Although the vast majority of Australian businesses are starting to see the benefit of internal staff training – and channel resources accordingly – 44 per cent of workers believe their own skills are being underutilised. This is becoming a problem. Research has shown time and again: staff attrition costs companies billions of dollars, and people tend to leave jobs when they feel there’s nowhere left to grow.
But who’s responsibility is upskilling anyway? Do businesses have an obligation to train and develop their employees? Where does the burden lie? And, more importantly, where does the buck stop?
"according to recent research, upskilling employees and investing in their career progression is very good for business"
Is it up to businesses to upskill their staff?
While businesses don’t have an explicit obligation to squeeze the maximum potential out of every single employee, they do have an obligation to do what’s best for the business. And according to recent research, upskilling employees and investing in their career progression is very good for business.
While it’s hard to put a precise dollar figure on the benefit of staff training, studies have shown that, for each hour of informal learning, businesses get a productivity increase of around 1 per cent.
There are hidden benefits too. Most companies use external recruitment to plug skills gaps or expand team capabilities, but research from Wharton Business School suggests that, not only do new hires cost 18 per cent more than internal promotions, they’re 61 per cent more likely to get fired and take two years (on average) to reach the same performance standard. Other studies have shown that the cost of replacing a bad hiring decision within six months is around 2.5 times the worker’s annual salary.
The numbers don’t lie: when you stack internal training against external recruitment, it’s far more cost effective, on average, to upskill your existing workforce.
There’s also the question of tech disruption. Despite companies expecting to lose one in ten jobs to automation over the next few years, only two-thirds actually have adequate training in place to transition their current staff.
Most companies surveyed believe that the market will solve this problem, which is not only wildly optimistic (given the looming tech skills shortage across the country) but also unfair to existing employees. Staff want job security, they want career progression opportunities, and they want companies who invest in their development. Whether or not businesses have a ‘responsibility’ to upskill their staff is becoming increasingly irrelevant: staff expect training, and they’re willing to jump ship to find it.
"The numbers don’t lie: when you stack internal training against external recruitment, it’s far more cost effective, on average, to upskill your existing workforce"
What role do employees play in upskilling?
This was the traditional corporate ethos for most of the 20th century: an employee’s personal development is really the responsibility of that individual employee. How can businesses be expected to outlay training costs with no guaranteed return? Isn’t tailored training for a large work force is impractical? And what if an employee accepts work-sponsored learning, then immediately jumps to a competitor?
Let’s tackle these points one by one. Studies have shown that it’s a lack of professional development opportunities, rather than the other way around, that leads to staff attrition. In-house training and upskilling have also been shown to boost job satisfaction and increase professional loyalty.
In terms of ‘guaranteed return’, this is a little harder to measure, but we can look at the qualitative data. RMIT Online’s research indicates that many Australian employers are now investing less money in recruitment and more money in staff training – with surprising benefits all around.
When looking at 600 businesses in professional industries, we found that 45 per cent of leaders are already delivering internal skills training. Moreover, 95 per cent of businesses said that they, as an employer, received a direct benefit from staff training. Two thirds of respondents claimed this benefit was split equally between the employee and the company.
Employees do need to be proactive and make sure that training budgets are spent effectively, but it’s up to businesses to make those budgets available in the first place. The figures show that companies who take the lead with staff training – rather than leaving it up to individual employees – gain a substantial, long-term benefit. It’s the classic win/win situation.
So, whose responsibility is it to upskill?
As always with binary questions like “Whose responsibility is it?”, the answer comes down to: a little bit of both. Businesses have a responsibility to offer reasonable upskilling programs (if for no other reason than it’s extremely profitable to do so) and staff have a responsibility to speak up, ask questions and seek new pathways.
Upskilling should be seen as an opportunity, but also a privilege. It’s up to both businesses and employees not to squander it.