THE WORKERS OF THE FUTURE To compete, companies need skilled employees who can turn on a dime. This means spotting good people early, training them continuously, and making them want to stay.
By Nancy J. Perry REPORTER ASSOCIATE Mark D. Fefer

(FORTUNE Magazine) – ONCE UPON A TIME, in the profit-minded kingdom of Corporate America, an anonymous copywriter came up with a slogan that fast became the phrase of the land. It read, simply: ''People are our most important asset.'' Companies loved it. Soon the line appeared in annual reports everywhere. The only problem was, companies didn't really value their employees that much. The slogan, says Jerome M. Rosow, president of Work in America Institute, ''was pure bull.'' Then one day foreigners invaded the kingdom. These international companies were flexible, quick, and responsive to customers. Searching for ways to compete with the invaders, a few American companies discovered that, given a little freedom and the proper training, workers could do things that machines could not. People could grow, invent, solve problems. The kingdom was rocked by a new thought: that people truly are its most important asset. This revelation has led to a human resources revolution. Corporate training programs are proliferating as companies seek to help workers adapt to rapidly changing technology and work processes. Personnel departments are scrambling to create improved benefit programs to attract and retain the best people. And finally, to make sure the next generation of workers is as well educated as possible, companies are forming partnerships with schools and colleges. Feeding industry's frenzy to upgrade the work force is fear of the future. Over the past few years numerous commissions have warned that the U.S. faces a serious skills crisis as the pool of qualified entry-level workers shrinks. While the problem has been exaggerated (see box), it is true that America is on the threshold of an era in which fewer people will enter the work force and that a growing percentage of them will come from such traditionally underutilized groups as blacks, Hispanics, and women. The trouble with the doomsday forecasts is that they divert attention from the more immediate issue companies must confront if they want to remain competitive: improving the productivity of the current work force. Seventy- five percent of the people who will be working in the year 2000 are already on the job. Says Anthony Carnevale, chief economist at the American Society for Training and Development: ''There is too much focus by CEOs on fixing schools and not enough on fixing their own organizations to better utilize people.'' To prosper in the Nineties and beyond, companies must concentrate on three R's: recruiting is important, but so is retraining, as is retaining high-quality people. RECRUITING. If you think you have hiring problems, listen to the situation at Bethlehem Steel. At America's No. 2 steelmaker the average employee is almost 46 years old, with 22 years of service. Before the year 2000, close to 50% of Bethlehem's current work force is likely to retire. Where, the company is wondering, is it going to find enough people to replace its retirees? It's a question that a lot of companies are asking, as the country's 77 million baby-boomers work their way toward retirement. To ensure a large pool of qualified recruits for the future, businesses and educational institutions are cultivating the next generation of workers now, while many are still in school. In particular, they are concentrating on the 75% of high school students who do not plan to attend a four-year college. The most popular new alternative to a college-prep curriculum is Tech Prep, or 2+2, so called because it is usually a two-year program that prepares average-level high school students, who often perform below their abilities, for two years of community college. North Carolina's Richmond County Senior High School offers a four-year version in three areas: engineering, business, and health and human services. Students are required to complete a full load of rigorous academic courses, including algebra and two sciences. In addition, they take such vocational courses as Principles of Technology, Electronics, and Metals Manufacturing. The North Carolina program, which was established with the input of a business advisory committee, has caught on. Since it began, enrollment in Tech Prep has risen to 30% of the high school population -- roughly equal to the enrollment in college prep. At the same time, the number of graduates declaring their intentions to attend two-year colleges has increased from 25% to 52%. Also dramatic is the jump in the number of students taking algebra. In 1986 only 47% of ninth-graders took it. By 1990 the number had risen to 74%. Says Myrtle Stogner, who runs the program: ''It shows that these kids can do it. We've just been letting them buffalo us into thinking they can't.'' Another approach: apprenticeship-like programs, which combine academic instruction in secondary and post-secondary schools with employment-based training. Faced with a shortage of qualified repair people, Sears is establishing a curriculum in a Chicago vocational high school that will give juniors and seniors the training they need to go to work right after high school as beginner Sears technicians. The program, which will start this fall, will include three hours a day of regular academics, three hours a day of vocational training in basic electronics and appliance electricity, and, for some, 20 hours a week of on-the-job training at a Sears Service Center. Students will get paid $5.15 an hour. At Marshall and Grant high schools in Portland, Oregon, a successful apprenticeship program has been under way for the past seven years. Approximately 70 students per year are supplementing their academic and vocational courses with on-the-job training at one of 20 local employers, including IBM, First Interstate Bank, and Providence Medical Center. The students -- juniors and seniors from poverty-level families who have at least a 2.0 grade-point average -- work up to 20 hours a week in entry-level jobs such as receptionist or data-entry clerk, and are paid entry-level wages. Portland's efforts have been rewarded. So far, a total of 500 students have completed the program, and more than 90% have gone on to college or work or have entered the military. Companies are benefiting too. First Interstate now employs 15 program graduates full time, some in management positions. Because scientists and engineers will be in short supply by the turn of the century, companies are also worried about that talent pool. Many employers are already prowling high school and college campuses in the hopes of catching gifted minority students early in their academic careers. For instance, through a 20-year-old national organization known as Inroads, 600 companies, including Chevron, AT&T, and Monsanto, identify promising minority students during their senior year in high school and offer them summer internships and career counseling throughout college. Demographic changes and the projected shortage of engineers have led Chevron, for one, to triple its spending on minority-recruitment programs over the past three years. This year the National Society of Black Engineers had to turn companies away from its annual job fair, demand was so great. As it was, more than 4,000 students and executives jammed themselves into the Los Angeles Airport Hilton in March to swap resumes for business cards. RETRAINING. True story: A factory worker at a food company in Mississippi runs a cooker. Has for years. One day his company brings in computerized controls to regulate the temperature -- a job he used to do by hand. There are dozens of commands to choose from on the computer screen. The worker knows how to read, but he can't master the machine. Today this man is no longer a line worker. Instead, he pushes a broom. Sad? Yes. Unique? Hardly. In factories across the U.S., workers are being asked to handle new technologies and expanded responsibilities, and many are ill-prepared to do so. As a result, companies are scrambling to find ways to train employees fast, effectively -- and continuously. Says Jere Jacobs, assistant vice president at Pacific Telesis: ''The problem is much broader than K through 12 education. It's really K through life.'' Today companies spend roughly $30 billion a year on employee education. While that may sound like a lot, only 12% of the work force receives any formal on-the-job training. Companies must do more. The question is, how? In Meridian, Mississippi, the folks at Peavey Electronics, a large producer of amplifiers -- the kind that powers your 16- year-old neighbor's rock band -- think they have the answer. It's called the Job Skills Education Program (JSEP), a computerized program originally developed for the U.S. Army to teach recruits skills in a job-related context. In Peavey's case, a JSEP lesson would present fractions as they are used for wiring diagrams. Says Karl Haigler, special adviser to Mississippi Governor Ray Mabus: ''It isn't that people can't read or do math. It's that they can't apply those skills to running a computer numeric-controlled machine.'' In 1988 the National Alliance of Business, using a $200,000 U.S. Department of Labor grant, launched an experiment to test civilian applications of the program. Peavey Electronics, in partnership with Meridian Community College, agreed to be the corporate guinea pig. The NAB hired a consultant to analyze four critical Peavey production jobs, such as cabinet assembler, and design four clusters of JSEP lessons specifically for those jobs. Meridian Community College agreed to dole out an additional $100,000 to buy the computer equipment necessary to establish a JSEP lab on campus. For its part, Peavey released 64 employees to attend JSEP training at the community college on company time for 12 weeks -- two hours a day, two days per week -- at a cost of about $70,000. The investment was worth it all around. About a third of the original 64 employees who went through JSEP training have been promoted, some twice. A second group of 13 employees increased their math ability three grade levels in just 56 hours, according to Haigler. In traditional adult education, students advance one grade level for every 60 to 80 hours of training. Now the JSEP program is in full operation at Meridian Community College for any Peavey employee who wants it. Says Haigler: ''No one is going to take someone right off the street to run a half-million-dollar robot. So this type of program is life or death for industrial expansion in Mississippi.'' Teaching workers how to use new equipment is one thing; teaching them how to manage is another. Says General Electric senior vice president Frank Doyle: ''You can't just tell people they are self-managed. You have to give them the tools to do it.'' At GE Aircraft Engines, 11,000 of the 38,000 employees have already taken a two-day course in problem solving. One thing people bring away from the class, says Bob Huff, who has worked as a GE carpenter for 12 years, is the sense that they can control their day and make a difference. Speaking for many American blue-collar workers, Huff says, ''Before, the hourly people felt like every time we walked through the gate, we checked our brains at the guard shack. So this is starting to tap into untapped resources, which is neat.''

