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Monday, 25 August 2014

Having Problems Finding Great People? You Shouldn’t Have Cut Your Training Costs!

With the improvement in the economy at least in the United Kingdom and the remarkable reduction in the level of unemployment come other issues for business that are not quite as palatable.

One of the real problems which surface time after time with the members of my Vistage groups is the problem of retention of good people and the difficulty in recruiting even better people.

During the years of the recession from around 2008 business logically cut every possible non-important expense and in some cases, even some very important (if long term) costs.

Normally the number crunchers in the business will recommend a reduction in marketing costs and a moratorium on training.

However many businesses are beginning to harvest the results of that disastrous strategy right now.

I remember in my corporate days we would work on a budget for the forthcoming year, which, in our view, was both attainable and stretching at least to some extent.

We could almost guarantee that the response from HQ was to say that turnover was inadequate as was the net profitability.  Accordingly we were “advised” to increase the turnover and the net profit by the simple expedient of reducing marketing costs and have a moratorium in training costs.

Of course we did as we were “advised” and the budget was passed.  It wasn’t achieved of course but we had a few months to prepare a defence.

The point is that training is NOT an expense; it is an essential investment in the future of the business.

With the growth in the economy and the subsequent demand for good people, comes the inevitable search in just about every sector for people who will help to move the business forward.

The problem is that recruiting at the higher levels in the business inevitably means that you will have to pay a premium on the market rate especially in the more affluent parts of the United Kingdom.

Added to this is another potential problem, that of the incomer bring with him/her the baggage from their previous employment and that is an issue, which may not have been explored at the interview stage.

Ken and Will Hopper in their great book, The Puritan Gift make the point that the great engines of growth, the vast businesses’ that dominated the economy in the United States between the wars relied heavily on growing their own talent.

Recruitment was seen as a secondary expedient and then only in essential circumstances.

The main reason was the lack of domain knowledge in the incoming personnel and the resultant hidden cost of bring them up to speed, which could take some time.

Far better they decided, to train the people in the “way that we do things around here” and as far as possible, from the earliest stage possible.

The question of domain knowledge is very significant and is one that can only be achieved by total immersion in the ethos of a business.

A normal spin-off from this strategy is a noticeable development in employee engagement, a consummation devoutly to be desired.

Recession can blunt the mind and seriously affect the thought processes to the extent that decisions are taken almost without any consideration of the longer-term effects.

There is no doubt that the businesses that kept their training programmes in place at all costs will now be seeing the benefit of the strategy.

Marketing needs to be done when you are busy; training needs to be done all the time.

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Marketing needs to be done when you are busy; training needs to be done all the time.

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