The world of work is evolving faster than anyone could have imagined a generation ago…and probably more dramatically than those of us immersed in it even realize. The amount of knowledge doubles every five years. Now, through the Internet, we have better access to that knowledge than ever before. This knowledge-based economy presents many challenges to organizations; however, these challenges all center around one issue–human capital. In other words, it is the collection of knowledge, skills and abilities employees bring into an organization that gives the organization value.
In the past, an organization’s value was in hard goods. Value could be measured in inventory and equipment–which is easy to control, easy to measure and easy to identify. And when an employee left you knew your equipment was still bolted to the factory floor.
If an employee leaves today, you’ve lost something. But, what have you lost? You can think about it in terms of titles: manager, sales person, executive, receptionist, machinist, and floor supervisor. Titles don’t serve much purpose except to perhaps give heading to the list of tasks that an employee performs in your particular organization. One organization’s administrative assistant might be another organization’s manager.
The next challenge comes when filling an open position. Is the person a good match for the organization? What package of knowledge, skills and abilities does the candidate bring? How do they fit into the organization? Are they suited to the position? Is there an advancement track they can follow? Will they bring value to the organization?
Perhaps the bigger challenge comes in retaining the talent you already have. Turnover is costly so it’s crucial for us to keep the good people in our organizations.
Within the first 6 months of employment a company will spend $5000 to $50,000 on every new employee
A recent Business Week article indicates the cost of losing a typical worker at $50,000.
In the IT industry the cost of turnover is generally accepted as $10,000 per person. –Gartner Group
Why do people leave? In a recent HR practitioner session it was noted that many people said they were leaving for increased compensation, better benefits, or stock options. But after further evaluation many indicated that even though the benefits and salary were better they didn’t really want to leave. Many times they felt like they had to leave because they were not compatible with their boss or there was no plan (training, mentoring and coaching) for advancement in the old organization.
During a team development session with a large telecom company, the marketing group was heard to complain that when new people are hired they are shown to their office, assigned their telephone number and then left to figure everything else out on their own. Little, if any, orientation is offered. Thus the new hire can experience high levels of frustration within the first month or two. Granted, individuals shouldn’t have to be hand held but some type of orientation program and a clear plan for development should be offered to facilitate the new employees integration.
Studies indicate that within 12 months, 35% of new hires will leave the company due to dissatisfaction with company mentoring procedures and another 41% leave because they are dissatisfied with the company’s training. It turns out that training, coaching, and mentoring is far more important than we traditionally give them credit for especially when calculating costs and ROI.
Results of a survey on “Who wants to quit within 12 months:”
Among all workers – 21%
Among those dissatisfied with company mentoring – 35%
Among those dissatisfied with company training – 41%
Data: Emerging Workforce Study
For instance, if we agree that the average cost of losing a worker is $50,000, then within a 1000 employee company with poor or undefined training programs, that company could lose $20.5 million dollars per year in employee turnover. If they instituted a mentoring program that cost them $9.5 million dollars and helped reduce the turnover rate, the cost savings could be as high as $11 million dollars.
“Compared with a little guidance from the boss or extra training, the cost for turnover is steep”.
–Ray Marcy, CEO of Interim Services
Why is training, coaching, and mentoring becoming more relied upon to help keep good people in our organizations? We have to go back to the 1950’s and realize the dramatic change that has taken place in the makeup of the workforce. In the 1950’s, 60% of the workforce was unskilled, 20% was skilled and another 20% were professional. By the year 2000 the skilled labor force will be 65% of the total working population versus unskilled at 15% and professional holding steady at 20%.
Skill attainment, increased knowledge, training and education are all necessary for the current and emerging occupations. Minimally, if a person just wants to keep their job, but optimally desires to be a highly productive contributor, then knowledge is power. Therefore, those with current and up to date knowledge, skills and abilities have before them a road paved with gold.
Unfortunately we are managing the current 65% skilled workforce the same way we did the 20% skilled work force of 50 years ago. The need for continuous education, learning, knowledge and skill attainment was not as necessary back in the 1950’s as it is now. The need for people to be competent and skilled in a particular job, occupation or process is unparalleled in the history of this country.
