By Julie Smith, Associate Director, People & Change Consulting at Grant Thornton
In the uncertain world we live in, one thing we can be certain of is that businesses need people and people need to have up-to-date knowledge and skills to enable businesses to succeed.
No matter how the working world changes, there will always be a need to constantly train and develop employees.
Whilst many companies recognise and acknowledge this, the budget for investing in their people is often one of the first things to be reduced when times are tough.
Many employers will make this decision as they see other business costs as a priority.
Whilst understandable, especially during lean times, employers often do not consider the true cost of failing to invest in their employees’ development; people may become less productive, demotivated and feel under-valued, and may decide to look for alternative employment where they believe there are development opportunities.
To establish the true cost, we need to consider how much it costs to replace an employee.
Often employers will think of tangible costs (e.g. advertising and recruitment agencies), but what about the cost in terms of time and impact on service and productivity?
Whilst difficult to quantify, the cost of losing an employee’s knowledge and skill must be considered. This will impact on service and productivity and on other employees, whose productivity may also be impacted as a result of a loss of a colleague.
Reduction in productivity may be short term but could also, in some cases, last a considerable amount of time if it proves difficult to attract a suitable replacement. Looking more broadly, any impact on service or productivity could lead to customer dissatisfaction, which may lead to a reduction in customer numbers and ultimately profit.
Then there is the management time that will be spent on selecting and interviewing candidates. This is often over-looked. If calculated, however, and added to the true cost, employers can expect to add thousands of pounds to the recruitment process.
Today, workers are seeking more from employers. They are not just enticed by salary.
They look for additional benefits such as flexible or agile working or an employer focus on health and wellbeing with appropriate benefits provided such as gym facilities or membership.
They are eager to learn, grow and succeed.
As such, they will search for an employer who can meet their requirements and enable the lifestyle and development they seek.
So, if this is what our workforce is seeking, shouldn’t all employers be finding ways to invest in their people, to ensure they retain the talent they have? If not, the true cost of losing an employee can be more costly than any investment provided for their personal development.
Not only should development be provided for existing employees, the investment would also help to attract the best talent.
Surely investing in your people today and in the future will pay dividends in the end.
For further information or advice, Julie Smith can be contacted at Julie.Smith@ie.gt.com
Grant Thornton (NI) LLP specialises in audit, tax and advisory services and was ranked by Experian as the Number 1 deal adviser in Northern Ireland in 2018