a focus on opportunity youth can grow to be truly strategic comes from American Express, which began hiring them in small numbers in 2007 through the nonprofit intermediary Year Up, which trains 18-24 year old low to moderate income youth. The impetus came from CEO Ken Chenault, who proclaimed on 60 Minutes that the Year Up relationship was a win-win for the company and urban communities that American Express served. But it was Destin Dexter, vice president of technology, who scaled these efforts to meet the business objectives of hiring entry-level IT talent in a highly competitive market.

Her problem was attracting talent. American Express’s reputation as a traditional financial institution was not necessarily appealing to recent computer science graduates. “It’s not that we didn’t offer great IT jobs,” said Dexter. “They just weren’t interested.”

Dexter felt she could boost the number of interns who progressed to full-time positions, which hovered at 20 percent in 2007.  She knew it would require effort, but she also felt that American Express was letting talent slip away.

After a pilot at its Fort Lauderdale offices, Dexter launched an eight-week software engineering boot camp that American Express co-designed with Year Up and Gateway Community College in Phoenix, a major technology hub for the company.  They screened candidates for comfort with logic and numbers, and then brought them to class. Her experiment was a stunning success.

“The Year Up interns loved it,” said Dexter.  “They came to work with smiles on their faces and leaned in.  They brought aptitude and were ready to learn.”

Today, Dexter brings on 80 to 100 Year Up interns annually for tech jobs ranging from software engineering to customer service.  The Year Up interns have a 72 percent conversion rate to full time versus about 60 percent for interns from traditional hiring pools. Year Up candidates also stay an average of 44 months versus 18 months for traditional hires.

“We initially approached the Year Up partnership as a great way to support the local communities where we live and work,” said Dexter. “But over time it became clear the program could be a breakthrough way to source entry-level talent.” Dexter now is promoting her work to other departments, and opportunity youth are filling more entry-level roles across the firm.

The American Express story points the way for others:
  • Identify positions suitable for opportunity youth that meet your business needs; hire for skills and aptitude, so that you screen in opportunity youth
  • Invest in training, potentially by partnering with a skilled nonprofit
  • Measure your progress; test and refine your approach
  • Scale the effort across your business unit and the company
As we watch the opportunity youth movement take hold, the question we ask is: Are senior executives and HR managers doing enough to tap into the benefits of hiring opportunity youth—and at a scale that will truly influence both bottom lines and the number of employed opportunity youth?

Willa Seldon is a Partner at the Bridgespan Group with extensive experience in cross-sector and philanthropic collaborations and economic opportunity, and author of the study “Hidden Talent: How Smart Companies Are Tapping into Unemployed Youth".

Vikki Tam is a partner in Bain & Company’s New York office, head of Bain’s global Social Impact Practice, and advisor to the study “Hidden Talent: How Smart Companies Are Tapping into Unemployed Youth".

For more information about best practices for hiring opportunity youth, visit the Grads of Life website.

The GradsofLifeVoice Forbes team provides thought leadership, research and expert commentary on innovative talent pipelines and related issues such as the skills gap, income inequality, workforce diversity, and the business case for employment pathways. We seek to change employers’ perceptions of young adults with atypical resumes from social liabilities to economic assets. This post was originally featured here.

Business Case, Hiring & Retention Practices, Partnerships,
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