Employee training pays off with fewer layoffs – Eurasia Review

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Companies that invested more in employee training before the pandemic were less likely to lay off employees and downsize to cope with pandemic-related financial pressures, according to the new Cornell University.

The results suggest that investments in training increase the value of employees to an organization. As a result, the organization is less likely to view employees as disposable resources that can easily be let go through layoffs or other downsizing – such as offering early retirements and leaving vacancies. unfilled – when the organization faces pressure to cut costs.

“Importantly, these results provide evidence that the same investments companies make to support employee human capital development in normal times also provide a buffer to employee job security in the face of financial precarity,” they said. writes the authors.

Rebecca Kehoe, associate professor of human resource studies in the School of Industrial and Labor Relations, wrote the article, “Investing to Keep: Pre-Pandemic Business Investments in Human Capital Decreased Workforce Reductions Associated with COVID-19 Financial Pressures,” with co-authors Scott Bentley of State University of New York at Binghamton and Hyesook Chung, Cornell Ph.D. ’22.

Additionally, the authors argue that investments in employee training can provide even stronger job protection when combined with an organization’s concurrent investments in other resources, such as technologies that can be specialized with the knowledge and skills of the employees.

To test their hypothesis, the researchers taken a sample of US federally and state-chartered retail banks obtained from the Federal Deposit Insurance Corporation (FDIC). After excluding banks with less than 100 employees, as well as depository and agricultural credit banks, which do not exercise traditional retail banking, their final sample included 1,364 banks with quarterly observations from the first quarter of 2018 to the fourth quarter. 2020.

They then relied on banks’ quarterly reports, which contain information on banks’ operations, finances and performance, and collected data on layoffs from worker adjustment and retraining notification filings. of State.

The authors also carried out additional empirical analyzes by conducting interviews with 12 bank executives and examining the annual reports of 35 banks in their sample.

Their findings confirmed their prediction that banks’ investments in training in the two years before the pandemic would reduce their reliance on layoffs and downsizing to cope with pandemic-induced financial pressures. In addition, investments in employee training provided even greater protection for employee jobs in banks that had also invested heavily in physical capital (including technologies supporting automation, cloud computing and mobile and digital banking platforms) over the same period. Their analyzes also confirmed their expectation that banks with higher levels of education cut more spending in other areas, as an alternative to downsizing, when faced with higher financial pressures induced by the crisis. pandemic.

“These companies, it appears, are investing in employees ‘for good,'” the authors wrote.


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