In an age of austerity where business budgets and profit margins are squeezed, the development and training of employees can cause an extreme pressure to those margins and ultimately impact on future decisions for the firm in the market. This usually depends on certain factors, such as what is the business environment like in the market? Is it in recovery like the UK currently is with slow but stable growth (about 0.8%), or is it a Greek market in deep difficulty (a contraction of -7.5%). I believe that although training and development can be difficult for a firm to accommodate and handle without effecting trade, the overall long term benefit to be gained poses a significant advantage to firms that survive through such economic hardship.
A firm may see the training and development of an employee as too costly to the company, this is usually a short run issue. Problems with training and development can cause extra workers to either stand in for some positions or a loss of working hours in favour of training. This can be such as a special training programme where the employee, like in many firms today, is fast tracked to be turned from lower end worker to managerial positions as a way retain good employees as well as exploiting increased effectiveness of the workers experience in the firm. Many firms employ this for graduates such as this case example, a graduate applying to Essex county council where the graduate experiences four placements over two years to obtain a managerial position. However this will require a large amount of training and also people to monitor the progress distracting the training employees from other more profitable areas. All of which can mean that the firm may have to hire another worker to fill in the old position as well as people to undertake the employees training scheme, meaning that the focus from profitable areas is taken away.
All of which equates to a loss of working hours to the actual firms business, due to lost hours earning in favour of training. This can have less of an effect to a firm if it was a prosperous business environment, since it is to be able to afford to hire another worker or a short term loss of profit. Yet in a recession when firms often lay off workers and accept smaller profits, companies are often unable to have such a loss of hours to the business so that some of its staff can be trained to a higher standard.
In addition why training and development may be costly in a time of austerity is to do with possible non-return to the business from the investment in the worker. This can be down to several reasons such as the limited capacity of the employee (e.g. family commitments, sudden lack of motivation with the company, limited education or talent etc.). There is also the possibility that the training may suffer due to the ratio of training to company work. According to Mullins (2005) things like performance reviews and tasks are an essential part of evaluation and review of any training programme. Which if managers who are most likely to be in charge of employee training are required more to focus on their designated job description, then the training employees have the potential to only receive partial training which may not give the full returns of what the firm invested in the employee. This can also have a double negative effect as the employee may be dissatisfied with his/her limited training resulting in possible loss of motivation and having an effect on the firm. “The leader-follower relationship is reciprocal and effective leadership is a two way process. Leadership is related to motivation, the process of communication, the activities of groups and the process of empowerment.” What Mullins is trying to explain is that because in a time of austerity there will be higher strains on managers and employees to…