Many SMEs realize the need of investing in young talent and have started to recognize the benefits. However, attracting new talent has its challenges and realizing what support is out there to assist this process and make it more appealing for SMEs to implement these practices requires better awareness of the existing materials, know-how and support. Moreover, this type of investment starts early, with partnerships and activities at school and universities.
Apart from the direct benefits for companies, there is also a broader spectrum of advantages for the society, such as increased employability and employment of young people, work experience opportunities, development of a pool of skilled workers at regional level, social inclusion of vulnerable groups, economic returns like reduction of public expenditure etc.
Furthermore, SMEs providing WBL and apprenticeship programmes experience variety of advantages, ranging from financial to soft benefits on both short and long term, such as higher productivity, reduction of external recruitment, high motivated and talented personnel, enhanced corporate image, staff retention, opportunity to fill skill gaps etc.
There are various factors and elements of the education system across the EU but a unified approach and frameworks have been developed in order to enhance the role of work-based learning in its different forms and apprenticeships in particular to make them an effective tool for SMEs to solve the issue with lack of skills and talent, from one side. On the other hand, they are growth and success factors for businesses as well as key drivers for success for SMEs.
Implementing a holistic approach and system for apprenticeships allows SMEs to become more competitive and attract the right set of skills, knowledge and competences for growth and innovation as key competitive advantages in today’s economy and competitive markets.
According to the research and surveys as well as the conducted focus groups of the project “Return on Investment of Work Based learning and apprenticeships”, co-funded by the Erasmus+ programme of the European Union, SMEs' decision to engage in the supply of WBL and apprenticeship training is determined by the cost-benefit ratio of such an investment.
Knowledge, Innovation and Strategies Management Club (KISMC) is a partner in the "Return on Investment of Work Based learning and apprenticeships" project (ROI), along with a diverse and complementary mix of organisations - from Slovakia the Technical University of Kosice (TUKE), 3 training organisations active in VET: IDEC - Greece, CECOA - Portugal, PIT - Spain and also from the UK - Social Value UK - a network focusing on social value and social impact, from Italy a network focusing on the promotion of digital learning and use of ICT - DLEARN and an ICT company focusing in ICT-enabled E&T - Cosmic Innovations - Cyprus.
Costs & Benefits
The following costs and benefits have been identified through the project partners' research based on focus groups and surveys among SMEs:
Calculation of RoI
The ROI project has been focusing on developing:
- A model for the calculation of RoI of WBL and apprenticeships by SMEs
- A digital tool that will demonstrate in visual way the RoI model
to calculate and visualise how investment on WBL and apprenticeships can manifest to multiple benefits.
To access the ROI calculation model and digital tool, please click here.
Did you know that SMEs represent 99% of all businesses in the EU? Or that statistics from the European Commission (EC) outline that in the past five years SMEs have created around 85% of new jobs and have provided two-thirds of the total private sector employment in the EU?
The availability of skilled labour is an important prerequisite to the SMEs’ prosperity, however, there is a mismatch between the skills the labour market demands and those that the education and training system provides. In order to tackle this mismatch, the EC has identified that quality work-based learning (WBL) and apprenticeships can be an efficient way of addressing labour market imbalances.
What is work-based learning?
“Acquisition of knowledge and skills through ‘carrying out – and reflecting on – tasks in a vocational context, either at the workplace (such as alternance training) or in a VET (vocational education and training) institution”.
What is apprenticeship?
“Systematic, long-term training alternating periods at the workplace and in an educational institution or training center. The apprentice is contractually linked to the employer and receives remuneration (wage or allowance). The employer assumes responsibility”.
In countries, where there is a well-established apprenticeship system, such as UK, Austria and Germany, SMEs contribute strongly to the training of the future work force through their involvement in work-based learning and apprenticeship schemes. On the contrary, in countries with more school based systems, like Slovakia, Spain, Portugal, Greece and Bulgaria, the engagement of SMEs in the supply of placements is more challenging as they lack the support systems and fail to realize both the financial and social benefits.
Based on this need, project “Return on Investment of Work Based learning and apprenticeships” (project N°: 2017-1-SK01-KA202-035375) suggests the development of a return on investment (RoI) model and digital tool that will allow European SMEs to calculate and visualise how investment on WBL and apprenticeships can manifest to multiple benefits, especially economic benefits, which you can have a glimpse on below.
10 Economic benefits for SMEs
In conclusion, there are a number of key benefits of work-based learning and apprenticeships for SMEs, which are not always considered by the companies. If you are leading one of the 99% of SMEs in the EU, wouldn't you want to increase your productivity and innovation capacity? Or strengthen your brand as an employer, develop your talent in-hose and increase your retention rate? Overall, wouldn't you want to decrease your talent acquisition costs?
