Playing the training game and losing: 'training for future work' and 'hiring for potential' can drain your company's shareholder value - Training & Development - Includes related article on the research

HR Magazine, August, 2002 by Bruce Pfau, Ira Kay

Staffing organizations today is a complex challenge that requires a complex solution. Most importantly companies cannot staff only for today; there must be a clear vision and strategy for the future. While I agreed with much of what read in the article and in the research. I found the conclusions over simplistic and without much consideration to long-term thinking and strategy. I believe a more balanced approach to hiring, i.e., a balance between experienced hires and capable "trainees", is more prudent for the health of an organization.

I understand that Wall Street only values the present quarter however successful companies intent on building long-term shareholder value plan accordingly. In my view the one dimensional hiring strategy (only hiring people with very narrow specific experience in your industry, exact job culture, etc.) described in the article does not take into account three important considerations changing demographics long-term workforce planning and diversity.

Changing U.S. demographics will likely cause the study's strategy to backfire over the next 10 years. As baby boomers retire the number of available skilled workers will significantly decrease. Companies that haven't adequately assessed the workforce and addressed the upcoming shortage by hiring some number of "developmental" workers will find themselves competing for a much smaller pool of experienced workers. A much smaller pool translates into a much more expensive hire, much longer recruiting time and lost productivity. So much for shareholder value!

Best practice companies excel at workforce planning both short term and long term. They are purposeful in evaluating their strategy (present and future) knowing what skills are needed to execute that strategy assessing workers for those skills and developing actionable plans to ensure that workers with those skills are available to the business. This most probably involves hiring people from outside the company, but it also involves growing and developing people they already have.

Finally, I see a critical flaw to the research's hiring approach in that there is no consideration of diversity. At Kellogg we inherently believe that a diverse workforce is a business imperative that drives shareholder value. It is difficult, not to mention tremendously expensive to execute an aggressive diversity hiring strategy if you are only interested in candidates with a narrow stone of experience. It's realty the same demographics issue, only the issue is real today. It's about supply and demand. Experience minority and female talent is in high demand, therefore you pay a premium for it. The best companies, and the most profitable over the long term are committed to diversifying their workforces and are using a variety of strategies to get there.

Again, I don't disagree that companies must already, understand the competencies needed for their business today but they must also think beyond today. At Kellogg Co. due to recent industry challenges and our business model, we have tended to hire people with specific skills and experience. While this has been effective for our business we have not lost sight of the future. We focus on demonstrated skills and experience but we also are aware of human potential. We are interested in employees who have both the capacity and desire to grow. Much of our training comes on the job, but nonetheless, we are committed to the growth and development of our people, because we are committed to the growth and development of our company.