Should employers should try to re-skill staff rather than lay them off? Well, definitely – maybe.
Should organisations ‘make’ or ‘buy’ talent? This age-old question has taken on an extra poignancy at a time when news of job cuts and planned redundancies appear in the headlines on an almost daily basis.
But even as the number of people registered as unemployed in the UK approaches the two million mark, experts report employers are still recruiting where skills gaps exist. And inevitably, as businesses and organisations restructure to cope with the present economic difficulties, they will be looking for people with the suitable skills to get them through this time and prepare them for when market conditions improve.
According to Owen Morgan, head of commercial operations at human capital consultancy Penna, employers that are planning to make redundancies should consider whether they can transfer or retrain current employees to fill gaps. This, he says, has the double benefit of showing the workforce you are doing your best to keep staff employed while also retaining people who have valuable knowledge of the company and its culture.
“The problem is there tends to be an urgency around redundancies which clouds the thoughts of those making the decisions,” he says. “But if an organisation can retain its staff by retraining them to fill skills gaps they will keep a valuable asset.”
Those who have an established talent management programme, which will give them a better structured understanding of what skills exist in the business and where people can be transferred as part of any reorganisation will be best placed to move people around like this, says Morgan.
One of the main advantages of nurturing talent internally is cost-effectiveness, according to research released last year by government supported e-learning provider Learndirect, which found employers find it is an efficient way to fill skills gaps – an important consideration in a tough economic climate.
In survey of more than 1,000 employers almost half of respondents (44%) agreed that they had saved money by ‘growing their own’ talent, while 38% said developing staff internally was more cost-effective than external recruiting.
“Ultimately”, says the report, “staff development is used more often by companies that need to focus on cost-effective human resource strategies. Arguably, this will apply to a significant number of organisations if economic conditions worsen and training and recruitment budgets are squeezed.”
There are already signs that some employers are doing their best to keep and retrain staff, according to Olwyn Burgess, client service director at HR consultancy Chiumento. She says that, unlike in the recent recessions of the 1980s and 1990s where “talent was haemorrhaged” because the focus was simply on cutting head count and cost, this time round many employers are taking a more sophisticated approach and looking at where they can keep or redirect their most talented individuals.
A viable proposition
As a rough rule of thumb, retraining an individual for another role becomes a viable proposition if that individual already possesses about 80% of the skills required, Burgess says. She suggests that employers ring-fence internal posts and invite employees who may be facing redundancy and may also have many of the skills required for the vacant roles to apply.
Transferring and retraining staff in this way is most likely to happen at the lower and upper echelons of an enterprise says Sally Ollett, a principal at HR consultancy Mercer. Lower level roles will be carried out by employees with generic transferable skills. “They will know the company well but won’t have much specialist knowledge, so they won’t require large learning curves,” she says.
At the other end of the company food chain, the redeployment of senior executives across departments and functions is already more commonplace because the high redundancy and recruitment costs involved in these positions.
Ollett says some of the most innovative examples of companies that are already redeploying employees are coming from the professional services sector. For example, the Financial Times recently reported that Deloitte is focusing on moving staff to busy areas, such as restructuring, from former boom areas such as corporate finance, while PricewaterhouseCoopers is planning to transfer people to other firms in its network as well.
But, despite the benefits, retraining staff involves a cost that many organisations will be reluctant to meet at a time when money is in short supply.
At the Trades Union Congress, senior policy officer for learning and skills Iain Murray suggest that employers look at what funding is available under the Learning and Skills Council’s flagship Train to Gain service, which is the main interface for government training schemes.
He said: “We are in favour of a model that sees Train to Gain funding rolled up with other financial packages from the government as a way of helping employers through this difficult time. “A lot of companies could survive the recession if they are given some financial help and the opportunity to re-skill their employees.”
At learndirect, operations director Raj Kakaiya says additional flexibilities introduced to the Train to Gain programme at the start of the year could help smaller firms to swiftly gain the new skills they need to ride out the downturn. These include free and part-funded bite-sized training courses in areas that could give a business quick return. Training is available in finance and credit, profit management, risk management, business systems and processes, team working and communications, sales and marketing, IT and customer service.
“In the current economy employers may not want to commit to full-length courses leading to a qualification, but smaller bite-sized training may give them the skills they require here and now,” says Kakaiya.
He also points to other recent additions to Train to Gain, that could benefit firms, such as its leadership and management programme, which was extended in November, so that businesses with between five and 250 employees can claim up to £1,000 in funding in areas such as coaching and mentoring. Other improvements include relaxing the rules so that workers can get training up to NVQ level 2 even if they already have a previous qualification at this level, and increased funding for NVQ level 3 training.
“As the recession goes on and firms restructure there may be skills gaps that evolve,” says Kakaiya. “Knowing where training and funding is readily available could become increasingly important as businesses are forced to refocus and tap into new markets.”
Case study : Mines Rescue
An example of a company that has used training to re-skill staff in a changing business climate is Mansfield-based Mines Rescue, which has successfully transformed itself into a health and safety consultancy in response to a declining mining industry.
Over the past year or so a number of rescue workers, admin staff and management from Mines Rescue have embarked on the Learning through Work university-level programme, delivered by the University of Derby in conjunction with e-learning provider Learndirect. The programme aims to develop the knowledge and skills required for the company to branch out into other business areas such as first aid training and consultancy.
The programme recognises the importance of ‘real’ work experience and uses an online framework and work-based projects so employees are not required to attend a university or college to learn. Tutor support is provided interactively online, face-to-face or over the telephone.
Mines Rescue’s commercial manager Andrew Watson said: “Our decision to become involved in this project is part of a process of continual improvement and change for this business. We have developed from being part of a nationalised industry to a private enterprise that relies on co-operation and motivated staff.
“Because Mines Rescue is a constantly changing, tailor-made training that meets the needs of our business, it is an extremely worthwhile investment.”