INTERNAL AFFAIRS - JSE MAGAZINE

INTERNAL AFFAIRS

Companies that develop their own staff are reaping the benefits of increased job performance from employees who are more motivated

INTERNAL AFFAIRS

Thando Nkosi is 25 years old, technology-savvy and has a diploma from a tertiary institution. This is his second job but he’s looking for another because his career isn’t progressing fast enough. He is willing to go the extra mile and expects a lot from his employer.

Thando doesn’t actually exist but his approach to his career does. In fact, this is the typical way that a new generation of employees think, who have a different understanding of career and company loyalty compared to their parents and grandparents. They are called ‘millennials’, born between 1980 and 2000, and sometimes nicknamed ‘Generation Me’ for their ‘self first’ attitude.

Attracting the best millennial workers will be critical to the future of business, says assurance, advisory and tax services network, PwC. To do that, employers need to understand their way of thinking.

The company’s 2011 survey titled Millennials at Work: Reshaping the Workplace, interviewed university graduates from 75 countries about their career expectations. One finding was that job progression is their top priority, and that they expect to rise rapidly through the organisation. Furthermore, the most important benefit they want from their employer is personal learning and development, followed by flexible working hours and, in third place, cash bonuses.

PwC provides advice to potential employers. ‘Let them learn. Millennials want to experience as much training as possible. If your organisation is more focused on developing high potentials or more senior people, then you could risk losing future talent if you fail to engage millennials with development opportunities. Build and measure the effectiveness of mentoring programmes alongside other learning and education.’

Individual training is also a priority. Dennis Stead, a partner at PACE Career Centre, a leading nationwide guidance and training provider, says: ‘Today the individual is loyal to his or her career. The concept of “individual learning” or “life-long learning” sees the individual, not the company, as the primary career driver. Companies need to accommodate this approach within their human resources development strategy.’

Louise van Rensburg, an HR specialist who runs a consultancy in Cape Town, agrees. ‘[In SA,] the days when employees stuck with one employer for their entire working life are over. Today’s generation wants instant gratification and that shows in their loyalty, which is quite the opposite to, for instance, Japan where if you start out working for Sony, you’ll work for Sony all your life.

‘Changing jobs gives the individual staff member more experience but it breaks the continuance for the company. The employer has to find a new candidate and often pays a recruitment agency a fee that can be up to 20% of the candidate’s annual salary. It’s a real challenge for companies to retain their staff.’

Stead says that in his experience, companies are desperate to attract top graduates from a small pool of candidates. ‘One of the key talent-management strategies used by employers is the selection of high-quality candidates from university using incentives such as bursary and graduate development programmes. These programmes sometimes have incentive strings attached and serve to lock candidates into an organisation for a certain period. The problem with highly skilled candidates is that they get poached or headhunted by competitor companies.’

Internal affairs IPQ

‘The more progressive and visionary companies take on a life-long learning perspective by encouraging training’

DENNIS STEAD, PARTNER, PACE CAREER CENTRE

These days virtually every company in SA provides some form of staff development or training. The most widely practiced training programme is employee induction, which all new recruits require, regardless of the professional qualification or hierarchy. A lower-ranking staff member will still need to be introduced to the demands of the new job and the culture of the company, just like new senior management.

Companies choose to develop their own staff rather than recruit from outside for multiple reasons. Learning and developing can be used to motivate employees, increase job performance, boost loyalty and engagement within the company. This prepares for succession planning through promotion.

But the most apparent value of developing and promoting from within is clear. According to Kim Dowdeswell, head of science and research at SHL Talent Measurement Solutions, better leaders and managers drive higher returns. The organisation, part of New York-listed, member-based advisory CEB, company advises leaders on how to manage and leverage talent to achieve business goals.

‘Our research shows that high potential [HiPo] employees are seen as almost twice as valuable to their organisations as employees who are not. As organisations look to drive growth in challenging markets, they recognise the need for a strong bench of rising talent that evolves with the shifting needs of the business.’

According to Dowdeswell, organisations with stronger leadership gain double the revenue and profit growth compared to companies with weaker leadership. ‘This means that developing effective leadership from talent programmes has to be an imperative for both public and private organisations.’

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SA organisations spend, on average, about 4% of their payroll on training, according to the 2013 State of the South African Training Industry Report, compiled by the Association for Talent Development and the SA Board for People Practices. This is an increase from the previous year (3.11%) and notably higher than the levy required by the Skills Development Act.

The Act requires employers to pay 1% of their payroll as a skills levy. Of this, 80% is used to fund the activities of the 21 Sector Education and Training Authorities (Setas). The remaining 20% goes to the National Skills Fund to finance training for the disadvantaged and unemployed.

Van Rensburg explains that compliant employers qualify for compensation from their Seta. She says: ‘Companies need to submit their workplace skills plan at the beginning of each year. Once training and skills development is completed and all the documentation submitted, employers can receive up to 70% of their contributions back, depending on the industry.’

The levy system was created as an incentive for employers to train and supply information about the training needs in each sector. As a result, the Department of Higher Education and Training publishes an annual list of scarce and critical skills. Ironically, the 2011 list had ‘training and development professionals’ in third place.

Not surprisingly, employers focus their training on their specific skills needs rather than the state’s national transformation and development goals.

Stead says: ‘Companies make decisions [based] on immediate cost benefits. The more progressive and visionary companies take on a life-long learning perspective by encouraging training, not only as a means of equipping people for their current work, but also to suit the organisation. [This in turn] focuses on enabling learning and development for people as individuals. This is a longer-term approach that has longer-term benefits.’

The report also found that 60% of surveyed organisations have a formal talent management strategy in place, compared to 53% in the 2012 report and 49% the year before. Some 45% of companies use mentoring and the same percentage use coaching (most often delivered by line managers) to support their strategy. The report reveals that more than 60% of companies outsource their training design and delivery, with classrooms still being the most popular training delivery method (59%), followed by e-learning (20%).

Training needs are analysed using performance management data (68%), information from customer complaints (57%) and interviews (40%).

‘Organisations need to collect data that indicates whether an employee will rise to a senior position, whether they will be effective when they get there and if they will still be with the organisation when they reach this level,’ says Dowdeswell. Many companies are also failing to address the ‘flight risk’. She says: ‘Our research shows that less than half of HiPo employees are highly engaged with their employers. They do not see their current employer as the place to realise their career ambitions and do not buy into the objectives of the organisation. Yet, those that are engaged are more than twice as likely to stay.’

This takes us back to the millennials, their ambition to learn and willingness to find a new job if their expectations are not met. PwC advises employers to rethink their HR strategy. ‘Millennials want a flexible approach to work but very regular feedback and encouragement. They want to feel that their efforts are being recognised. They value similar things in an employer brand as they do in a consumer brand. These are all characteristics that employers can actively address.’

In Thando’s case, it means that his current employer should listen and engage with him, planning ahead so that his career within the company can grow and advance.

That way the business will retain him and he could become a future leader in the organisation – given the right training.

By Silke Colquhoun
Image: Mr.Xerty © www.nomastaprod.com