The training gap: The hidden costs of not keeping staff skills up to date
This article is following on from our previous article: The wage vs. inflation gap narrows
During the last recession businesses held on to their employees rather than reduce their workforce. Some came to flexi-time arrangements, others saw a reduction in pay. Now that the economy is recovering one of the mysteries is that we as a workforce are producing less for each hour worked?
Presently our level of productivity is 21 percentage points below the average of the rest the G7 countries. One reason given is that employers have not invested in making their business’s run more efficiently, particularly with training their staff. This not only means staff are working in more stressful environments, but also costs employers more money because it takes longer to achieve results.
Prior to the recession, the UK had the most people in training for the EU, but since then it has reduced 4 times faster than any other European country to now one of the lowest. It is estimated that the manufacturing sector will need to import 1 million positions by 2020 and is still producing 10% less than in 2008. One in three companies will source specialised positions from EU countries while only two thirds of employers conducted any sort of staff training. This equates to a reduction in spending of 2.4 billion since 2011. All of these figures can be damaging to the current recovery and reduce the UK’s competitiveness against overseas rivals.
For individual companies it restrains them from taking full advantage of the current upswing. For SME’s training is seen as an expense rather than investment in the company’s future. A bit of a luxury when we have time. Yet this oversight can end up costing the company more money in the long run. When I was involved in an implementation, I was assisting the head accountant with her monthly reports. I showed her how to use specific formulas in excel to summarise information. She did not know that this was possible and admitted spending at least a day manually cutting and pasting that information into something presentable (My Excel FAQ and favourite formulas). Not having attended a half day course meant she lost one day a month for the three years she had been in that employment. As a rule of thumb if an employee is paid £50,000 only loose one day a month, then the true cost of time lost equates to £6250.00 PA.
As the recovery is quickening in pace it may be time for industry to refocus efforts on their human resources. To encourage staff to become better at their jobs proves a long term commitment to employees as a reward for being loyal during this last recession. It may be time to reinvest in the people parts of the business. This can’t be done in isolation of technological change or of the needs of each particular sector. In these cases it may be that the boss has gone on some sort of training to know what is available, or even what questions to ask. One form of help is the “Growth Accelerator” program, an initiative from Vince Cables department that assigns a business consultant to advice a company on its future direction. Sometimes having an external view helps to clarify issues within the organisation and how and where these gaps can be filled to help both the business and their employees reach their full potential. (See business help section)
Next in the Series: The skills Gap: The high costs of qualifications and what happen to the unskilled.
Malcolm Ford has had 25 years’ experience in different industries and currently implements enterprise level software to increase efficiency in small to medium sized businesses.