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Why Investing in Training and Development Still Makes Sense in the Age of “The Great Resignation”

by David Wyld 29 days ago in economy

Today, companies all across America are dealing with an unprecedented level of turmoil in keeping workers. In this article, we explore a very real issue executives are facing: How do we justify investing in training when so many of our workers are leaving?

Why Investing in Training and Development Still Makes Sense in the Age of “The Great Resignation”
Photo by Dylan Gillis on Unsplash

Wow! It is one tough time to be in charge of people in any organization today! Each and every day on your drive into work, one cannot help but see the signs of the times, as they are everywhere! Seemingly every business, small and large alike, not only has a simple “Help Wanted” sign out front. Today, those signs seem to be trying to “one up” one another, as all of these firms - from fast food restaurants to retailers to warehouses and distribution centers to manufacturers and every category of business in between - are engaged in a desperate struggle to attract new workers. Companies are touting starting pay of $10…$12…$15…$20 an hour for jobs that just a year or so ago paid nothing close to those levels. Firms are adding incentives beyond higher hourly pay, throwing in signing bonuses in the hundreds, and sometimes thousands of dollars! They are advertising that they will give new hires vacations, tuition reimbursement, and more!

By Tim Mossholder on Unsplash

The competition level is intense as all companies seek to lure new employees, which in most cases, come from another employer, further aggravating companies’ staffing problems and adding more pressure to be even more competitive in today’s already hypercompetitive job market!

The Great Resignation” is thus not just a news story, but an all too real issue for almost all employers today. And where this cycle of what is nothing less than employment craziness stops, nobody knows!

While there has been much attention paid in the media to the costs associated with competing in the market for new hires and how companies should maneuver in this really unprecedented time, far less focus has been given in the media to the very real costs for employers with so many workers choosing to leave their jobs. As any manager knows, there are significant costs incurred each and every time one has to replace an employee, from hiring and training costs to simply the loss in productivity - and even camaraderie - that come when any worker leaves. Additionally, there is a hidden cost, and that is the costs associated with the past training and development that the organization has invested in that employee when that individual walks out the door for the final time. And when one talks about a knowledge worker, especially when much of that knowledge has been instilled by the company, those costs rise far above that of the average front-line employee. Then, in cases where we are speaking about a mid to senior level manager, one that likely went through years of company training, the training and development investment made in that employee can reach the tens, even hundreds of thousands of dollars quite easily!

By Sahand Hoseini on Unsplash

And so as a strategic management professor and consultant, I was intrigued by a recent Tweet from one of the “all-time greats” in my field. Tom Peters, coauthor of perhaps one of the most important management books of all-time, In Search of Excellence: Lessons from America's Best-Run Companies, recently tweeted this:

In that single Tweet, in far fewer than 240 characters, Tom Peters perfectly encapsulated the very real dilemma facing all companies today - from the giants of the Fortune 500 to midsize firms to even the smallest of businesses - in regards to training and development.

By Max Bender on Unsplash

When it comes to training and development, anything and everything that a company does - and spends - in this regard can be looked upon as a very real investment in their human capital. And because human capital can indeed leave the organization at any time, training and development investments are really unlike any other capital investment that a firm makes. And yes, the reality is that people do leave organizations. In fact, one way or another, we all leave our organizations! The question is when this will happen, not if! And thus, when we speak of a company’s investment in human capital, that investment does have a very uncertain expiration date! Workers may leave tomorrow...or in 30 years.

By Nathan Dumlao on Unsplash

And so the situation that Tom Peters depicts in his Tweet represents an acceleration of the age-old question regarding training and development expenditures: Why invest in our people if they are certain to leave at some point? Yes, the CFO (Chief Financial Officer) perspective on this question has to be, by definition, a financial one. There is certainly an incentive - from a financial viewpoint - to limit such expenditures, and to target training and development efforts on the here and now - helping workers build knowledge, skills and abilities (KSAs) that pay benefits for the organization today, not years down the road (as is often the case when speaking of management and leadership development training programs and educational opportunities). When thinking of training and development investments in workers with an eye on the ROI (return on investment) of such efforts, programs that produce demonstrable, short-term benefits are far, far easier to justify than training programs that might produce significant results over the longer-term - results that may not be there if the employees do leave.

By Benjamin Child on Unsplash

However, the counter perspective on all of this is the strategic perspective, represented in Peters’ Tweet - CEO: "What if we don't invest in them and they stay?" Today, training and development is widely regarded as not just a necessary function, but one that workers look for - and can even use in determining whom they will work for in their career. All too often, when times turn tough for companies financially, training and development efforts are often the first areas to be cut by management. But this is often done as a form of “financial triage,” as training and development is a “low hanging fruit” - easy to cut or to simply postpone. Such an action will lower near-term costs. However, even in the short run, cutting back on training and development can make your company less competitive. In the longer term, curtailing training and development efforts can contribute to increased turnover, meaning that the losses involved with your human capital will be even worse.

By Luke van Zyl on Unsplash

What is the “happy medium” on all of this? The answer, according to Tom Peters again, is simple enough to be contained in a single Tweet. He quoted Sir Richard Branson, the founder and CEO of so many successful businesses under the Virgin umbrella, who said:

That is excellent managerial advice for these troubled times! A simple reminder that training and development is an essential part of managing, and one that pays dividends for the company and its workers. Training and development in your people may well be the best way to compete for and to retain the talent of today!

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About David Wyld

David Wyld is a Professor of Strategic Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, publisher, executive educator, and experienced expert witness. You can view all of his work at https://authory.com/DavidWyld.

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economy

David Wyld

Professor, Consultant, Doer. Founder/Publisher of The IDEA Publishing (http://www.theideapublishing.com/) & Modern Business Press (http://www.modernbusinesspress.com)

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