Investing is rooted in hope. The act of investing in something implies that there is the expectation of a return; some benefit or a profit of some sort. It is driven by the anticipation that investing now will result in a better state in the future.
Most companies readily invest in equipment, facilities, better materials, etc. Returns on these investments are relatively simple to track, making the decision much easier to justify and support. Yet many organizations do not consider an investment in workforce development as an investment at all; they often see it as a drain on the bottom line. However, investing in its workforce can and should be tied to the organization’s strategic goals.
The concept of Total Cost of Ownership (TCO) might be a good model for examining the investments made in workforce development. TCO analysis takes into consideration all of the hidden costs of things such as importing parts or owning a piece of equipment. For example, if a part is sourced overseas, to the landed cost, TCO would add inventory holding costs, fluctuation in wages in the country of origin, cost of rework, documentation, etc. giving a more accurate cost measure.
Using this method to look for hidden returns from our investments in workforce development, management can ask; what are all of the potential returns that might be realized from a strategic investment in our workforce? Returns could include: improved retention rates, higher morale, a stable and dedicated workforce, lower recruitment cost and a team that has grown alongside the company, and others.
Now, consider how each of these could help the organization achieve its goals. For example, such ROIs might give a firm the capacity to add new products or services. Efficiencies gained from more cohesive teams could provide a number of opportunities for operational improvements.
Would some of these returns help prevent the loss of intellectual property? Would it allow for smoother transitions when older workers are ready to retire? A number of cost savings are related to a stable workforce. Where else might those monies be invested?
What if the contributions of an employee were measured and values assigned? Not just those contributions that apply to the actual production process, but also contributions like improving processes, contributing to the positive attitude of their team, taking on more responsibilities, training others, missing little or no work days, and being an encouragement to others.
All organizations have some type of workforce strategy; whether they knowingly put it in place or not. Some of the less well-developed strategies include:
· leaving it to chance that the talent your organization requires will be available when you need to hire;
· offering some in-house skills training but no real development opportunities;
· collaborating with outside entities to find trained workers;
· trusting that none of the star players on the team leave; and
· expecting that the workforce development system will prepare the future workforce without input and cooperation from their organization.
Some will take these gambles. Others have recognized that investing in a strong workforce is a strategic decision that should not be left to chance.
Investing in people involves an effort to treat employees as valued partners, respected contributors that management believes in and trusts. The message sent to the workforce is that they are not expendable, they are not just a cost or liability, but that they are important and appreciated. The employee can become an integral part of the whole organizational structure and can contribute to the attainment of the team’s strategic goals.
Investing is rooted in hope. Organizations that have realized a return on their investment in their people have recognized that hope – backed up by a strong development plan is how they will grow their own talent and increase the likelihood that their future state will indeed be better.