Advantages and Disadvantages of Cutting Expenditure on Training - Literature review Example

Advantages and Disadvantages of Cutting Expenditure on Training The continued reduction in the level of sales has madeit necessary to make an assessment of various organizational strategies as an adaptive measure that will ensure the company emerges even stronger after the period of decline is over. The HRM department is among the areas where adjustments in relation to the declining sales have targeted. This report presents the advantages and disadvantages of cutting expenditure on training as a reaction to the current condition of declining sales. Given that this is a matrix organization effect of cutting expenditure on training will be experienced on both the functional and executive levels of the organization’s operations (Gottlieb, 2007). The functional level of the organization will need to maintain a high level of skills for both the managers and the workers to ensure the quality of output is not compromised. Expertise of line managers needs to be kept at a highly competitive level since they are the ones who inform the executive arm of the organization about production needs. The need to have highly skilled human resources is also informed by the fact that the organization has adopted high-involvement strategy with the aim of ensuring employees have the autonomy they need to produce high quality output in their various stations (Kandula, 2003). Advantages of Cutting Expenditure on Training Cutting down on expenditure allocated for employee training is seen as an objective measure in keeping the business afloat. This measure will ensure that the funds allocated to improvement of employee knowledge and skills are diverted to other areas of need such as maintenance of organizational production facilities during the period of reduced sales. Given the fact that employee training and development is costly undertaking, reducing this expenditure will save a significant amount of financial resources. The organization has been relying on external experts to train new and existing employees both for shop floor and management employees. Cutting expenditure on training provides the chance for the organization to develop alternative measures of maintaining high levels of employee skills and knowledge for their specific functions. Such an alternative might include the initiation of mentorship programs for all levels of employment with the skilled employees chosen to mentor those earmarked for promotion or those who have been recruited. This is a cost effective approach to employee training as it offers employees practical skill while on the job (Gibb and Megginson, 2005; Felstead, Fuller, Jewson, Konstantinos and Lorna, 2007). Cutting expenditure used on training can also present a chance for the organization to shift employment and recruitment policies to tapping of skilled workforce from other organizations. Lower cost can be achieved through identification and attracting skilled labour by offering prospective employees relatively better terms that does not comprise the current organizational financial situation. This move will also generate other fringe benefits among them introduction of new skills and knowledge that lacks within the organization set up. This therefore presents the organization with an opportunity to bolster existing intellectual capital based on the new perspectives and ways of operating that the poached employee might possess. The effect of this approach is that exiting employees will be motivated to perform at their level best as they will be energized by the fresh ideas brought in by the new employee. Cutting expenditure on training provides an opportunity to reduce the levels of formal courses and involvement of external trainers by shifting this role to line managers. This based on the realization that the organization cannot do away with all aspects of training due to conformity with legal responsibilities, maintain organization operational requirements and for customer satisfaction (Felstead, Green and Jewson, 2013). This however calls for a reassessment of the training needs based on uniqueness of each situation to delineate the organizational needs that require formal training from those that can be handled within the department by line mangers. This new approach will adapt the line managers to perform increased roles by giving them mandate to offer certain levels of training and development for their staff. This is based on the realization that in most cases, employee training has been followed by coaching from line managers on how to effectively apply new skills on the tasks assigned to the employees (Antonacopolou, 2001). Disadvantages of Cutting Expenditure on Training Given the high involvement strategy that the organization has adopted, employee training and development is at the centre of all organizational operations. The importance of employee training and development in this case is underlined by the fact that every employee is expected to make essential work place decisions. High level and intensive training and development of employee skill and knowledge that are based on up-to-date information equips these employees with the necessary skills and abilities to make right decisions at the level of their functioning within the organization. Consequently, investment in training of employees in this case is part of organizational practice that should be sustained through adequate funding to prepare new employees and those targeted for additional skills for improved output (Heyes, 1997). It is important that before cutting expenditure on training, an overall assessment of the cost of training should be made. Although it might appear that the organization is spending a lot on skill development and training, this is not the case when considering the benefits to the organization that this practices brings. This assessment will show that the cost of not training or not investing enough on training and development of employees is higher than any benefit that might result from the alternative use of the diverted funds. Employee training and development approach undertaken over the years have been pursued with an objective of updating the knowledge