As the labor market continues to tighten, nearly all employers are grappling with the cost of churn. In fact, the quit rate has risen every year for more than a decade — with about 40 million employees voluntarily leaving jobs in the past year alone.
What’s worse, millennial employees — who now are the largest generation represented in the workforce — made up more than 50 percent of voluntary separations.
Employers are often reluctant to invest in training for fear of “free riders” eager to poach their investments in so-called “elevator assets”: skills that employees can use to move up the career ladder. These assets can be lucrative; in high-demand fields, some employers are reportedly willing to double the salaries of new hires.
As a result, large companies are actually spending less on training than they have in years past. Why train your competitors’ talent? Why swim upstream to develop talent in an era where employee loyalty hovers near all-time lows? Conventional thinking holds that it’s easier to poach talent than to create talent.
Search and replace. Poach and pay. Rather than invest in training, employers continue to play a costly zero-sum game.
But what if investments in education can actually bend the curve on employee turnover? What if the best way to retain your top employees may actually be to prepare them for their next job?
Research shows that as the labor market tightens — and the shelf life of skills shrinks — employees not only value education as a benefit, they are more likely to stay when they receive it. By investing in talent — even if it makes current employees more marketable to other employers — companies can sow loyalty and boost goodwill, which in turn leads to stronger performance.
Consider the case of Discover Financial, which has seen $1.44 in savings for every dollar spent on education reimbursement. An analysis at Cigna conducted by the Lumina Foundation found similar returns on investment in training.
At the same time, learning and development are often among the most popular workplace benefits cited by millennials. According to Gallup, 87 percent of millennials rate professional or career growth and development opportunities as important aspects of a job. Nearly 60 percent say opportunities to learn and grow are extremely important to them.
But it’s not just young employees who see the value of continued investment in learning. More than half of all working adults now acknowledge the necessity of training throughout their careers. And according to LinkedIn’s 2018 “Workforce Learning Report,” 93 percent of employees say they would stay at a company longer if it invested in furthering their careers.
The benefits of investing in employee learning go beyond helping reduce churn. As the world of work becomes ever more automated, reskilling employees will only grow in importance, closing important skills gaps within companies and charting a path forward for workers in an increasingly tech-focused economy.
Employee training has become a collective action problem: No employer wants to be the only one investing in talent, as they may cede at least some of their investment to competitors who poach their workers. But if every employer continues to protect their human capital by refusing to upskill their current workforce, companies will find themselves all fishing from the same dried up talent pool, unable to find workers with the training to take on the economy’s emerging challenges.
To break the cycle, employers have to step up and recognize that by collectively embracing a new model for upskilling current employees, they will all benefit from a stronger workforce. A report from Accenture Strategy argued that if businesses doubled their investment in workplace training — in particular programs that focus on soft skills like creativity, critical thinking, emotional intelligence and leadership — they could reduce the number of jobs at risk from automation from 10 percent to 4 percent.
Some prominent companies are already paving the way, either by offering on-the-job training or paying for employees to find the training they need elsewhere. McDonald’s announced last year the expansion of its upskilling program, which provides employees with career advising services meant to help them translate the skills they learn on the job into advancement opportunities. Through this program, employees can access tuition assistance, and if they earn a degree, the company will help them land their next job — even if it’s with another employer. They are investing in the growth of the overall talent pool instead of running existing resources dry.
Hilton Worldwide now offers an innovative 22-week apprenticeship program at hotels across the United States. JetBlue, through its Scholars Program, provides online courses to employees, covering most of the tuition costs and allowing workers to earn a degree from Thomas Edison State University. These companies are early examples of what is sure to be a growing trend in business.
Meanwhile, policymakers are exploring ways to further incentivize companies to offer meaningful job training. Employers are learning that what has long been viewed as counterproductive is, in fact, a smart strategy for recruiting and retaining a workforce that is better prepared for the future.
The way to hold on to the best workers is to train them for their next job.Filed under: Talent ManagementTagged with: employee turnover, learning investment, quit rate, talent pool