A new study shows that business is under-investing in staff development. To remain competitive businesses need to look after their people

Employers need to offer the right training to retain staff and boost productivity, as nearly a million workers in the UK are voting with their feet and moving to companies who will invest in them, according to a new report.

According to the ‘Train to retain’ report from City & Guilds, which focuses particularly on the training needs of UK small and medium sized enterprises (SME’s), one in four workers (25 per cent) say that they have left, or would leave, a job because of poor training and career prospects.

The transition of so many workers could impact on businesses and, ultimately on the nation’s collective productivity, given that there is a predicted shortfall of 800,000 skilled workers in the vocational sector alone by 2012.

Exploring the extent to which UK organisations invest in their staff, the report concludes that the relatively high spend on recruitment and associated labour turnover costs makes it far more cost-effective and beneficial for employers to redevelop existing staff.

Cost argument

Judith Norrington, head of national policy development at City & Guilds agrees: ‘If you take into account the overall costs of filling a vacancy and ensuring that new staff have sufficient knowledge and understanding of the organisation, it makes good business sense for employers to invest in their existing employees. Training and career development is one way that an organisation can instil loyalty into its staff and ensure that they are not losing valuable team members as this can have a detrimental impact on its brand and productivity. In fact, employees expect to receive training in return for their effort as it is considered to be a vital aspect of the psychological contract with their employer.’

‘While employers seem to be putting more money into management training this is not sufficient on its own and needs to cascade down to all levels of the organisation Businesses need to have a structure in place that allows staff to apply learning effectively in the workplace.’

Problem figures

Despite the vocational skills crisis, employers from vocational occupations are actually the least likely to plan employee development, with nearly one third (30 per cent) having no training in place. Vocational employers also spend 38 per cent less on employee skills than other employers.
Small businesses also need to pay more attention to employee development. Although spend per head is actually higher, 22 per cent of SMEs have not planned employee training, compared with just 11 per cent of larger companies.

Stephanie Morgan, chartered psychologist, comments: ‘Smaller and vocationally-oriented businesses, in particular, could spend more time planning employee development. By making this investment, organisations can become employers of choice and make themselves less likely to face a shortage of skilled workers in the future.’ The ‘Train to retain’ report suggests that HR departments should focus on retraining existing staff rather than seeking fresh talent - especially given that 60,000 fewer people are entering the workforce year on year.'

Recruitment spend

But, HR personnel in the publishing and media, professional services and telecoms and IT industries all spend more on recruitment than training for existing staff, putting their productivity at risk as the pool of new talent dries up.

Judith Norrington adds: ‘We are urging UK employers to regularly assess the training needs of their staff, formalise training programmes and measure performance against this investment. They can then be sure that an improvement in skills is having a positive impact on the bottom line. UK businesses need to ensure that their workforce is skilled to a Level 3 or the equivalent of an ‘A’ level if they are to compete effectively with China, India and other emerging economies. Making an investment in employee training now will have a positive impact on productivity today, tomorrow and in the future.’

Article originally written by Recruitment Consultant Magazine 24th April 2007