Training: What’s in it for you and your employer

Historically, most employees received initial and ongoing training throughout their careers. This was an important aspect of the informal contract between firms and employees: “I join your company, we invest in each other, and we both benefit.”

The goal of this training was to provide employers with increased levels of productivity and accompanying profitability. For the employee, training provided an opportunity to improve his or her value-add to the organization and earning potential. However, on-the-job training has steadily decreased since the 1980s. Today, education and skill development rest primarily with employees.

Globally, a significant proportion of firms struggle to find the critical mass of appropriately skilled employees. Organizations can spend months recruiting the “right person.” Other firms are dissatisfied with their options or lose the person in a relatively short time period after being hired. The duration for an average job opening in the US is at a decade-high of 25 days. More than 30% of US companies cite “lack of experience” as the main issue when filling jobs. Meanwhile, more than 75% of employees actively searching for a job have the explicit goal of “growing and improving” skills. Both employers and potential employees face a paradoxical situation. Clearly, firms and candidates should seek a mutually beneficial way to solve the problem.

In order to address the skill gap, employers have three options:

1. Recruit “already-skilled” talent: Employers can forgo spending money on talent development. However, recruiting is relatively difficult for most key roles — and compensation will be higher. Additionally, employers must be prepared for the potential of higher turnover rates, as people may leave the company to build their skills.
2. Recruit motivated employees and train them: Employee search costs are reduced, but employers must screen for motivation as well as aptitude. Moreover, employers must spend on training and address the flight risk. Ensuring competitive compensation may reduce voluntary attrition, but it adds to the expense.
3. Develop an employee “training partnership”: Employers provide training, with the employee contributing a portion to the effort beyond their time. In this option, the employee may partially fund the training, accept lower pay, or agree to refund the expense if they leave. Under this scenario, firms must embrace learning organization characteristics and facilitate continuous employee growth. This option requires joint employee and firm commitment.

Conversely, prospective employees should examine their own options:

1. Invest in self-training: Employees can choose training that is most beneficial and interesting to them. However, they may need to spend significant time and money outside of work. Additionally, they will need to seek employers that give them flexibility to support self-training. For this option to be effective, an individual will need to have relatively high self-discipline, adequate resources, and adhere to an explicit training plan.
2. Change position: When their role does not provide them with opportunities to develop skills, employees can seek to change roles within their organization. This option can be difficult, as the employees must align three different variables. First, they must identify the skills they want to develop. Second, they must find a role within their company that will develop them. Third, they must get hired.
3. Change firms: If an employee has determined that their organization does not offer opportunities aligned with their development goals, they may need to seek opportunities at other firms. Clearly, this is an option that many employees are selecting today. Voluntary turnover accounts for nearly 60% of total turnover. However, employees need to conduct the required due diligence on prospective employers or they may find themselves in the same position in a relatively short time frame.

Employers need to explicitly consider their fundamental basis of competition — employees, brand, efficiencies, or some other attribute. For firms competing on the quality of people, the talent agenda must be aligned with internal resource allocation. Employees, on the other hand, must carefully seek out firms that fit with their personal skill development approach. Regardless, both employers and employees must consider their skill development approach and seek solutions that meet their respective goals and objectives.