Training, Development, and Employee Turnover
When it comes to turnover, making investments in training and development can be a double-edged sword. Many managers fear that investments in training will make employees more mobile and, therefore, more attractive to other employers. Some evidence does show that if not handled correctly, investments in training and development may very well be investments made toward a competitor’s future workforce.1 Most of the evidence also shows that strategic investments in training and development can pay off in terms of an improved workforce and reduced turnover.2 Besides, when managers express concern about what happens if the organization trains everyone and they all leave, we like to offer the alternative that the organization fails to train anyone and they all stay!
The link between training and development and turnover should be viewed in terms of career development.3 In the traditional psychological contract (a psychological contract represents the shared beliefs, perceptions, and common understanding of informal obligations between an employer and an employee) that was held between an employer and its employees throughout most of the 20th century, the employer offered relatively long-term, stable employment in return for satisfactory job performance and positive organizational citizenship. In the current century, the psychological contract has changed. Employers are now expecting above average performance but no longer imply the availability of long-term employment. Employees, especially high performers, now expect in return for their efforts for the organization, the opportunity to grow, develop, and advance their careers.4 A 2010 survey conducted by Robert Grossman, lawyer and professor of management, discovered that one quarter of high potential employees planned to change jobs within the next 12 months. Of these high potential employees eager to move on, 64% confided that their current employment situation was not providing for their career development needs.5 The implication is that at least some of these high potential employees may be less likely to consider changing jobs if their current employers offered greater training and development opportunities.
High performing and high potential employees today value what has been termed career adaptability. They want their employer to provide them with the developmental opportunities they need to advance their career, whether that means remaining with their current employer or moving on. Ito and Brotheridge6 found evidence for the resulting paradox—career adaptability is positively correlated with both organizational commitment and intentions to leave. This means that managers must provide employees with both development opportunities and the advancement opportunities that match their individual career goals.
The following four principles are discussed further in the remainder of this chapter:
(1) Managers should know that, in general, providing employees with training and development opportunities reduces their propensity to turnover. (2) Less market mobility is associated with more job specific training and development. This creates a low turnover environment when coupled with internal career advancement opportunities. (3) Tying training and development opportunities to tenure requirements may encourage employees to stay longer. (4) Training supervisors and managers, especially in effective leadership and management skills, can reduce turnover among frontline employees and supervisors and managers.
Principle 1: Providing Training and Development Opportunities Can Reduce Employee Turnover
The Research Evidence
Training and development opportunities tend to reduce the desire to leave an organization.7 One possible reason for this is that it increases employees’ perceptions that the organization is supportive of them. This increases their overall job satisfaction, which in turn decreases their desire to leave. This was the relationship observed by Karl Pajo and his colleagues.8 In their 2010 Journal of Small Business Management article, they stress that this link between training and development and reduced turnover is entirely dependent upon the intermediate responses of perceived organizational support and job satisfaction. The implication is that if employees have reason to believe that their employer is not truly supportive of them in their career advancement, or if they are not satisfied with their job, no amount of training and development will keep them from leaving. In fact, the HR consulting firm, Watson Wyatt, found that the people who just received training are the most likely to leave if they see no immediate means of career advancement with their current employer.9 We again stress that training and development opportunities must be coupled with corresponding career advancement opportunities.
Getting Started with Providing Training and Development Opportunities
From the above discussion, it follows that employers ought to provide their employees with training and development opportunities. But they should be careful that their investments in the development of their employees don’t stop there. Employers should make sure that these training and development opportunities are provided in an environment of real organizational support for its employees. They should make sure that the organizational culture fosters employee satisfaction, or at least does not foster dissatisfaction. They also need to ensure that once trained, their employees have the opportunity to use their new skills in the advancement of their own careers.
In Summary, Offering Training and Development Opportunities Will Reduce Employee Turnover When,
•provided in an environment of perceived organizational support, and
•employee job satisfaction, and
•coupled with internal career advancement opportunities.
Principle 2: Job Specific Training and Development May Reduce Employee Mobility
The Research Evidence
One legitimate fear that managers may have is that they will invest thousands of dollars to increase an employee’s knowledge, skills, and abilities without the guarantee that the employee will stick around long enough for the company to earn a return on its investment. Indeed, human capital theory maintains that increases in the training and development of employees’ general skills are likely to increase turnover. In contrast, though, proponents of employability policies (policies intended to offer continued employability to employees in return for their loyalty) have shown that offering training and development opportunities that increase employees’ general skills may also reduce turnover.10
Tuition reimbursement is one of the more popular means of offering general skills development to employees. George Benson and his colleagues analyzed data from over 9400 employees and found that tuition reimbursement actually decreased turnover during the period that employees were taking classes. Interestingly, they also found that employees who took classes via tuition reimbursement programs without earning a degree were actually less likely to quit than employees who did not take advantage of the tuition reimbursement. It was only the employees who earned a degree through tuition reimbursement that were more likely to turnover. Since earning a degree can take several years, and employees are less likely to quit while receiving tuition reimbursement, employers may get the benefit of retaining a more educated employee for quite a while before they graduate. Although employees who did earn degrees through tuition reimbursement were more likely to quit, if they were offered a promotion upon degree completion they were less likely to quit. Taken together, these findings indicate that tuition reimbursement plans can benefit both employees and employers, especially if the employer recognizes and rewards degree earning employees.
