De­velop Tal­ent, Don’t Hire It

Em­ployee train­ing may seem pricey, but it costs just pen­nies com­pared with the ex­pense of em­ployee turnover.

Financial Planning - - Contents - BY KELLI CRUZ

Em­ployee train­ing may seem pricey, but it costs just pen­nies com­pared with the ex­pense of em­ployee turnover.

Have you ever cal­cu­lated the cost of hir­ing a new em­ployee? It’s not cheap.

In fact, re­search from Cen­ter for Amer­i­can Progress, cit­ing 11 re­search pa­pers pub­lished over a 15-year pe­riod, de­ter­mined that the av­er­age cost to a com­pany of turn­ing over a highly skilled job can be more than 200% of the an­nual com­pen­sa­tion for that role once train­ing costs, lost pro­duc­tiv­ity and hir­ing ex­penses are counted.

In other words, you can’t af­ford to have a high turnover rate in your firm. So in­stead of green­light­ing new hires, why not look within your or­ga­ni­za­tion to make the best use of the tal­ent you have?

One of the best em­ployee re­ten­tion strate­gies is to in­vest in their train­ing and de­vel­op­ment. In fact, re­tain­ing em­ploy­ees in your firm should be a part of your busi­ness model. If you don’t con­sider em­ployee re­ten­tion as an im­por­tant plan­ning is­sue, you’ll ex­pose your busi­ness to many neg­a­tive side ef­fects, which, in ad­di­tion to the high costs, in­clude:

Lost time: The sec­ond big­gest is­sue with high em­ployee turnover is lost time and pro­duc­tiv­ity. It can take months to find the right em­ployee in a po­si­tion. Each time you lose an em­ployee, you have to rein­vent the wheel and start the re­cruit­ing process all over again. This takes away from pro­duc­tively ser­vic­ing your ex­ist­ing clients.

Poor team dy­nam­ics: Em­ployee turnover is di­rectly re­lated to poor team dy­nam­ics or a lack of team­work. If peo­ple are con­stantly com­ing and go­ing, it’s hard to es­tab­lish a co­he­sive work en­vi­ron­ment in which co-work­ers can rely on each other and work as a team. This can have a neg­a­tive im­pact on your clients, and it in­hibits pos­i­tive em­ployee morale and job sat­is­fac­tion.

Just as kin­dling will make a fire grow, add- ing new em­ploy­ees to a firm that’s go­ing through em­ployee re­ten­tion pains will ex­ac­er­bate the is­sue. Re­fo­cus­ing your at­ten­tion to train­ing and fur­ther de­vel­op­ing your team’s skills is a great way to uti­lize the tal­ent you’ve got while com­mu­ni­cat­ing your com­mit­ment and in­vest­ment in them.

Many firms we’ve worked with don’t have a sys­tem­atic way of train­ing and de­vel­op­ing em­ploy­ees. Un­for­tu­nately, they are not alone, and in­dus­try­wide, this is start­ing to be­come a se­ri­ous prob­lem. If you want em­ployee train­ing and de­vel­op­ment to be a main­stay in your busi­ness plan, then it needs to be­come sec­ond na­ture to em­ploy­ees.

Cul­ture of Learn­ing

You must es­tab­lish a cul­ture of learn­ing wherein em­ploy­ees are en­cour­aged to reg­u­larly iden­tify de­fi­cien­cies in their jobs and re­quest train­ing. Em­ploy­ees should never feel ashamed for need­ing help. They should feel em­pow­ered to rec­og­nize their own ar­eas for im­prove­ment and be given the re­sources and coach­ing to de­velop a plan.

One method for cre­at­ing open di­a­logue on de­vel­op­ment is to meet on a reg­u­lar ba­sis and ask em­ploy­ees ques­tions such as: What ad­di­tional skills, knowl­edge or tools will you re­quire to ac­com­plish your goals? What de­vel­op­men­tal ac­tions will you

take? What two or three things do you need from me as your man­ager to make your job bet­ter? These ques­tions can get a con­ver­sa­tion started and help you and your em­ployee dis­cuss de­vel­op­ment and train­ing plans.

Most firms lack con­ti­nu­ity in train­ing em­ploy­ees. Or­ga­ni­za­tions of­ten front-load a new em­ployee with ex­ten­sive train­ing, but of­fer no learn­ing op­por­tu­ni­ties af­ter the first six months or year. This is a mis­take. If you want to em­brace a cul­ture of learn­ing, you need to plan for train­ing op­por­tu­ni­ties from day one through the du­ra­tion of the em­ployee’s time at your firm. There should never be a point in an em­ployee’s ten­ure that the com­pany says, “You know ev­ery­thing you can know.” There’s al­ways some­thing more to learn.

Al­ways keep in mind that a cul­ture of learn­ing starts at the very top of your or­ga­ni­za­tion. Em­ploy­ees must see that lead­er­ship sets an ex­am­ple. If the firm own­ers and man­agers are reg­u­larly in­vest­ing in their own train­ing by at­tend­ing sem­i­nars and con­fer­ences, then the en­try-level em­ploy­ees are more likely to feel com­fort­able do­ing the same.

