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Pre Hire Training…Investment or Cost

Article first published in Hindu Business Line across all editions

An economic growth engine is well-oiled only if it has a steady supply of skilled resources.If India has to sustain the current pace of growth in its knowledge economy or meet the many ambitions of its private enterprise then a complete overhaul of its many institutes that impart vocational skills is needed.

While nearly 5 million students graduate every year from a thousand colleges and universities, nearly half of them are not employment-ready due to insufficient English language and cognitive skills, according to a recent report.

What is severely lacking in mainstream education is the absence of industry-specific skills and domain knowledge. Often, the skills taught in our technical institutions are not tailored to meet the needs of the industry, resulting in a higher unemployment rate among fresh graduates.

The oft-cited Nasscom-McKinsey study revealed that only 25% of the engineering graduates are employable. The number of unemployed educated youth between the ages of 15-29 has been growing in urban India and stands at 10 percent for males and 23 percent for females.For urban India, graduate unemployment is 8.2 percent while unemployment among post-graduates is slightly lower, at 7.7 percent.

The employability gap is not limited to India alone. According to the U.S. Bureau of Labor statistics, unemployment rates for those with bachelor’s degrees or higher are still much better — at 3.8 percent — than those with only a high school diploma, which was 7.4 percent in May. Clearly, unemployability is a huge problem globally since candidates are not work-place ready.

So what does this mean?

A new recruit is considered work-place ready, if he/she can contribute to the company’s growth by efficiently handling the day-to-day tasks. However, the first-day-first-hour ready workforce is a myth. Typically, IT companies allocate 3-4 months of training at an average cost of Rs. 200,000 per employee to make the freshly-inducted employee productive.
In non-technical domains, the training varies between 2-4 weeks. Is it any wonder that companies these days are considering pre-hire training as part of the standard induction process?

Pre-employment programs are generally short courses, comprising skill sets identified by industry as essential for entry into the industry or occupation. It could be soft skills such as interpersonal skills, collaborating with stakeholders in multiple functions and geographies, cross-cultural interactions, multi-tasking, project management and cognitive skills.

While earlier, individuals aspiring to hone or upgrade skills opted for pre-hire training, nowadays, corporates are beginning to include pre-hire training as part of the recruitment process.

Pre-hire training: An investment or cost

Consider this: For every employee who falls short of expectations, an organization will have to bear costs equivalent to two and a half times of an individual’s salary. An unproductive new hire may weigh on the company’s efficiency rate and costs as the company ends up spending a lot on training and mentoring.

Training costs make up nearly 2-3 per cent of total staffing budget. Organizations realize that training is not a luxury but a necessity. Besides streamlining existing training programs for new hires to include mobile training and self-paced learning programs, what if there is a more time-tested way to harness new talent.

Pre-hire training enables you to do just this. Small and medium-sized businesses especially in non-IT related sectors find it easier to hire and do their own training. Starting on a blank slate allows a company to instruct the employee more easily about the company’s protocols and processes. It is easier to estimate training time to bring the recruit to speed.

Even though pre-hire training may be more expensive on a per employee basis the company will save a lot more in the longer run. Companies can train employees in skillsets relevant to their industry. A pre-hire training program can be the gateway to an organization’s growth if the industry works with the academia to mobilize and train resources in relevant skill sets. Through pre-hire training selected candidates can be trained on IT skills, practical use of machines, project management, communications and team work practices. They can be given practical knowledge and significant on-the-job training to bring their skill levels on par with regular employees.

Developing skilled workers enhances their efficiency and flexibility; skills bottlenecks are reduced and skilled workers are able to contribute to the company’s growth and help in economy building. Educational institutions are starting to give vocational training its due especially in a gloomy job market where the IT, BFSI and retail sectors are not hiring at the fast clip they normally would. While the debate is still on whether it should be the corporate sector or the academia that takes on the onus of pre-hire training, it cannot be contested anymore that employable skills are a necessity for graduates and post graduates in a hyper competitive economy.

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