We’re making a foolish mistake by not investing in training the workforce of the future

Josie Cox explains how we’re in danger of repeating our past mistakes, and making a mess of our future by not investing in workforce training

The apprenticeship levy should have super-charged employer spending on training (Getty)

In a speech back in 2015 at NYU’s Stern School of Business, Hillary Clinton took issue with what she described as “quarterly capitalism”. Organisations, she argued, are myopically focused on the next three months of business. They want quick profits to keep investors sweet. Too often they disregard the potential benefits of longer term investments – investments in things such as research, development, recruitment and training.

Clinton’s words were predominantly aimed at the big public corporations of America, but I have no doubt that her warnings are just as relevant on this side of the pond for companies great and small.

Look no further than the UK’s chronic under-investment in employee development over the last few decades. In many businesses, training is limited to formulaic and cumbersome inductions and compliance – rushed tick-box exercises often mindlessly completed by trial and error. And then we wonder why we all want to quit our jobs and move to Spain.

Last Tuesday, the Chartered Institute for Personnel and Development (CIPD), the UK’s professional association for human resource management, published an extensive study taking stock of the effectiveness of the apprenticeship levy to date.

Introduced by the government in 2017, the policy’s aim was to combat this very problem. It intended to enhance both the quantity of apprenticeships available as well as the quality of them. It should have super-charged employer spending on training and made our country’s workforce more skilled and motivated, more productive and competitive. But it hasn’t worked. Short-termism, it seems, still rules.

The survey of 2,000 employers found that fewer than a third of levy-paying employers today say that it will lead them to increase the amount they spend on training. Back in July 2017 that figure was much higher at 45 per cent. And nearly six in 10 say they either believe the levy will have no impact on the amount of money they spend on training, or will lead to a drop in the amount they spend on it. What’s even more worrying is that the design of the current levy system is actually incentivising companies to use the funds earmarked as apprenticeship levies in alternative and counterproductive ways.

Around 15 per cent of respondents say they use the scheme to accredit skills that staff already have (so spending for the sake of spending), while 14 per cent report that the levy has actually led to funds being directed away from forms of training that would be more appropriate for their particular organisation.

Perhaps the first thing we need to do is address semantics. As the CIPD recommends, why not rename the levy something more holistic, like a “training levy”? Organisations need to be encouraged to pump cash into the types of training that are most relevant and sensible for their particular needs. That may be apprenticeships, but it might not be. Chances are that each organisation is best placed to recognise their individual needs.

And then there’s the issue of size and scope. Currently, the levy has to be paid by all employers with an annual pay bill of more than £3m at a rate of 0.5 per cent of their total pay bill. The CIPD suggests that the levy should in fact cover all employers with a headcount of 50 or more, which would double the amount raised by the levy to £5bn. Crucially, the CIPD argues, this would help to make up the shortfall from the decline in investment over the past 20 years.

To really move the dial, a portion of the training levy could also be used to establish a regional skills fund which could address challenges at a local level. That could help smaller firms, which might not be paying a levy at the moment, to invest in skills.

Smaller firms constitute the backbone of our economy and our national workforce. They are integral to ensuring productivity and international competitiveness, especially as we head into the next uncertain chapter of our country’s sorry story.

For years short-termism has plagued us. It’s caused us to overlook the unparalleled power and potential of a skilled and enthusiastic workforce. It’s allowed us to be held hostage by investors and stakeholders focused on the next quarterly financial report, and it’s led us to treat our workers like machines rather than humans. Talent is priceless. Failing to foster it is foolish. Let’s not allow the mistakes of the past to jeopardise our future. We all know we’re in a mess, but this is one thing that every manager can help to fix if they just put their minds to it.