Ask the Executive Coach: Putting priority on training employees – New Orleans CityBusiness

Question from Allison D. Craig, I work in human resources at a 200+ employee human services organization. Our CEO has had to reduce our training and development budget this year and I do not anticipate an improvement in 2021. I am worried about retaining our best employees because I know from experience, our turnover increases when we do not develop our employees. Can you give me any advice on what I can tell our CEO to make training a higher spending priority? Thanks, Allison.

Allison, thanks for asking this question. Developing people is a subject near and dear to me and was a priority in my hospital days. I have seen several of the employers I work with reduce training and development (T&D) budgets significantly. Looking at the bigger picture, we both need to understand that the survival of many employers in New Orleans is a very real issue. You and I both need to be realistic about that reality. What worries me most are the companies that continue to keep a tight hold on T&D funds, even when their profits have recovered sufficiently, such that mere survival is no longer an issue. I hope your company has moved past those difficult daily survival decisions.

Juengling

I recently attended the New Orleans Society for Human Resource Management (SHRM) annual conference and had a chance to listen to the national SHRM President Johnny Taylor, Jr. speak to these very issues. While I have some thoughts to add, he brings us insights to this challenge from a national perspective. Here are the three critical points he made:

We are a knowledge-based economy. When you think about this, he is right; the vast majority of jobs today (and certainly those of tomorrow) require continuous learning, not physical strength. The constant need for learning new concepts is critical for production of manufactured goods or developing the technology and software needed in a competitive environment. The delivery of your programs and services is no exception. I also believe one of the trends of the pandemic will be on-shoring of the manufacturing sent overseas in the past two decades, as well as the emergence of industries to address renewable resources and global climate change. T&D is and will be crucial to thrive in this new world.

The war for top talent never ceases. The megatrends are undeniable: declining birth rates, aging of the workforce, and an expanding economy (after the pandemic recovery). The second most important driver of employee engagement, whereby your employees give valuable discretionary efforts, is the fact people want to be developed to achieve greater contributions, more responsibilities, and professional growth. Over the coming decade, the labor force will shrink in most developed countries and T&D has been proven to retain top talent.

The skills gap of managers and leaders is (still) huge. The data still supports this fact: people leave companies because of their boss over 60% of the time. Another reality: over 50% of employee problems are a result of poor management that leads to poor operating results. If company leadership took more time developing managers and emerging leaders, you would have a better bottom line and better employee retention. The cost of hiring top talent will continue to go up, but you can proactively address the problem by training up your managers and leaders.

I want to add these two other thoughts to Mr. Taylors comments:

Build your business case. You can and must determine the cost of turnover, hiring, and lost time due to poor management and leadership. Estimates of the cost of hiring new leaders is still between 15 to 35% of their annual salary (recruiting fees, relocation, lost productivity, etc.). SHRM estimates it costs over $4,000 to hire every new line employee. So after you add up the turnover costs, it justifies the need for a reasonable development budget and program for managers and leaders.

Find an executive sponsor. Even if you are the head of HR at your organization, find a C-level executive sponsor who agrees with the necessity to develop your employees. Work with them to build your business case and then persuade the members of the leadership team of the necessity to think long term. T&D is a strategic imperative where you invest in people. Leaders who see T&D as a line item expense to be minimized will not see their companies recover quickly when better times return.

Allison, I hope this helps and I want to leave you with a final thought: There is a famous Richard Branson quote that he penned in 2014 that goes, Train people well enough so they can leave, treat them well enough, so they dont want to. The statement from the founder of Virgin Atlantic carries a lot of meaning, and it should undoubtedly be the driving force of every manager, leader, executive and business owner.

Craig S. Juengling, PCC, is a credentialed executive coach who spent 22 years running hospitals and health care systems and maintains a private executive coaching practice in New Orleans. Visit http://www.neworleansexecutivecoach.com for additional information, or email Craig at JuenglingC@juengling.us.

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Ask the Executive Coach: Putting priority on training employees - New Orleans CityBusiness