One way to increase employees’ skills and abilities without increasing their external mobility is to offer less general, job specific training. We say “external mobility” to mean the ease of movement to another firm. Job specific training, training specific to the procedures and processes of the organization that is not easily transferable to other organizations, can satisfy a valuable employee’s desire for career advancement only if there are viable options for internal mobility (mobility within the current employer).
Getting Started with Offering Job Specific Training and Development
Job specific training will reduce turnover only if employees see a direct link between the training and internal career advancement opportunities. Beyond promising advancement upon completion of training, which is viable in some cases, the most common method for communicating internal mobility is through internal job boards. Internal job boards give employees the ability to connect their new skills to new opportunities within the same organization. They also give employees a sense of ownership over their own career. Peter Capelli reports that Dow Chemical reduced turnover by 50% when they implemented an internal job board system.11 The best internal job board systems: (1) allow all employees to view available jobs; (2) identify the specific knowledge, skills, and abilities necessary to be eligible for the job; (3) give some indication of the pay range and organizational level of the job; and (4) are tied to reasonable tenure requirements (discussed in more detail in the next section) such as number of months an employee must have been with the company or in their current position before they are eligible for transfer.
In Summary, Job Specific Training and Development Can Reduce Turnover By:
•increasing internal mobility,
•without increasing external mobility,
•but should be coupled with
a) promises of advancement upon successful completion of training, or an internal job board system, that
– allows all employees to view available jobs,
– identifies the specific knowledge, skills, and abilities necessary,
– gives an indication of the pay range and organizational level, and
– is tied to reasonable tenure requirements.
Principle 3: Tying Training and Development to Tenure Can Reduce Turnover
The Research Evidence
Although offering job specific training that increases skills and internal mobility without increasing external mobility is advisable, it is not always doable. When general skills and abilities will be the outcomes, it is wise to tie training and development opportunities to tenure requirements.
As noted earlier, we once worked with a firm on a project that reduced turnover by over 80%. We accomplished this primarily through tying training opportunities to tenure requirements. In researching the turnover problem we found that most of the turnover was within the first 90 days. So we spread what was originally one week of job training over a 6-month period. Employees received basic training within the first week. This allowed them to gain proficiency in the basics of the job. After 90 days on the job and if performance was satisfactory, employees were given the second round of training. This second round of training allowed the employees to be able to handle increased responsibility, along with which came a small increase in pay. Finally, after 180 days on the job and continued satisfactory job performance, employees were given the final round of training, which allowed them to carry out all of the duties of the job. And, you guessed it, successful completion of this training came with another slight increase in pay. This training program resulted in lower turnover because it had the multiple advantages of being job specific training tied to tenure requirements and opportunities for rapid career advancement and pay increases.
Getting Started with Tying Training and Development with Tenure Requirements
Remember to try to make training and development opportunities specific to your organization. When you cannot, tie training and development opportunities to tenure requirements. Or better yet, do both.
In Summary, Tying Training and Development Opportunities to Tenure Requirements:
•can reduce turnover, especially
•when timed with those more troublesome turnover milestones, and
•paired with providing job specific training.
Principle 4: Training Supervisors and Managers May Reduce Turnover at All Levels
The Research Evidence
As discussed earlier in Chapter 5, immediate supervisors and managers play a large role in whether employees will stay or leave their company. Therefore, when you are considering training and development in the context of employee turnover, remember to train supervisors and managers in employee management and leadership skills. Youngsoo Choi and Duncan Dickson found evidence that management training programs lead to increased employee satisfaction and reduced turnover that may offset the monetary investment.12 Specifically, they found that training managers in human resource management skills such as interviewing techniques, sexual harassment, workforce diversity, and employee performance appraisal, as well as in job specific technical skills reduced turnover in just one year from 89 to 57%.
Getting Started with Training Supervisors and Managers
When training employees, don’t forget to train supervisors and managers as well. They play a pivotal role in whether employees decide to leave or stay. Training supervisors and managers in both HR and technical related skills can reduce turnover among the ranks of supervisors, managers, and frontline employees.
In Summary, Training for Supervisors and Managers in HR Management Skills and Job Specific Technical Skills Can Reduce Employee Turnover:
•among the ranks of supervisors and
•managers, as well as
•frontline employees.