Isn’t it odd that most organizations spend more time, money and effort inventorying desks and chairs than they do their employees skills? Microsoft has a market cap of $250 billion dollars but only $8 billion of that is in physical assets. What’s worth the other $242 billion dollars? Obviously it is the knowledge, skills and abilities (intellectual capital) of their people. If the value of intellectual capital is so great, shouldn’t we take a more modern approach to developing individual knowledge, skills and abilities?
One company reduced their annual turnover rate from 24% to 16% in only 8 months. The CIO attributed the change exclusively to the identification and management of skills. “That’s the way we manage skills, first of all to save money by providing a productive advantage and to save people by reducing turnover”.
In 1999, $600 billion dollars will be spent on training worldwide. Unfortunately, a good share of that money will be wasted because training programs are ill conceived in conjunction with the skills needed by an individual to perform their job. For years companies provided training on the basis of what management saw as the need versus what measurable skills were required to move people and the organization forward. In addition, return on investment for training efforts was ignored or not perceived as measurable. Now with the advances in skills mapping, the Internet and distance learning, training can be measured and done effectively and show a positive effect on ROI.
About 90% of corporate training has long been considered a lecture-based and instructor-led process. But with technological advances like CBT, CD-ROM, videodisc and the internet, the industry is moving toward a more technologically-based delivery system. Additionally, training is no longer about serving up random courses with minimal efficiency. Instead it is demanded that training efforts be targeted and measured against skill gaps with a demonstrable return to the employee as well as the company.
“The skills of the workforce are going to be the key competitive weapon in the 21st century … skilled people become the only competitive advantage.”
–Lester Thurow, MIT
We are embarking on the development of the last great frontier for gaining a competitive edge-the human brain. The ability to obtain knowledge, skills and abilities all while helping individuals and organizations move forward in a more productive manner is what the world of business is about now. This is why the competency movement has gained such momentum. One of the best ways to achieve and maintain a competitive advantage is to identify, measure and increase an employee’s competency or skill levels. Optimizing intellectual capital helps individuals and companies survive and thrive.
There is much mis-information about the definition of competency. Competency components consist of KSAO’s (Knowledge, Skills, Abilities and Other characteristics) associated with high performance. Through years of study, it has been proven if an individual’s KSAO’s are enhanced, this leads to an increase in job or occupational competency which leads to increased performance thus equaling a higher level of competitiveness for the organization.
KSAO’s are considered to be the DNA of an organization, because when an individual’s KSAO’s are enhanced, there can be a profound effect on the competitiveness of the organization as an organic whole.
The question becomes, how to effectively identify and enhance the KSAO’s of an individual? There are several companies who have now taken the process of CoreSkills to very sophisticated levels. These providers are actually able to identify individual KSAO’s through a process of SME (Subject Matter Expert) interviews and tasks analysis sessions all filtered through an elaborate software algorithm that ultimately yields a CoreSkill.
A CoreSkill is the combination of Generalized Work Activities (GWA’s,) Knowledge, Skills, Abilities and Other characteristics (KSAO’s), task statements, and the knowledge and tools required in a specific workplace. Basically, a CoreSkill is an accurate description of work and worker in a digitized format so we can compare the KSAO’s or CoreSkill of the individual against the requisite KSAO requirements of an occupation. We are measuring the gap between individual CoreSkills and occupational CoreSkills. If there is a gap then the individual knows what additional KSAO’s have to be obtained to be marketplace or project competitive.
Those additional CoreSkills can be obtained in a variety of ways either through software programs, classroom sessions, distance learning programs, CBT, CD-ROM’s or the Internet. This is a particularly exciting development especially in those occupations that change frequently and have a continuous need for updating content.
What are the specific benefits of identifying CoreSkills?
KSAO’s can be aligned with organizational goals and provide measurable metrics for calculating the ROI for training, education and learning.
Knowing what CoreSkills are needed for a specific job reduces historical risks and takes some of the guesswork out of hiring and promoting
By requiring a specific CoreSkills for a specific job that requires licensing or other certification you can keep track of employee credentials
Identifying the CoreSkills for workers allows the organization to identify skill gaps via the CoreSkills Assessment and 360 feedback tools. Knowing where the skill gaps are determines where it makes the most sense to spend educational dollars. You may find a universal skill gap among employees, in which case a traditional classroom training effort might be most effective. Even though you may identify some universal skill gaps, each individual will have different skill gaps requiring a unique educational methodology to fill the gap. Tapping into the vast educational resources available on the Internet provides the opportunity for each employee to be educated in the specific areas that will fill their individual skill gaps.