If every employer asks themselves these questions, it appears significantly evident how important it is to review their practices regarding work-based learning and apprenticeships and to better evaluate their future investment. However, more awareness needs to be raised about the benefits of WBL and apprenticeship among SMEs as well as support.
“Return on Investment of Work Based learning and apprenticeships”, co-funded by the Erasmus+ programme of the European Union suggests has developed a return on investment (RoI) model and digital tool that will allow European SMEs to calculate and visualise how investment on WBL and apprenticeships can manifest to multiple benefits.
The Model for calculating the return on investment (ROI) of worked-based learning and apprenticeship reflects the perspective of the consortium “Return on Investment of Work Based Learning and Apprenticeships”, project coordinated by Slovakia, with partners from Portugal, Greece, Bulgaria, Cyprus, Italy, Cyprus, United Kingdom and Spain. For more information about the partners in the project, read here.
The “RoI of WBL and apprenticeships” is based on the traditional model of calculating ROI, taking into consideration the costs and benefits of the SMEs regarding their investments in WBL and the apprenticeship courses.
The list/menu of key “costs” and “benefits” proposed by the model are based on national research reports, developed for partners' countries (such as Slovakia, Portugal, Greece, Bulgaria, Italy and Spain), highlighted the SMEs needs and their national apprenticeship system.
What is ROI?
ROI is the calculation that compares the value of outcomes (changes as a result of an activity) to the value of the resources needed to create them.
Presented as a ratio, the value of outcomes is divided by the value of resources required to create them. The results of the calculation demonstrate the efficiency of an investment or activity. This can aid decision making by highlighting if an investment provides a positive return, and if there is more than option, it can help decide which option provides the greatest return.
The return on investment formula is:
ROI = Value of outcomes / Value of investment
In the above formula, "Value of outcomes” refers to the aggregated value of all of the included outcomes of investing in WBL.
As well as presenting results as ROI, the net present value of money can also be used to aid decision making. This is calculated by subtracting the value of the investment from the value of the outcomes.
The net present value formula is:
Net present value = Value of outcomes – value of investment
* Erasmus+ is the European Union’s (EU) programme for education, training, youth and sport, with the EU committing £12 billion to the programme between 2014 and 2020. By 2020 it is expected that over 800,000 education and training staff and youth workers will teach or train abroad across Europe with Erasmus+. Projects provide opportunities for learners and staff to improve their skills, enhance their employability and gain cultural awareness.
Knowledge, Innovation and Strategies Management Club (KISMC) is a partner along with a diverse and complementary mix of organisations - from Slovakia the Technical University of Kosice (TUKE), 3 training organisations active in VET: IDEC - Greece, CECOA - Portugal, PIT - Spain and also from the UK - Social Value UK - a network focusing on social value and social impact, from Italy a network focusing on the promotion of digital learning and use of ICT - DLEARN and an ICT company focusing in ICT-enabled E&T - Cosmic Innovations - Cyprus.
Calculate the ROI for Apprenticeships & WBL
For SMEs with limited financial resources, work based learning (WBL) represents an important tool. The RoI online tool offers:
- a cost and social benefits model calibrated on specific needs of SME managers and entrepreneurs to calculate the RoI for apprenticeships and WBL supply.
ROI Project Objectives
- Contribute to the sustainable investment of WBL and apprenticeships by making apparent their benefits for both individual SMEs and the society as a whole
- Develop a model for the calculation of RoI of WBL and apprenticeships by SMEs
- Design a digital tool that will demonstrate the RoI model in a visual way
- Develop a Good Practice Guide addressed to SMEs, giving guidance on how to design, implement and monitor profitable apprenticeship practices which can benefit the enterprise, the apprentice and the entire society
- Create and promote an apprenticeship-friendly SMEs badge to increase the engagement of companies in the provision of WBL
- Promote a VET – SMEs cooperation, through experimentation and validation of the RoI model
A Project Designed to Engage
- Managers, staff and trainers from SMEs that already host or are interested in providing WBL and apprenticeship;
- Staff from VET providers, i.e. VET teachers and trainers, administrative staff dealing with apprenticeships, etc;
- Policy makers, representative of stakeholders, VET expert and practitioners, social partners.
In addition to that, long-term beneficiaries such as VET learners who will benefit from the increased provision of WBL opportunities in their local, regional and national area.
Blog post by our team, innovation contributors, VIP members, blog guests, etc.
Funding For Innovation
Work Based Learning
The Knowledge, Innovation and Strategies Management Club is a non-profit organisation set up in Sofia, Bulgaria in 2012 to foster knowledge and innovation management across South East Europe. KISMC is supporting the development of the innovation ecosystem in the region by bridging the gap between education, research and business.
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