Should You Retrain Your Employee or Hire a New One?
One question all employers will ask themselves is if they should retrain or hire a new employee. What many of them don’t realize is that there is a large talent shortage in the United States. So, before you decide the answer to that question about retraining versus hiring, here are some things to consider.
Cost is the biggest drawback when hiring new employees. A recent study conducted by U.C. Berkley found that it costs a company around $4,000 above salary and wages to hire a new employee. This number jumped to over $7,000 when it came to replacing management-level employees. The cost increases for small businesses, because hiring consumes administrative costs as well. According to a study at MIT’s Sloan School of Management, benefits can also be costly when hiring new employees, as they can total to 1.25 to 1.4 times a base salary. The average cost to hire a new employee averages around $133,000, while it only costs $1,208 annually for the training and development of current employees.
Time is money, and for most companies, the time it takes to hire and do mandatory training for a new employee is more than double the time it takes to retrain a current employee. On average, it will take a company 43 days to hire a new employee from the time of the job posting to accepting the job offer. Taking the time for job postings, interviews, screening, hiring, training, handling and compensating for the mistakes of new employees will take so much longer than it would take to simply retrain an employee. No extra time will be lost by further developing a current employee’s skill set. Plus, current employees are already familiar with their environment and the company guidelines and handbook.
When you choose to further develop your current employees’ talent, it gives you more flexibility for responsibility and encourages employees to take on more roles in the company. Training allows more specialized talent to be used when needed. This flexibility is useful when there is a large project that takes priority or when employees are absent and work needs to be completed for a deadline. Hiring new employees doesn’t offer as much flexibility when situations like these arise. However, in similar situations, it could be a good learning opportunity for your new employees and a way to see how they stand up under pressure in the workplace.
When you train your current employees, you are investing in their skill sets and boosting their future potential. This avoids the costs of new talent and ensures that new managers and leaders will be the perfect fit because they have been trained internally. Current managers will then be able to use the people they are training like assistants, as they can give them tasks that are important to learn to fit that role. This also prepares your company for smoother transitions for when existing managers retire, move on or even take time off. When employees learn these new skills through training, it also gives them potential to become future trainers. When an employee learns a new skill set, they can assist others with on-the-job-training. This multiplier effect will help you train staff without the added cost.
When it comes time to decide whether you should hire a new employee or retrain an existing employee, these are things to take into consideration. If you decide to hire a new employee, be sure you’re hiring the right way and the right person.
If you are seeking assistance with any of your human resources needs, such as payroll, employee scheduling, benefits packages or compliance screening, visit Coastal HR at our website www.coastal-hr.com.