Partnering with a more human resource

Why training is the key to stronger talent management – including retention

Posted by: The ADP Team on 20 July 2017 in Human Capital Management

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About two thirds of organisations today have a training budget, according to The Society for Human Resource Management – with 39 percent of respondents reporting increases to training budgets in the last 12 months. A major driver for this commitment is the demands of the knowledge economy and challenging market conditions. There’s clearly an increasing desire for business leaders to nurture a multi-skilled workforce who have the ability to work in a variety of roles, as requirements change. The ADP Research Institute® (ADP RI) Evolution of Work report found that 68% of surveyed Australians “already use technology to learn anything, anytime, anywhere.” So why are some companies still not investing in training? One reason can be the fear that an employer spends the time and money training employees, only to see them take those newly acquired skills to another company. Good training programs can however deliver gains in both talent management and retention. Investing in your employees demonstrates that you value them, encouraging them to stay with your business and build their career. The key to creating a win-win situation for employer and employee is to understand, define and measure the training costs and benefits in order to forecast a ROI. You can then advocate for and properly utilise training. 

Understand the impact training has on talent management

According to Harvard Business Review (HBR), a primary reason employees depart – aside from compensation – is because of poor managers. According to the Study of Australian Leadership (SAL) “many Australian leaders and managers are not mastering basic management fundamentals such as performance monitoring, target setting, and the appropriate use of incentives”. In fact more than 40% of Australian businesses fail to meet their performance targets for return on investment and profitability. Management training that aids in improving the leadership, coaching skills and processes for managers could have a pronounced impact on talent management. 

Any employee typically want to excel in their careers – and training often provides the tools to do so. An ADP reportfound that “If training could be brought into alignment with employee goals to grow and advance, changes in this area may also have a broader impact in talent management.” An article from the Economist Intelligence Unit reveals that Finance leaders are increasingly collaborating with HR to build their workforce capabilities as it enhances business performance and profitability. McKinsey & Co. found that 78 percent of the most effective capability building firms encourage their employees to continuously develop their skills through a variety of training. Furthermore, 89 percent of these organisations link performance to skills obtained through various learning programs.

Define what training can change

Solving job performance issues with training is futile, if those issues are driven by poorly structured performance assessment and reward systems, job design and motivation. HBR reports that training as a change strategy rarely works. Implementing specific policies, processes and procedures is more effective. Business goals must be clearly identified and considered. Then, those goals must be linked with individual performance goals – with training designed to fill the gaps in employee knowledge. In addition, training shouldn’t be one-size-fits-all. Effective training is a mixture of in-class learning with real work situations and other options, such as coaching. 

Further, according to the ADP report#, less than 50 percent of employees participate in training. When education, training and development is championed by senior leaders, it normalises it for employees and motivates them to participate. According to ADP researchfor example, employees who have role-specific training options are more likely to stay with the firm. In addition, the conditions are created for people to apply what they’ve learned and systems are put in place to support and sustain the learning. Doing all of this requires more effort, but can drive a high ROI on training.

Measure fully to accurately quantify ROI 

Ensuring that your team has the requisite development support it needs to grow and fully support the needs of the rest of the organisation requires advanced consideration and preparation. Review the specific costs and benefits of the primary training being considered. Calculate all the anticipated training costs including materials, facilities, instructors, travel and evaluation time. Be aware of all the benefits, direct and indirect, soft and hard. This should include the reduction in turnover costs, productivity improvements, reduced labour and compensation costs and increased employee sharing and collaboration. Delving into the true costs of various training options and using a ROI approach can help you clearly determine what types of training are best for various individuals, groups and departments.  

If an organisation doesn’t see the investment return on training, that training is not helping employees succeed. This can be corrected by providing — from the top down — not just training, but the processes, support and opportunities to use that training. Crafting an ROI-driven training budget, using the suggestions shared can provide significant talent management and goal achievement benefits to your firm.

#Fixing the Talent Management Disconnect: Employer Perception vs. Employee Reality, ADP Research Institute, 2017


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