Education Case

The issue: Companies aren’t investing in their employee’s education and/or training as they did prior to the “recession.” When companies struggle through economic downturns, much like the one we are experiencing now, the first instinct is to start slashing the operating budget and managers and employees are asked to do more with fewer resources. The economic outlook for the foreseeable future in our country shows businesses will continue to cut costs and make tough choices in order to survive and stay competitive. While the belt tightening continues, so too will the temptation to cut training budgets or eliminate them all together.

It's been my experience that one of the areas hit hardest by budget cuts is the training function. Training, in some instances, is often thought of at times as a luxury or "nice to have" in organizations. It is an expense worth paying for when times are good, but an easy target for elimination when times are bad.

Companies who have established formal training departments, however, see the benefit to operating an education arm of their organization because they understand how training maintains or increases performance in their employees. They understand there is a science behind training and adult learning. After all, it is the employees that help make the organization run. Poor performance on their part could mean poor performance for the organization as a whole.

The cost of employee turnover due to poor training or cuts to employee training, results in higher costs to employers. These costs are due to employee turnover. According to Deloitte's 2010 Ethics & Workplace Survey, one-third of employed Americans plan to leave their current job and look for a different job or career once the economy gets better. The main reason as to why they choose to leave their current position is due to lack of trust, and clear, consistent communication from their employer; add to this poor training or lack of training opportunities where employees can enhance or develop their skills.

The Center for Workplace Excellence has compiled data on how companies who under-train or poorly train their employees suffer from costly high turnover rates. Costs associated to replacing (or failing to replace) those lost through turnover far out outweigh the costs in further investment in training. Consider the following: in companies where training is considered good, 12% of employees are considering leaving to find new employment or changing careers. In companies where training is rated poor (or severely lacking), 41% of employees are planning on leaving. The average cost of replacing an employee making approximately $60,000 per year is more than half that person's salary - almost $38,000. The average across the country is $17,000 in recruiting, screening, interviewing and on boarding costs. Using these figures, it becomes apparent that these costs add up when you have many employees