Emphasis should be skills investment

by Gill Plimmer

Ask any question about the problems facing an ailing economy and the answer is likely to include the skills shortage. Yet, while the diagnosis may be correct; the prescription is all too often wrong. Instead of developing existing staff, companies poach the best from their competitors or from overseas.

Rather than organising work-based educational programmes, employees are sent on generalist courses in "management" - or its new incarnation, "leadership". "Companies are often failing to hit the target," says Jim Hinds of Marakon Associates, a consultancy that advises FTSE 100 companies on the issues that most drive their performance and long term value. "They are not investing enough on training and what they are investing is often directed at the wrong places."

A competitive labour market and a shortage of skilled professionals should give more weight to the old credo that "people are your finest asset". But a gaping gulf has emerged between rhetoric and reality. On the one hand professional development - broadly described as the systematic development of knowledge and skills - is receiving more attention from policy gurus than ever before; on the other hand, companies have become increasingly reluctant to invest in training, leaving the job to the regulators, individual employees or the professional associations they have formed.

Exact figures are hard to pin down but Saratoga, an arm of accountancy firm PwC and adviser to 40 per cent of FTSE 100 companies, estimates that expenditure on formal, off-the-job training - by far the easiest to measure - has decreased by 10 per cent during the past two years. This could be masked by the rise in e-learning but is still a fall big enough to cause concern. So long as employees are likely to change jobs at any time, employers will question whether they should be picking up the tab for training. But the simple answer is that companies cannot afford not to.

"A good employer is not necessarily one who pays the highest rate but is one who helps keep their staff's skills and hence their employability up to date," says Richard Phelps, partner at Saratoga. Mr Phelps says that training is often the last item to be added to a company's budget and the first to go because it is hard to demonstrate the return on investment. "Companies have failed to take training as seriously as they should because it is hard to demonstrate exactly how much impact it has on the bottom line," he adds.

However, the changing nature of work - with downsized, flatter organisations, the end of the 'job for life' and the rise of the 'player manager' - has also made companies aware that to be competitive they need to get more out of their people. "Companies have down- sized, right-sized, reorganised, but they now cannot cut or reorganise any further. So, where do they focus next as a way of getting an advantage over their competitors? The most obvious place has to be their people," says Mr Hinds.

Consultancies, training providers and business universities all point to a near doubling in the number of customised education programmes as a result, and a corresponding slide in the take-up of off-the-shelf courses. "Most companies are looking for training that will have the biggest impact. They are beginning to invest again but they are being much more discriminatory," says Bill Shedden, director of customised executive development at Cranfield University.

Certainly, the increase in regulation is starting to push some companies to put their money where their mouth is. Continuing professional development has become compulsory in most core accountancy disciplines. However, much of the burden has fallen on individuals who have been forced to foot the bill for training themselves. Jonathan Harris, chairman of the Institute of Continuing Professional Development, says employees are much like athletes, "engaged in a process of permanent and endless training. They plan their route, exercise and, as soon as they hit one goal, there is a new one".

Professional associations have stepped into the breach, with the threat of regulation forcing the many organisations that compete for members within each industry to pay more attention to CPD. The Financial Services Authority now requires employers to be responsible for keeping their staff's competence up to date, with those that fail liable to stinging fines. Proposals put forward as part of the Operating and Financial Review in the UK, have put pressure on companies to increase transparency and to demonstrate to shareholders the impact of human resource policies.

"Once companies have worked out a way of measuring and demonstrating clearly to stakeholders the contribution that training makes to the company, they will find it easier to make room for it in their budgets," says Mr Phelps. In business terms, this could mean that the sums on training finally add up. Or as Derek Bok, the Harvard president, once said: "If you think training is expensive, try ignorance."

Дата добавления: 2015-08-10