Why employers are spending more on learning and development
When deciding whether to invest in L&D for employees, employers can choose between paying now or paying later.
Too many employers believe they're in a Catch-22 when it comes to upskilling employees. The cost seems prohibitive, but the price paid for untrained workers may be higher. They worry if they invest in training, employees will move on to greener pastures, but worry if they don't train, they will be stuck with unskilled workers.
Walmart can easily absorb learning spend, but the company is known for its cost-consciousness, and L&D is no exception. Ellie Bertani, director of HR strategy and innovation at Walmart, suggested rethinking the cost of learning.
"I believe business needs to stop looking at employees as a cost center and realize they are an investment. Training them is an investment that will pay dividends in the future," she said.
The metrics are more than just the training cost per employee; retention, engagement and attracting quality hires are all part of the ROI of training.
Rethinking the training spend
HR and L&D can no longer simply recommend training. The department now must work directly with managers to identify skills gaps and establish a clear case for training; if learning directly improves performance, the cost of not training may be higher than the cost of investing in employees.
"The changing labor market demands a shift to modern learning, and employers will need to meet the needs of continual learning across the workforce," Jeremy Auger, CSO at D2L, told HR Dive in an email, "so the choice is really between paying the price of learning or paying a price in the marketplace." By doing nothing, he added, companies will face employee turnover, recruitment challenges, lost productivity, lost sales, loss of staff to competitors and lack of innovation – all of this, he believes, is far harder to recover from.
The cost of knowledge
While the cost per employee is higher for most small companies thanks to economies of scale, Maria Ho, associate director of research at ATD, said employers should conduct needs assessments before creating programs and evaluate programs after they are created. "Our research has shown that it's important to involve all employees in learning in order to build a culture of learning, have more knowledge sharing, and also build succession pipelines," she told HR Dive in an email.
Niall McKinney, president of AVADO, noted that as jobs automate, employers may need to help employees reskill to match the new jobs that will appear. "We think people are spending more because the skills required in roles are changing very quickly," he said.
As more jobs become automated, employers need to help employees re-deploy in new or more advanced areas. Around 32% of current workers ages 16-54, regardless of their position, may need to retrain within the next 12 years, according to McKinsey reports cited by AVADO.
Kelly Palmer, CLO at Degreed, said in an email that cost is not an excuse for not training employees. "The reality is that today anybody can learn any topic, from any device, anywhere in the world at low to no cost," she said. With so much content available, she added, "it's more about encouraging and allowing employees to spend time learning."
Who needs training?
There's a lingering perception that new or entry-level employees require minimal training, Auger said, "sometimes as little as a company manual and a few conversations with current employees." Even companies that invest in learning for employees haven't changed their onboarding process much, which is "too bad," he said, "because getting those employees up to speed faster and setting them up for success leads to greater retention and better return on investment."
Palmer agrees: "Most companies spend most of their training and learning budgets on leadership and management training and leave the rest of their employees to fend for themselves." Smart companies, she added, focus resources on entry-level employees as well, which can lead to greater employee longevity.
But companies are coming to the realization that they can't afford not to make learning a part of company culture. Skills shortage is a reality today, but hiring "specialized individuals" actually costs more in the long-term than training up who you have on hand, Palmer said.
Approaching training strategically
For L&D to really succeed, it has to be wielded as one of many tools in a toolbox. Walmart's L&D includes a "One Best Way Team" that works with managers to develop best practices and procedures for 52 identified performance areas.
"Walmart's Academies were built by the operations businesses purposely to address the issue of pulling staffers away for learning that wasn't closely aligned with need," Bertani said. Leaders articulate need and then work to develop standards. Once programming is developed and delivered, development leaders must continuously monitor to assure training was effective and behaviors have changed.
To make sure all of the above actually happens, however, more employers are opting for business partnerships with educational institutions to provide a pathway for employees to learn.
"Growing availability of online training programs enable businesses to cut costs while increasing quality and personalization," Leah Belsky, vice president of enterprise at Coursera, told HR Dive in an email, "which makes employee training a realistic endeavor for small or mid-size businesses that otherwise wouldn't be able to afford it."
McKinney suggested businesses focus on practical outcomes and learning design that changes behavior, making employees more effective and productive. But Palmer believes with today's available technology, skill acquisition has never been more cost-effective or efficient. "There are truly thousands of free or low cost options for learning and many platforms like Degreed that centralize access to those sources," she said. "The minute you open up all the content that employees can learn from, the challenge of helping people learn new technologies becomes so much simpler."
Making learning affordable may hinge on employers changing the way they think about employees and the return on investment. In response to demand for concrete talent insights, Belsky said, Coursera for Business recently launched Skills Benchmarking, an AI-powered tool that arms organizations with actionable data about talent performance, such as skills employees are gaining and their level of competency.
Other metric types, such as retention rates, may be useful, as well. For one of AVADO's clients, "turnover fell from 30% to 6% in the cohort of people trained," McKinney said — something that certainly benefits a company in the long run.
Learning programs are increasingly an aspect of company branding, as well, Ho noted. Personalized career paths — especially useful for workers that may be struggling to figure theirs out — can go a long way in engaging and retaining workers.
For businesses that worry training will make their staff members more valuable in the marketplace, Palmer said that while there's no way to prevent attrition, learning can boost engagement and loyalty. "Instead of asking what happens if I train my employees and then they leave," she said, "ask what if I don't train them and they stay?"
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