and skills of employees in specific areas of production or management. Regular employee training and development is an approach that is informed by the realization that a high involvement organization depends on creating flexibility, efficiency and productivity of employees which will translate into high level of employee workplace satisfaction (Keep, 1989). Regular training and development enable the organization to create employees who are assured of the demands of their workplace responsibilities and can also operate in different sections therefore increasing productivity. Employees who are equipped to take on various organizational responsibilities are able to react and adjust to different market situations. Apart from developing organizational-specific knowledge for competitive advantage, adequate funding of training creates a multi-skilled workforce whose importance to the organization goes beyond performing their responsibilities at a restricted level of job description (Rastogi, 2000). The organization is able to invest in human resource that can be deployed in various areas therefore reducing unit labour costs. The organization is able operate with a minimal number of employees who instead of having multiple human resource for responsibilities that can be undertaken by less number of employees. This also makes the organization adaptive since all functioning can go on in times when some employees are not present and replacement cannot be sorted in due time. Such situation might occur through illness, death or resignation of an employee which leaves an essential part of organizational operation without the necessary skills. Having a training approach that encourages a multi-skilled workforce ensures a replacement is allocated to perform such functions with immediate effect pending the decision to recruit or wait for recovery and return to work of the employee. With the current economic situation where competition for highly skilled and educated employees is high, there is a need to have internal measures to equip workers with the necessary skill so that the firm does not spend more on external recruitment (Adams and Demaiter, 2008). Although existing training approach might seem expensive for the organization to sustain due the reduction of sales, the yields from it should also be mentioned. Cutting funds for employee training will hamper efforts to sustain competition from other organizations in the market as it will affect performance at both the level of individual employees and at the organizational level (Wong, Marshall, Alderman and Thwaites, 1997). The organization has depended on regular employee training to sustain organizational competitiveness based on creation of new knowledge that adds to the existing skills which has contributed to high level of creativity and inventiveness among the employees. Cutting expenditure on training will reduce the amount of resources necessary to create an organization that evolves based on the need to be unique from other market competitors. Creation of uniqueness through constant research and training of employees on new approaches in their areas of operation has been based on provision of adequate financial resources. Consequently, maintenance of this uniqueness depends on a sustained level of funding that will cater for the expenses on researcher into new trends in production and management and to apply these trends in organizational practices through employee training. The effect of cutting expenditure on training is that the organization is forced to come up with alternative means of getting highly qualified employees. One of the consequences is that the organization will now be forced to hire highly skilled employees who have already developed the competencies that the organization will be looking for at certain points. Although this seems to be an effective measure of obtaining new employees in the current environment where the market is characterized by reduced sales, getting the right employee with the necessary skills and knowledge can be more expensive than picking from within then training or getting new employees then training them on the current needs of the organization. A disadvantage of shifting the firm from reliance on training its own employees to tapping skilled employees is that it is difficult to get such level of skills that have not been tapped already. Most of potential highly skilled employees can be tapped from competitions by offering them better terms of employment. This move might end up being quite expensive in the long run based on the higher wages and other remunerations that these employees will receive. In the long run, the cost of training and paying employees based on the current scale becomes an economical undertaking that will keep the expenditure on wages and remuneration at an affordable rate (Adams and Demaiter, 2008). Additionally, insufficient exposure of existing employees to new skills and knowledge through training will force some of them to undertake their own training initiatives. Fink (2010) points out that most employees nowadays are increasingly strategic in planning their career development and job searches to suit their future needs of employment and progression through career. For these employees, performing their responsibilities in the organization is part of their well planned career development strategy that is characterized by a constant acquisition and refinement of knowledge and skills. Offering training within the organization is part of these employees’ individual expertise and mastery of their responsibilities all which are organized to fit into their career planning objectives. Therefore, apart from needing training to improve job mastery skills for improved performance of their responsibilities, these employees also look for professional development skills for reasons that go beyond the scope of their current job description (Grugulis, 2003). As seen from the above argument, training does not benefit the organization only; its benefits are also experienced by employees through improvement of their professional skills. Cutting on the expenditure for training does not only affect the skill development necessary for improved production, it also