Should I train my current employees or hire new skilled workers?

As a business manager, you want to have the best talents in the business. Should you hire from outside or do you simply train your existing employees? That is the dilemma that many supervisors face.

By training your current staff, what are the advantages? Well, the good news is that employees who are given adequate training are more likely to stay.

The importance of employee training and development to an organization

In a survey by HR Review in the UK, 56% of workers said that they will leave their current role if their employers stopped providing training. In fact, 31% have previously left a position because of this issue, according to the same study.

And did you know that it costs SMEs an average of about $15,000 to replace employees? That’s because every time a business replaces a salaried employee, it costs 6 to 9 months’ salary on average, according to the Society for Human Resource Management.

The higher the position, the bigger the cost, of course. For a manager making $40,000 a year, that’s $20,000 to $30,000 in recruiting and training expenses. So, the next time you’re asking yourself if you should delay your employees’ training to avoid extra expenses, you may want to think twice.

Scheduling employee training

Now that you know that your current workers want training, the next consideration would be finding the time to do it. Obviously, you should check the company’s schedule to know the days when your staff is at full capacity.

How do you know when to schedule training days that don’t interfere with operational work? It can be a challenge if you’re handling several employees from different branches of your business.

The trick is to have a staff management software that allows you to systematically coordinate and plan training across different teams. It’s best to have an agile platform that gives you the flexibility to move around schedules instead of writing them down on a piece of paper or word document.

Should I hire new skilled employees of upskill your current staff?

However, if there is a position open and it is a highly-specialized role, you must weigh the resources it will take to train an existing employee versus hiring a new one who already has the required skills. Will it be easier and more cost effective if you actually just hire from the outside?

That’s the question we’ll be answering in this post. In this guide, we’ll give you a few pointers and factors to consider whether it’s better to hire a new employee or train an existing one.

The cost of training new employees

According to the 2018 Association for Talent Development Report, the average training cost per employee is $1,296. On top of that, each employee is said to have spent an average of 33.5 hours for training.

You may ask, why is the training so expensive? Consider several costs, including:

  • Training materials and/or equipment
  • Loss of billable hours
  • Payment for outsourced lecturers

Each company has its own needs so make sure to tailor your training specific to them. Do you need to outsource trainers? What kind of training materials do you need? And all of that should be accounted for when computing how much you spend on training per employee.

If you want to compute your own cost of training for an employee, here is the formula:

Training Cost Per Employee = Total Training Expenses / Number of New Employees

Say you spend $3,000 on training materials, another $3,000 in lost productivity, and $1,000 on new laptops for all trainees.

This totals to $7,000 for training for the whole year. And let’s say you hired 4 new employees. The formula would now look like this:

$7,000 training costs per year / 4 new hires for the year = $1,750 training cost per new employee.

The cost of not training employees

As previously mentioned, when companies neglect ongoing training — as far too many companies do — the price is the loss of top talent.

According to a study published in the Harvard Business Review, many top young workers feel they’re not getting enough employer support for professional development. If that feeling consolidates over time, your company could experience a brain drain of its best and brightest.

Aside from this, not training your employees can result in decreased productivity or even loss of profit. Just imagine all the upskilling they are missing out on, which in turn can be beneficial to your company.

To use a simple example, your bartender may learn how to make new drinks if you send him to a seminar. When he goes back to work, he creates new drinks for your bar, and this attracts new customers and brings in money.

What are the benefits of retraining employees?

With existing workers, your training should have a different focus. You want to help your workers improve their skills, stay current with your industry, and advance their careers.

Look for ways to train and encourage employees to think outside the box and solve problems in creative ways. Blend both skills-oriented and development-oriented training for best results.

A consistent commitment to quality and ongoing training will improve employee engagement and yield a more productive, flexible organization.

By committing to top-quality ongoing training for existing employees, you help build a workforce that’s highly skilled, and trained your way.

As an added bonus, assuming they’re compensated well, your current employees will become both more loyal to the company and less interested in looking elsewhere.

Should I hire externally or promote from within?

Despite the obvious advantages of promoting from within and training current workers to take on bigger jobs, it can still be tempting to hire a perceived “rock star” away from a competitor.

However, one study shows that another company’s “rock star” may not be the best bet for your company. In fact, they could actually end up costing your business a lot of money – as much as $24 million, according to the study.

This is because of increased tension in the workplace brought about by the new hires and a more difficult adjustment period for both them and the current employees.

Of course, there are also advantages in hiring externally. For one, a new employee can bring on a different perspective. Old problems can be solved with new solutions, given the fresh set of eyes looking at them.

If it’s a sales position, they might be bringing new clients with them.

New employees can also bring new skills and technology to the table. Maybe this new hire knows another software you can use to do your jobs faster or maybe they have a different, more efficient way of doing things.

On the other hand, if you hire from outside instead of promoting from within, current employees may feel that their chances to advance their career in your company is very limited. They may be tempted to look elsewhere.