Train­ing Choices

No­body knows your em­ploy­ees bet­ter than them­selves. So let them choose the train­ing that they need to do their job bet­ter. This shows em­ploy­ees the or­ga­ni­za­tion cares about them. It builds loy­alty and in­creases pro­duc­tiv­ity.

For­mal train­ing is the ex­cep­tion, rather than the rule at most ad­vi­sory firms. But op­tions for such for­mal­ized pro­grams are di­verse and can in­clude such things as cer­ti­fi­ca­tions and des­ig­na­tions, tech­nol­ogy sys­tems train­ing through ven­dor sem­i­nars and train­ing on firmwide pro­cesses for crit­i­cal tasks. Such pro­grams can of­fer a boost to per­for­mance by ex­pand­ing the skill set of em­ploy­ees as the firm grows. They can also help mo­ti­vate staff and in­still pride in their work.

One of the big­gest com­plaints I hear from firm own­ers is that they don’t have the time or in-house re­sources to pro­vide ad­di­tional train­ing out­side of new-hire train­ing. There are a num­ber of ven­dors of­fer­ing video-based and on­line train­ing that can be ac­cessed re­motely. Cus­to­di­ans are a great re­source for train­ing sem­i­nars and in­dus­try con­fer­ences, both on­line and in per­son. Al­low em­ploy­ees the time and flex­i­bil­ity to at­tend and com­plete such pro­grams.

As a best prac­tice, I also rec­om­mend that you ask your em­ploy­ees who at­tend in­dus­try sem­i­nars and con­fer­ences to re­port back to the team about the key take­aways and les­sons, and to make rec­om­men­da­tions as to how the in­for­ma­tion can be in­cor­po­rated into the firm’s op­er­a­tions and prac­tices.

This type of learn­ing and de­vel­op­ment goal can also make for an ideal in­di­vid­ual in­cen­tive met­ric, and per­haps a fi­nan­cial re­ward for an em­ployee tak­ing per­sonal re­spon­si­bil­ity for their ca­reer de­vel­op­ment.

Men­tor­ship Pro­grams

One way to en­cour­age on­go­ing train­ing is to de­velop a men­tor­ship pro­gram. Men­tor­ship pro­grams look dif­fer­ent in all or­ga­ni­za­tions, but the pur­pose is to en­gage em­ploy­ees and to close knowl­edge gaps in the firm.

I am en­cour­aged to see more firms adopt­ing ad hoc or more for­mal men­tor­ing pro­grams to help de­velop fu­ture lead­ers at the firm. For firms that don’t have men­tor­ship pro­grams, there are a num­ber of in­dus­try or­ga­ni­za­tions that of­fer re­sources. The Fi­nan­cial Plan­ning As­so­ci­a­tion of­fers Men­tor­match and The Na­tional As­so­ci­a­tion of Pro­fes­sional Fi­nan­cial Ad­vi­sors of­fers Men­tor En­gage. These pro­grams pro­vide op­por­tu­ni­ties to con­nect in­di­vid­u­als both as men­tors and pro­teges.

On a fi­nal note, es­tab­lish­ing train­ing and de­vel­op­ing pro­grams in your firm will make you more at­trac­tive to younger tal­ent when you are ready to fill a po­si­tion.

A sur­vey con­ducted by PWC asked mil­len­ni­als, “Which of the fol­low­ing char­ac­ter­is­tics make an or­ga­ni­za­tion com­pelling to work for?” Just over half of them (52%) noted op­por­tu­ni­ties for ca­reer pro­gres­sion as an at­trac­tive char­ac­ter­is­tic in an em­ployer. That ranked higher than mon­e­tary com­pen­sa­tion (44% listed com­pet­i­tive wages and fi­nan­cial in­cen­tives as a com­pelling fac­tor). Ex­cel­lent train­ing and de­vel­op­ment pro­grams came in third, with 35% of mil­len­ni­als not­ing it as an ap­peal­ing draw.

Em­ploy­ees are an in­vest­ment, not an ex­pense. While the in­vest­ment in con­tin­u­ing ed­u­ca­tion and train­ing may seem ex­pen­sive, it’s pen­nies when com­pared to the cost of los­ing an em­ployee and hir­ing a re­place­ment.

This should be the mantra as ad­vi­sory firms con­sider the chal­lenge of em­ployee de­vel­op­ment and re­ten­tion. To get the best work from your em­ploy­ees, you have to in­vest in your in­vest­ment. Cre­at­ing a loyal, skilled and mo­ti­vated staff does not just hap­pen overnight. It re­quires a dis­ci­plined plan with de­vel­op­men­tal train­ing, con­tin­ued learn­ing and steady fol­low-through.

A lot of firms of­fer train­ing for new em­ploy­ees, but no learn­ing op­por­tu­ni­ties af­ter a year or so. This is a mis­take.

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