A simple conversation on learning and development can typify the dilemma. Consider the following exchange that often occurs between a larger agency’s Managing Director (MD) or CEO and its Finance Director (FD) or Chief Financial Officer (CFO):
FD/CFO: “What if we pay to train the staff and they leave?”
MD/CEO: “What if we don’t train them and they stay?”
Both are valid points and I explore this in more detail.
The value of employee development
You want to ensure that learning and development (L&D) budgets are spent appropriately to develop staff and benefit the agency. Agencies are increasingly recognising that upskilling their workforce is not an expense, but an investment.
Upskilling staff can be a better way to bridge skill gaps, enhance productivity and encourage innovation than recruiting is. The business landscape is constantly changing, just think how AI has emerged since the launch of ChatGPT at the end of 2022. Training staff can help to keep an agency up to date and ahead of the curve on the latest trends in the wider world of business and niche specialisms.
Based on my own in-house agency finance experience, providing commercial training for client services and project managers always led to an improvement in job profitability and profit margins in the months that followed.
You cannot measure the return on investment of training but you will often see the benefits it can bring.
The challenge of increasing staff turnover
It’s essential that there is the required return as described above on this investment. However, you don’t know who will be looking to make a career move soon. Agency staff turnover rates have been increasing in recent years. Despite the economic uncertainty in the UK post-pandemic and Brexit, there hasn’t been enough talent to fill vacancies leading to difficulties in both attracting and retaining staff, resulting in higher staff turnover rates. Lack of advancement and growth is often cited as a reason to move on, it might be that an additional benefit of investing in training is the increase in staff retention.
Mitigating the risk
One potential solution is to establish a written agreement between the agency and employees who undergo costly training or qualification programmes. This agreement could stipulate that if the employee chooses to leave the agency within a reasonable period after completing the course, they will repay a portion of the training costs. The repayment structure could be designed on a sliding scale, gradually reducing over a year or two and acknowledging the value an employee brings in this time as they apply their newly acquired knowledge. The period that training fees would have to be repaid, either in full or part, should never be excessively long that it is unreasonable that the agency wouldn’t have had a return on investment and the employee feels unable to make a career move.
Please get in touch if you would like to discuss commercial training for your team or implementing a training strategy and budget for your agency.