affects the need for employees to further their professional skills. Cutting on expenditure used to train means that the available resources will only used in developing skills that will benefit organization while those employees perceive as being necessary for their professional development might be overlooked. The effect of this is that the organization creates the employee impression that the organization does not value them as asserts or is not keen on their development (Heyes and Stuart, 1996). The effect of having employees who feel underappreciated is that the level of loyalty to the organization continues to reduce therefore exposing the organization to the risk of high employee turnover (Rainbird and Maguire, 1993). When there is a chance for employees to further their professional development in a competing organization, the employee will not feel attached to their current employer as they feel they do not owe them loyalty and therefore feel the urge to remain. Consequently, cutting on training expenditure will be followed by an increased rate of employee turnover in the coming days as employees seek to further their professional skills (Cheng and Waldenberger, 2013). Reducing the amount of financial resources earmarked for training will prevent the organization from enjoying the benefits of associated with targeted training such as idea generation and team working. Importance of these skills is that their development leads to immediate application within the workplace therefore contributing to employee output. Targeted training is important in organizational operations since it involves the determination of a specific area of skill shortage and proper mechanism for filling the gap in knowledge is developed to cover the existing shortage. Although a costly undertaking targeted training cannot be avoided since the presence of a gap in skills wills ultimately lower the quality or quantity of organizational output which will further hamper the prospects of the organization getting out of the current low levels of sales (Mello, 2011). A significant consideration to make is the effect of cutting expenditure targeted for training on the organizational learning culture. Since the organization has over the years been based on motivating employees to appreciate lifelong learning in order to create a learning organization, cutting on expenditure will render this strategy unachievable. To ensure the organization remains competitive, there is a need to maintain high level of knowledge, learning and intellectual capital through maintenance of knowledge management systems which equips the organization with the ability to quickly implement development strategies. The concept of a learning organization is based on the belief apart from the traditional perception of the organization as the consumer of knowledge; current generation of organizations should also be creators of knowledge (Vemić, 2007). The learning organization therefore is one where there is a free flow of knowledge through removal of obstacle to knowledge acquisition both at the organizational and employee levels of organizational operation. This means that knowledge within the organization does not only flow from top to bottom, but also from bottom to top. The organization can only be classified as learning organization when development of knowledge is encourages through engagement and develop avenues for employees to improve their skills in a constant basis. Organizational learning is only possible, although not guaranteed, when individuals in the organization learn and acquire new knowledge. Therefore, creating a learning organization depends on developing a synergic effect within the organization and is achievable through creation of an avenue where knowledge from individual employee is exchanged freely to the other (Vemić, 2007). Training creates an important avenue where the employees can meet to share knowledge as those who are more knowledgeable transfer their skills to the rest. The overall effect of having a learning organization is that employees are focused on learning and continuous improvement not only as part of their job description, but to apply their competitive aptitude to develop better ways to do things. These benefits of having a learning organization makes it necessary to have a training program whose focus is sustained employee education and career development to enable them think outside the specifics of their job description (Vemić, 2007). Sustainable organizational future demands that existence an effective well maintained skill development program realized through training. Cutting down on expenditure meant for training purposes has a risk of crippling the organizational training program and halting plans of future employee skill development. Cutting funds will ultimately result in abandoning employee training programs as the available funds will not meet the overall organizational requirements. However, the ongoing situation might be a temporary situation that will change in future leading to recovery of previous levels of sales. When this happens, the organization might not be adequately prepared to handle the new levels of demands due to inadequate number of workers while those present might not possess the required skills to satisfy the dynamic customer needs. Therefore, cutting of expenditure on training has the risk of ending the established organization culture that is based on training and equipping existing and new employees with up-to-date skills that makes the organization competitive in the business environment. The above assessment of the benefits cutting expenditure has shown the need to maintain the current levels of funding for employee training and development. Although the organization might benefit from the funds which are diverted to other programs, this is a short-term gain as long-term disadvantages might also include hiring of skilled employee who will require higher wages and remuneration from them to leave their posts in other organizations. Cutting expenditure on training also affects the quest of the organization to become a learning organization while also disrupting the established training culture. 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