While GE Aircraft Engines is flying high on the idea of employee involvement, Levi Strauss is moving one step further, to fully self-managed work teams. The plan is to let sewing machine operators, who have traditionally been told to ''sit down, shut up, and sew,'' become partners in the business. The company's Roswell, New Mexico, plant, where 640 employees produce high-fashion sports jeans, celebrated the rollout of its first team of 13 operators in April. Says Joan Arnold, who oversees operator scheduling and training for the new teams at the plant: ''It is a big culture change. Our moms and dads raised us to do what the boss says -- and now the boss is asking us what we should do.'' Over the next two years, Levi plans to convert the entire Roswell facility from assembly lines to modular manufacturing teams. Workers will receive 100 hours of training in topics that range from reducing labor costs to laying out equipment on the shop floor. Each operator will have to perform at least three jobs, and each team will be responsible for determining who does which jobs and when, and for producing a garment start to finish. This differs markedly from the traditional assembly line in which, as Arnold says, operators become ''living extensions'' of their machines. Dramatic results are already evident. For starters, 13 people now do the work of 25. And whereas it used to take six days to get out a 60-pair bundle of jeans, it now takes one. Even more important than speed, says plant manager Ramon Hinojosa, is improved quality. The team's defect rate is 1.9%, vs. the plant average of 3.9%. Just after the team began working together, its members sat down with a manager from the merchandising department and negotiated a change in the construction of a pocket, so that it could be sewn with fewer wrist movements. This small change will both reduce labor costs and improve worker safety. Says Hinojosa: ''Traditionally, employees don't tell us if there is a better way to do something because they figure that's the way management wants it.'' RETAINING. ''I think the name of the game during this decade will be retention,'' says Chris Lardge, director of human resources at Chevron. ''We're doing pretty well at hiring, but if we can't meet employees' expectations and needs, we'll lose more of them than we'd like.'' That loss is costly. Aetna estimates its annual turnover expense at more than $100 million -- money spent largely on bringing new workers up to speed. Says Jerry Rosow at Work in America: ''If you train, you must retain.'' The secret to retaining valued employees, most companies say, lies in designing management practices and benefit packages geared to an increasingly diverse work force. Says Arlene Johnson, who is in charge of work and family issues for the Conference Board: ''Flexible companies will capture people that inflexible companies will lose.''

