Employee Retention: A Case for Training and Development

(Excerpt from a paper I wrote on the effect of training on employee retention.)

The importance of training and development as a key organisational strategy, affecting both employee retention and human capital development, has been extensively reported. The term 'human capital', as used by economists, is interpreted differently by them. The vast majority agree that human capital includes skills, abilities, experience and knowledge. A worker's skills, effort and time are all examples of intangible resources that they bring to their employment, and these resources are referred to as human capital.

As human capital is such a priceless asset, it is one of the key factors in determining whether the company can succeed in today's cut-throat market. As a result, many employers have turned their attention from financial capital to intellectual capital in order to cultivate valuable assets.

As human capital becomes more critical to an organisation's success, companies are realising the importance of retaining skilled employees. All types of organisations struggle with the important issue of employee retention. The expertise within an organisation is maintained when employees are successfully retained. Gaps in knowledge occur when people leave the organisation. In addition, a high rate of turnover of skilled employees will result in a significant loss to the organisation, such as a decline in organisational performance.

Training can increase the value of an organisation's human capital. Organisational performance is increasingly thought to depend on investment in human capital, particularly through the training of employees. Training has several well-established benefits. For example, training increases worker productivity by reducing waste, accidents and absenteeism. Employers should train employees efficiently to improve their job performance, rather than focusing on empowerment.

The main benefit of training and development is that it is best seen as an incentive to improve staff retention, particularly to keep those with ambitions to progress in the workplace. Most employees today are willing to take the opportunity to learn new skills to take on new responsibilities. As a result of training, employees become more committed to the company and more loyal as they recognise that the company is helping them to progress in their careers.

Human capital is one of the key factors determining an organisation's performance in today's information economy because it is a priceless resource that can be trained and skilled to develop valuable virtues. The field of Human Resource Management includes two crucial components: training and retention.

Based on the idea of social exchange, the psychological contract explains how training affects retention. Training increases employees' commitment and, as a result, they feel obliged to repay their employer. After training, they stay longer with the organisation. On the other hand, training gives employees a sense of organisational support and employer trust. Training therefore has a positive impact on management's ability to inspire trust and reduces staff turnover.

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