By applying education dollars to KSAO’s you give people the tools needed to perform the tasks related to their job. Since KSAO’s are “portable” from job to job (both inside and outside the organization,) your return on investment is maximized. If education dollars are applied to tasks the investment is lost when the employee moves on to another position since each new position brings a new set of tasks.
Now that we know this information about how to reduce employee turnover in organizations, this makes the $600 billion dollars a year spent on training annually a truly shameful fact. The knowledge that only a small percentage of that expenditure is providing effective training can be offset with the knowledge that the next evolution is on the way. Focusing our training efforts on outcomes and tasks is futile. Instead let’s focus our training energy and money on affecting the foundational DNA—KSAO’s. Let’s bolster the KSAO’s like reading, information processing, judgment, values and cognitive complexity to insure a more long lasting effect on the individual and the organization.
Support of this concept recently came from the Training Director of a 400-store specialty retailer. He developed a highly effective Associate Training Program geared toward increasing individual KSAO’s at the field level. But he developed his model for learning based on his experience on the football field and over 21 years in the specialty retail business. From those collective experiences he devised a training program that provides measurable and profitable results.
He observed that the high levels of turnover within the retail industry had as much to do with showing concern for the individual and their increase in skill attainment as it had to do with compensation, benefits and working conditions.
His experience from the football field laid the foundation for helping individuals identify key skills for competency and provided a system for repeating those skills over and over again until mastery was attained. Along the way he evolved his system for performance into the Learning Cycle TM (modeling, doing, repeating and measuring outcomes).
Through the process he showed that as people engage in and actually completed his Associate Training Program, the turnover dropped from a high of 71% down to 50%. His model was built on affecting KSAO’s through training, coaching, repetition and experimentation even to the point of making it OK for individuals to fail in the testing phase of the program.
According to Roger Shank, Director of Northwestern University’s Institute for the Learning Sciences and author of Virtual Learning, A Revolutionary Approach To Building a Highly Skilled Workforce,” the best learning scenario is one that gives the trainee the opportunity to practice, fail, and try again under one who can share relevant knowledge and experience.” This points to the old apprentice program of the 1950s when the unskilled labor force was at 65% and the pace was slower.
The concept of apprenticeship was good but now it is outdated since it can’t keep pace with the amount of training required in the current market. But with multi-media and distance learning you can simulate accuracy, depth and complexity of interactions as well as allowing people to practice and fail without fear. With the proliferation of the Internet and distance learning, the opportunity to be exposed to a diversity of targeted information can help increase KSAO’s.
Online learning is a powerful solution for increasing KSAO’s since it is available on demand, it is customizable to meet specific needs, it can be interactive and communicative, it can leverage existing course content within a company and maximize a student’s accessibility. When done right, online training is not only affordable but can produce a 60% cost savings by reducing training time all while increasing retention rates.
To get ahead it is expected that each person become actively involved by sharing the responsibility in his or her professional development.
–Director of Audit for Arthur Anderson
SpectraComm presents a unique, comprehensive and efficient way to harness the power of people through CoreSkills. CoreSkills provide employers the tools to identify the Knowledge, Skills, Abilities and Other characteristics (KSAO’s) within their workforce, as well as those needed to perform specific jobs. CoreSkills unleashes the power of the Internet and its vast stores of knowledge by putting it to work for you.
Turnover costs companies billions of dollars every year but there is an answer. Provide targeted and focused training that affects individual KSAO’s. This leads to increased competency, performance and competitiveness. This is where training shows a measurable return on investment. Targeted and appropriately devised training can increase a person’s effectiveness and productivity.
What is your organization doing to increase your employee’s stock of knowledge, skills and abilities? Continuous learning is critical in today’s world. If you don’t enable learning opportunities for employees, those with the greatest potential will find someone who does.
To learn more about how we can help you with employee retention, please email us at Spectra@Spectracomm.com.