Corporate training: business wants to win more by tackling skill shortages

Corporate training videos were once as earnest as airline safety instructions. Now companies are jazzing up their training using techniques borrowed from computer games. Scavenger hunts, leader boards and virtual reality simulations aim to boost engagement. That should improve the return on training investment, estimated at nearly $400bn a year globally.

Persuading your superiors to pay for external training can be tricky. The Pointy-Haired Boss in the Dilbert comic strip turns down requests on the basis that staff would quit and get a better job. Better, he argues, to keep staff in the “Goldilocks Zone”. There they are not impressive enough to score a better job but not yet incompetent at the one they do.

Informal training — from colleagues or on the job — is easier to supply and less likely to lead to poaching. The Paris-based OECD found that, on average, every hour of informal learning, at a cost of $15.50, benefits the employer by $55 over one year of work. The boost to wages is half as great.

Companies, however, often have no choice but to invest in formal training. Health and safety rules are the most important drivers in many factory jobs. Better-paid workers are increasingly likely to demand training to improve their skills and facilitate promotion. Companies will respond if they are worried about staff retention. That anxiety was amplified by the recent “great resignation”.

Myriad organisations serve this market, ranging from large software companies to freelance consultants. The tech sell-off hit lossmaking edtech companies such New Hampshire-based Skillsoft and California-based Coursera, the shares of which are down 71 per cent and 28 per cent respectively over the past year. Even profitable companies such as Aim-listed Learning Technologies Group, with a decent operating margin of 9.3 per cent, have been derated. Investors fear that the deteriorating economic outlook will curb companies’ investment in their staff.

Yet some trends favour the training industry. The working-age population is largely shrinking. In a quarter of at-risk jobs in the US, it would be cheaper to retrain a worker than fire and hire different ones, according to the World Economic Forum. As skills shortages worsen, Dilbert’s boss might need some retraining himself.