Small Businesses Are Now Hiring Apprentices. Should You?

The old plumber and electrician trainee model has been reimagined for the new world -- and could be exactly what a startup needs.
Small Businesses Are Now Hiring Apprentices. Should You?
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This story appears in the March 2020 issue of Entrepreneur. Subscribe »

Fiona McDougall never thought she’d hire an apprentice. The practice was common in her native Australia, but as a principal at the marketing company OneWorld Communications in San Francisco, she had no time. Plus, here in the U.S., the concept of it seemed like it was for…electricians? Plumbers? Certainly not her. 

But in 2017, she was invited to an unusual roundtable series with other local businesspeople. It was organized by the city of San Francisco to help them develop an apprenticeship program — which is to say, paying a potential employee to work part-time while also providing on-the-job training and education. McDougall came away thinking it could work for her.

Small businesses have limited resources,” she says. “You wear many hats, and we expect people to be specialized but nimble and resourceful.” So why not train someone specifically for the role? About a year after the roundtables, the city started distributing small grants to help companies hire apprentices. McDougall’s firm received one: $2,500 to pay for her time to manage the apprentice, plus tuition for outside training costs. The goal was to fill a digital marketing position.

Stories like this are becoming more common, as businesses of all sizes discover (or, in a way, rediscover) the value of apprenticeships. The conversation is being pushed along by public initiatives, policymakers, commercial education companies, and entrepreneurs themselves, who are now preaching the value of earn-and-learn arrangements. They say it’s an affordable way to train employees or upskill existing staff, and that the long-term effect is strong. According to the Department of Labor, every dollar spent on apprenticeships returns $1.47 in increased productivity and innovations. 

Related: How Apprenticeships Can Benefit Your Company's Bottom Line

To understand why apprenticeships suddenly became so popular, look no further than the tech skills gap. There just aren’t enough candidates to fill the open jobs in fields like artificial intelligence, cybersecurity, and software development. Currently, more than 500,000 of these “new collar” jobs are unfilled, and analysts predict the number will grow by 20 percent in three years. 

As Silicon Valley tech giants wrestled with this problem, some came to the same conclusion: If we can’t hire great employees, we have to create them. And so, a new interest in apprenticeships was born. Between 2013 and 2018, the number of apprentices in the U.S. increased 42 percent, and the programs to facilitate them more than doubled, according to the Department of Labor. 

From there, enthusiasm for the concept spilled out into the broader business world. Two years ago in California, then lieutenant governor Gavin Newsom announced a plan to add half a million high-skilled apprenticeships by 2029 — a 500 percent increase for the state. And last year, IBM and the Consumer Technology Association (CTA) launched a coalition to scale thousands of these on-the-job tech training positions across the country.

As this has happened, though, many small businesses have asked a reasonable question: How can they afford the time and money to put together a whole education program? This is where a third-party company like OpenClassrooms comes in to connect the dots. 

OpenClassrooms was founded in France in 2013, and it works like this: When a company needs apprentices, the OpenClassrooms team finds and vets applicants. Selected candidates then split their time between work and online classes that are project-based and designed for the specific needs of the employers. Each apprentice is also matched to a dedicated mentor for weekly hour-long meetings via videoconference. It’s a 12-month program that, according to OpenClassrooms founder Pierre Dubuc, usually ends with the company hiring its apprentices full-time.

In Europe, two-thirds of OpenClassrooms clients are startups and small businesses. After expanding to the U.S. two years ago and becoming part of the CTA coalition, Dubuc says he’s committed to serving small businesses here as well. If his program is financially out of reach for some entrepreneurs (it typically costs around $5,000 to $15,000), the government can help with grants that are available from the U.S. Department of Labor. “It’s pretty cool, especially for startup companies and small businesses that want to hire one developer or two data analysts,” says Dubuc. “They can have access to this program and actually be subsidized to run these apprenticeships.” 

Related: 4 Key Ways to Create a Culture of Learning

As companies consider whether to bring on apprentices, many often ask Dubuc the same question: What if I invest all this time and money training an apprentice, only to have them jump ship when it’s done? That’s a possibility, as it is with any employee. But advocates argue that the benefits outweigh the risks.

First, they say, the arrangement cuts both ways. Companies get to fully test out a potential hire for a year, without having to commit to them. And for what it’s worth, studies find that the process breeds employee loyalty. One survey in the U.K. of more than 4,000 employers who had used an apprenticeship program found the mean retention rate (of the trainees still working for the company) at 73 percent. 

Advocates say that programs like this can level the playing field, giving smaller companies a way to staff up despite all the perks being offered by their larger competitors. “For me, the war for talent has been never-ending, trying to compete against both the shortage of talent and the resources of huge tech giants who also have deeper pockets,” says Marty Reaume, a former tech executive at Twilio and Fitbit, who now sits on OpenClassrooms’ U.S. advisory board. “But ultimately, some of us are getting future-focused by looking to build and develop our own talent.”

And critically, they say, apprenticeships can draw in diverse and unconventional talent. Many of the public-private apprenticeship programs have formed around the goal of increasing diversity in all kinds of higher-­skilled jobs — from Apprenticeship 2020, a $3.2 million effort in Chicago, to TechSF Apprenticeship Accelerator, the name of the San Francisco program, which focuses on women and people of color. 

Related: For Entrepreneurs, Apprenticeship is the Ideal Solution for Addressing the Labor Market Chaos

Jocelyne Umanzor is one of the women who went through TechSF’s program. The 22-year-old says she never would have thought of working in IT. Meanwhile, the Silicon Valley delivery startup Postmates would likely never have found Umanzor in the open market. She went to Skyline College, not MIT, and didn’t have the network a place like that often affords.

But through the San Francisco program, Umanzor connected with Postmates and apprenticed there while getting an online education in IT, and then transitioned into a full-time role there. “It’s like a big door has opened for me,” she says. Postmates is happy, too. “We need people in IT who look like the people they support, and we need people writing the code who look like the end user,” says Claire Sands, the company’s director of communications and engagement. “That’s something that TechSF apprenticeships have really been able to fill for us.”

Meanwhile, at OneWorld, Fiona McDougall used her apprenticeship program in a slightly different way: She plucked her office administrator off the front desk and trained the woman to become the digital marketer they needed. “It was a great experience overall,” says McDougall. “There’s some very resourceful, employable talent in the Bay Area, and this is a way of helping small businesses leverage that talent in a realistic way.” 

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