Tuesday, June 21, 2011

#ALGORITHMS: "Does Employee Training Increase Turnover?"

Enterprises often distinguish themselves by offering excellent training opportunities, thereby attracting the best applicants and creating the most productive employees. Unfortunately, a new study claims that employers may actually be increasing turnover by making their employees more qualified for job opportunities elsewhere.

Employee training can be the difference between a trim, efficient workforce and a bloated, incompetent one that wastes enterprise resources and ultimately shrinks the bottom line. As a result, U.S. businesses spend about $134 billion yearly training their workers. Unfortunately, a new study at the University of Iowa maintains that much of that money is wasted, since it merely makes employees more qualified to take better paying jobs at other companies.
Compounding the problem is the fact that by increasing turnover, the additional expense of finding, hiring and training new employees is increased as well, driving up costs and further sinking the bottom line.

The problem, according to University of Iowa professor Scott Seibert, is that employee training does not by itself instill loyalty. Professional development by itself merely creates the hunger for better opportunities.

The key to making employee training programs pay off, is to couple professional-development programs with a clear path to career advancement.
"Only those employees who can see a way forward in their careers will stay with an employer," said Seibert. "Otherwise, professional-development opportunities might simply make their workers more employable by other firms."
Seibert and fellow professor Maria Kraimer based their conclusions on a survey of 246 employees, who were asked whether their company had provided adequate professional-development programs as well as whether the company also had career-advancement opportunities in-house. The results showed that the employees who took advantage of professional-development programs planned to stay on only if the training was coupled with attractive career possibilities. Otherwise, they were happy to receive the training, but felt no obligation to stay on; in fact, they felt the opposite way and started almost immediately looking for career-advancement opportunities elsewhere.
"When career opportunities are low, development support was not related to performance, and it actually increased turnover," said Kraimer.

The enterprise that coupled training with a clear path to career advancement, on the other hand, was able to retain their employees and boost their company's overall productivity.

The most surprising finding of that study was that "career advancement" did not correlate directly with promotions and raises. In fact, many employees said that job rotation, mentoring opportunities and an improved relationship with their boss created the feeling that career opportunities were available.

"Career opportunities are perceptual in nature, so raising perceived career opportunities for employees may be largely a matter of letting employees know more about the range of possibilities that are already available within the organization," the researchers wrote in their study entitled: "Antecedents and Outcomes of Organizational Support for Development: The Critical Role of Career Opportunities."
The study, co-authored by professors Sandy Wayne and Robert Liden of the University of Illinois-Chicago and professor Jesus Bravo of Arizona State University, will be published in the “Journal of Applied Psychology.”

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