Guest Post: Investing in Employees – When to Hire, When to Train

Kate Manning is a business major who has worked under others and as a self-employed entrepreneur. She currently owns and manages her own business in Washington State. Here's her post about the importance of employee development to the long-term success of a company.

Modern business models often place stockholder profit above other considerations, even when that scenario may significantly hurt the long-term viability of the organization. This frenzy to create an annual report with a positive bottom line is understandable, but when it comes at the expense of employee enrichment or research and development, it may well hinder future growth potential. The question then becomes, "How does one find a balance between shareholder profits and employee satisfaction and retention?" Next, is it more profitable to enhance the growth of current employees or to hire replacements that are already at the professional point desired? Luckily, you don't need an online finance degree to find a solution that will benefit all parties.

While today's employees often expect to change jobs (or even careers), they generally would prefer to remain with their current employer if possible. Long-term research by groups like the American Management Association and Gallup suggest that a marriage of sorts between short-term profits and employee satisfaction is not only desirable, but it is also essential for long-term viability. The point being that for a company to experience sustainable profits, there must be an investment in employee development.

Employee development is often one of the things to be first sacrificed when business times are tough. However, cutting employee enhancements is detrimental to long-term stability or growth as well as stockholder dividends. Quality current or potential employees are seeking personal and professional growth, and in the absence of those opportunities, they will often go elsewhere.

Growth for current employees may take many forms, including both personal and professional aspects. According to "Investing in Employee Growth Makes Bottom Line Sense," firms that choose to assist current employees in various forms of professional and personal enhancement are more likely to retain those employees. That significantly reduces the need to attract new employees that invariably require at least some training and a period of time to adapt to the corporate culture.

At what point does it then become more practical to hire a new employee as opposed to attempting to retain a current employee? In the event of significant changes in job duties or expectations, it may be advantageous to consider bringing in new employees that are capable of stepping in without significant training. However, losing long-term employees who are loyal to the company can create issues for the remaining labor force and reduce morale. To keep employee satisfaction at peak levels, providing retraining opportunities may actually improve morale and loyalty of all employees. It is a dilemma that can create sleepless nights for those responsible for making such decisions.

While attracting new employees is often necessary, most companies find it more desirable to retain current employees. Even so, when it is necessary to attract new employees due to changes in corporate goals or product lines, having a reputation as a company devoted to retaining current employees helps in attracting the best candidates for those positions. Productivity is virtually always elevated when employee satisfaction is high, and providing training for existing employees is certainly one way to keep up employee morale.

When businesses decide to provide training for current employees, they have a variety of options to consider. Many elect to provide educational options on an on-going basis to improve the skills of existing employees. This type of benefit is also one that is coveted by those seeking new employment. Encouraging employees to attend professional conferences, providing management training, and offering interpersonal skills training are all ways to enhance employee satisfaction. Reimbursement for education is also a great benefit for current and potential employees.

For companies seeking to improve profit for stockholders, enhancing skills and improving employee satisfaction directly affect the bottom line. While most gains are long-term rather than short-term, savvy investors are likely to elect to hold the stock of a company viewed as being forward looking as opposed to those seeking immediate gains.