Costs of recruitment and training 1.4.2

Labour Turnover - measures the rate at which staff leave the business. They may or may not need replacing. It can measured by the percentage of staff leaving within a time period.

Recruitment and training are expensive and it takes some time for new recruits to become fully competent. The more senior the position, the more it will cost.

HARD COSTS OF RECRUITMENT
  • Advertising and recruitment agency costs
  • Interview costs and expenses and managerial time diverted
  • Costs of training and induction
SOFT COSTS OF RECRUITMENT
  • Loss of production when staff are involved in recruitment and training
  • Time taken to build up knowledge, experience and working relationships with co-workers and customers.
The costs of recruitment and training mean that a high rate of labour turnover can be a real problem. It entails the loss of valued skills and knowledge and therefore lowers productivity. It may affect employee motivation. Even so, a certain amount of labour turnover can bring in capable and innovative people who will have a positive effect.

Training costs can be significant in any business. Most employers are prepared to incur these costs because they expect their business to benefit from employees' development and progress.

Training is needed within a business for a variety of reasons. Common training needs includes;
  • Supporting new employees (induction training)
  • To improve productivity
  • Supporting high standards of customer service and production quality
  • Introduction to new technology, systems and or other change
  • Support employee progression and promotion (internal recruitment)
BENEFITS OF EFFECTIVE TRAINING
  1. Better productivity
  2. Higher quality
  3. More flexibility through better skills
  4. Less supervision required
  5. Improved motivation - through greater empowerment
  6. Better recruitment and better employee retention
  7. More loyal employees
 MOTIVATION AND EFFECTIVE TRAINING
  • Assuming training is effective; then...
  • Employees feel more loyal to firm
  • Shows that business is taking an interest in its workers
  • Provide employees with greater promotional opportunities
  • Enables employees to achieve more at work - perhaps gaining financially from this
REASONS WHY BUSINESSES NEGLECT EFFECTIVE TRAINING PROCEDURES
  1. They fear employees will be poached by competitors (who will then benefit from the training)
  2. A desire to minimise short-term costs 
  3. They cannot make a justifiable investment case
  4. Training takes time to have the desired effect
  5. Sometimes the benefits of training are more intangible (e.g.morale) than tangible

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