Employers Who Invest and Nurture Talent Cut Costs

On 16th May 2008 Willy Walsh, Chief Executive of BA summed up the dangers of cutting training during an interview on Radio 4’s  Today programme. Asked what was the biggest mistake made in the T5 debacle, he said “allowing delays in the building programme to impact on the staff training and familiarisation programme that we had put in place”. He admitted they had compromised on the programme.  How many companies make the mistake of cutting training when times get tough leaving their people without the skills and knowledge to deal with difficult conditions? Hopefully it won’t cost them the £40-50 million it’s estimated this mistake will cost BA.

Later the same year Cranfield School of Management published a report entitled Nurturing Talent that shows that businesses that invest in their staff and continue to train and develop them are: -

• Best placed to save money -  44%
• Improve staff motivation – 33%
• Increase employee retention – 52%

The report also found that organisations that made strategic decisions about staff development, and used formal rather than ad-hoc policies to train and nurture talent were more successful. However despite the evidence that 45% of successful organisations use formal training policies and programmes to develop their internal talent only 34% of organisations overall have such a strategy yet 78% of employers see skills development as more beneficial than external recruitment.*

Dr Emma Parry the report’s author said, “ With training budgets arguably amongst the first to go in a recession, this research demonstrates that growing your own is an effective way for organisations to obtain the skills they need while saving money.”

With organisations cutting back staff numbers it clearly makes sense to invest some of that saving in developing the skills of those remaining and ad hoc initiatives are clearly less effective. With apologies to Zig Ziglar who used the same analogy about motivation; training, particularly skills development, is a bit like washing, it must be done regularly to achieve the desired results! If organisations are going to able to capitalise on the opportunities once the much lauded green shoots of recovery appear they will need well skilled, knowledgeable and motivated people.

The training and HR community have always known this but now have some evidence to support their case when arguing for a share of the budget.

*The report used responses from 1189 training and recruitment decision makers.