Matthew Mohr, CEO, Dacotah Paper Co.: Education matters, but skills matter more
FARGO, N.D. – Most studies of our society show a direct correlation between a person’s income and that person’s level of formal education. A high school graduate on average earns more than a high school dropout, and having a college degree generally leads to a higher income than does having only a high school diploma.
But while that income-education relationship statistically holds true for the population as a whole, what the reports tend to overlook is the income-skill relationship. Classroom education in and of itself does not entitle a person to a higher income. Only skill and the amount a person produces compared to others in the same field will lead to more income.
More education should provide an individual with the knowledge, information and ability to produce more, but like anything in life, the person has to use what they know to earn more. Just because I got good grades and was able to achieve academic excellence doesn’t mean I am more valuable than my neighbor who dropped out of school to support his family.
In fact, my neighbor – because of his real-life experiences – may have better skills than I do when it comes to getting ahead in life, regardless of each of our chosen professions.
At one time in my career, I evaluated a subset of a company’s employees using regression analysis to try to uncover why certain folks earned more than others in the work group. The analysis clearly showed that the employees with the least education earned the most.
Of course, this is contrary to most information published. So, not satisfied with this result, I expanded the statistical data base, and it became clear that the higher-income-earners’ success factors were hours worked, previous related experience (experience working in the job as opposed to education) and family status.
Another example: When employed by a multinational firm that was doing seismic testing for oil and paying for land leases, I was asked to help the company better manage and more quickly reconcile its cash flow. Again, I worked up a large regression analysis based on a number of variables.
I spent countless hours performing the evaluations. I calculated average check-float time, average check amount and a host of other valuables.
When I presented my findings to the business financial manager, she was not impressed! My education had given me a set of skills, but in the real world, I had not uncovered much better or more reliable techniques to get the right answer.
What mattered was simple communication, and that was my recommendation: Have the people in the field tell you the amount of checks written in one day, factor in float, and you can predict your cash needs.
My formal education had given me a set of “professional” skills to use. But in the end, the right answer was to look at experience and use common sense.
Over the years, we have supported a variety of individual educational endeavors; some turned out well, others not so well. Without formally learning about accounting, taxes, finance, marketing, business law and similar topics, a business owner-manager would be at an extreme disadvantage.
In every organization that I’m currently directly involved with, the top management all have the highest level of formal education and, in general, work the hardest to get the job done.
The level of education an individual achieves can help build the person’s skills to allow the person to earn more income. But the skills that are applicable to the job and the effort that a person puts forth are the factors that ultimately will determine a person’s individual earnings.
CEO, Dacotah Paper Co.