The most dramatic change in the work force is the entrance of women. According to the Bureau of Labor Statistics, in 1990 74% of women between ages 25 and 54 were working, up from 35% in 1948. By the year 2000, the Bureau predicts, women will make up 47% of the work force. The result has been a slew of new benefit plans aimed at making life easier for single-parent families and for those with more than one job holder. These plans go well beyond the standard flextime, job sharing, and day care programs of the Eighties. Today companies are rushing to design such benefits as elder care counseling and leave policies, which make it easier for employees -- particularly females -- to take care of family obligations without abandoning their careers. At Aetna, for instance, a plan that allows employees a six-month unpaid leave to attend to family matters has cut in half the number of employees who typically respond to such demands by resigning. Marriott Corp. is busy developing a largely untapped human-resource gold mine: physically and mentally disabled workers. Although the hotel company experiences a 105% annual turnover rate among workers in general, the turnover among employees with disabilities is only 8%. To help the mentally handicapped adjust to working life, Marriott has a program that teaches basic social and job-readiness skills, such as how to get to work on time. The company also pairs new handicapped workers with Marriott managers, who serve as coaches. Says Kathleen Alexander, Marriott's vice president of personnel services: ''Companies have a great need to include all the talented people they can find. So we want to use personnel policies not to discriminate but to attract and retain.'' Corporations are applying that philosophy widely. When the Columbia business school recently announced a five-day course for executives on Managing Cultural Diversity, it received some 700 inquiries -- more than for any other executive class offering. According to Santiago Rodriguez, manager of the multicultural program at Apple Computer, the interest reflects corporate America's move to a next-generation hiring policy: one that is willing to cultivate every qualified worker -- black, Hispanic, Southeast Asian, or white.

At Apple headquarters in Cupertino, California, multiculturalism is flourishing. (This may not always have been so at other Apple operations: In April the U.S. Labor Department found that Apple had from 1987 through 1989 practiced racial discrimination in hiring at the company's Fremont, California, plant. The company denied the charges but offered jobs to 15 black workers who had been previously denied them and paid $437,000 in back pay.) Current Apple support groups include a Jewish cultural group, a gay/lesbian group, a black group, and a technical women's group. Apple also conducts classes to teach cultural groups how to work more effectively within corporations. By talking to the different groups, Apple managers get advice on how to recruit. The more closely a company's work force mirrors its customer base, Rodriguez points out, the more effectively it will be able to design and sell its products. ''This legitimizes the conversation about diversity,'' he says. ''None of this succeeds unless you can identify a business interest.'' Another payoff for companies mastering the three R's: a more competitive work force for the 21st century.

CHART: NOT AVAILABLE CREDIT: SOURCE: NATIONAL CENTER ON EDUCATION AND THE ECONOMY CAPTION: WORKER TRAINING