The biggest benefit of hiring from within isn’t just the increased productivity of upskilled employees, it’s also a morale boost for everyone — it shows that you champion your own people and care about their career goals.

Who is responsible for training new employees?

It’s often a debate between the Human Resources (HR) Department and the Operations Department on who should be in charge of training. Usually, the simple answer is both of them.

The Operations Department may see the immediate needs of employees and may prepare for department-specific requirements. On the other hand, the HR Department can help trainees address needs and goals at a company-wide level.

A company needs both the HR and Operations Departments to effectively handle employee training. If they can cooperate in defining the needs and prospects of training in line with the company’s business strategy, the training will be able to address both short and long-term goals.

What you have to figure out next is how to coordinate the schedules of the HR Department, the Operations Department, and the trainees. That shouldn’t be a problem, however, if you have a staff scheduling app.

What are the different types of employee training?

There are various ways to train your staff and each one uses different materials or methods which you can tailor depending on specific needs:

  • Instructor-led training – This is a traditional type of learning in a classroom with a teacher presenting a material. While this is not an interactive method, it can be a great way to tackle complex materials.
  • eLearning – Relies on videos, courses, tests which employees can take online. With this method, employees can also take control of their time since they can log on the learning portal whenever they’re free. Employees can do their training right in the palm of their hand with a smartphone or on their company computers.
  • Simulation employee training – This is mostly provided through a computer using augmented or virtual reality. This is the necessary option for employees in a high-risk field such as aviation and medicine.
  • Hands-on training – An experiential training that’s focused on the individual needs of employees, it’s conducted directly on the job and helps employees enhance their skills.
  • Coaching or mentoring – While this is similar to hands-on training, the focus of coaching is the relationship between the mentor (an experienced professional) and the mentee (the employee being trained). In this type of training, there is an opportunity for the mentee to ask questions that he or she would otherwise be shy to ask in a group setting.
  • Lectures – If a big group of employees need the same type of training, the lecture-type training can fit the bill. This is good for subjects that aren’t specific to a certain department. An example can be lectures on company policies or business compliance within the industry.
  • Group discussion and activities – This type of employee training is best used for training big groups simultaneously on complex issues that require collaboration and problem solving.
  • Role-playing – In this type of training, employees will be asked to consider different points-of-view as they take on another role – a manager or someone from another department. This way, they can come up with innovative solutions to old problems and learn how to cooperate while solving tasks.
  • Management-specific activities – Managers have different needs from other employees and that is exactly the purpose of management-specific activities. It may include simulations, brainstorming activities, team-building exercises, or eLearning focused on management best practices.
  • Case studies or other required reading – Similar to being given homework in school, when employees are given case studies or required reading, this supplementary knowledge can be helpful to tasks specific to their roles. An example can be industry updates or the latest study relevant to their field.

What are best practices for training new employees?

It’s crucial to get new-hire training right. This is where you make your first impression on your new employee, and how you give them the tools they need to meet your expectations of them.

At a minimum, orientation and basic training for new employees should include:

  • An overview of the company, including organisational structure
  • A clear explanation of job duties and expectations
  • Hands-on and theoretical training for necessary job skills
  • A thorough explanation of safety and other types of legal or regulatory requirements

In addition, create a new-hire manual and keep it current at all times. Keep it light – your new employees will get a better understanding if you tailor the manual to be easily comprehensible. See our guide to hiring and onboarding new employees for inspiration.

Finally, your employee manual should be as specific as possible, including diagrams and images where appropriate. Remember that the manual is the first place they’ll usually turn to, if they encounter questions about their new jobs.

Developing a training programme for existing employees

Coming up with a training programme should be customised per specific department or organisation. This is why it’s important to have Operations, HR, and the actual trainees onboard and invested.

Once you have their support, you can work through these steps to create the perfect training programme:

  1. Evaluate your needs for training based on gaps in performance, which you can identify through ongoing analysis and managerial attention. Tailor your training programmes to address those gaps.
  2. Address regulatory and legal requirements in training and respond promptly to changes in this area. Ongoing training for existing employees helps you maintain compliance, avoiding stiff fines or worse, especially for worker and customer safety issues.
  3. To improve your company training, combine in-person and online methods. Having someone physically present in the room helps when trainees need more explanation, while online modules let the employee move at their own pace.
  4. Whenever possible, conduct hands-on training in a controlled, safe environment. A Skillsoft survey found that 33 percent of office workers prefer to learn by doing, with “real-world” experience guided by an expert.
  5. Reduce the costs of training without sacrificing quality by using free resources where possible, such as MIT’s OpenCourseWare.
  6. Finally, if you have existing employees who are experts in specific subject areas, consider enlisting their help. In many cases, they can do a better job of training because they’re already familiar with internal policies and procedures.

Communicating training needs with your staff using Planday

While you’re developing the training guide or programme, it’s important to be in constant communication with your staff. Knowing their needs should be the backbone of your training programme and you can do it with Planday’s employee communication system.

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