
The issue.
The business case for workforce rests on saving money over time by reducing potential turnover costs and retaining workers longer.
That’s not as compelling to businesses as you might think.
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Explain.
As a former policymaker, I really believe in the typical business case for investing in workforce development programs. It goes a little something like this:
Turnover costs you a lot of money, as does recruiting people to meet skill needs you have now or expect to have in the future. You’re going to save significant money over time by investing in workforce development because it helps you retain the staff you have and fill your future skills needs internally.
Some really smart people have done the research and put this business case together—and it makes sense. If you’re looking at employment at the macro level—as policymakers have to—and adding a dash of pop business-school thinking about efficiency, this is a great argument for why companies should invest more in workforce programs like apprenticeship and in-house skilling instead of desperately hunting for talent that might not be out there. It’s logical and, in a forward-looking way, cost-effective. I’ve heard it frequently from both parties.
But as a person running a business, I understand why employers are skeptical of the typical business case for workforce development. It’s not compelling in the terms that are likely to motivate them to do something, particularly since doing nothing is a whole lot easier.
Why?
Because the money employers are “saving” isn’t real.
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Think about it like this: let’s say that a few years from now, you’ll be desperately hunting for ketchup and can’t find any. Maybe you end up looking in the wrong places. Maybe the tomato uprising comes at last.
Actually, the reason why doesn’t really matter.
If you learn how to make your own ketchup today, you’re probably going to save money during this theoretical shortage—or maybe not worry about what you’re going to dip your fries in when Heinz falls to a horde of ninja beefsteaks. It’ll sure feel nice.
But the day may never come. Even if it does, who’s to say you won’t find good-enough ketchup in some roundabout, silly way that still kinda works?
If you do invest against future ketchup shortages, you’re going to have to spend a decent amount of money—and time—investing in the materials, equipment, and knowhow it takes to make your own ketchup and get it just right for your tastes. The money you might save isn’t as real as the money you have to invest now—and I’m certain you have plenty of other needs for that money.
You’re smart people, so you’ve probably gathered that this analogy is not a portent of a dark ketchup-less future. This is what investing in workforce development looks like to employers now.
Again, from the 10,000-foot view of policymaking, I get why this feels so nonsensical—in a way I’ve found can especially frustrate Republican political leaders. It’s better for your future as a company to invest in making your own talent today instead of hoping you can find the right people in the future. You’re wasting time and money you could save by investing in the humans you employ just as you would invest in any other infrastructure. It’s just logical.
I get it—but something I’ve heard from businesspeople, and felt myself, is that where your money ends up isn’t about logic but about expedience. You have a lot of needs, and a lot of other businesses you know aren’t doing this work. Sure it’s inconvenient, but so are all sorts of things you do to keep your business running.
In that sense, spending gobs of money on finding talent you could build yourself is quite literally just the cost of doing business. It doesn’t require you to rethink how people come into your company or spend time settling on what types of skills you want. And it’s money that you probably assumed you’d spend because, on paper, employing people looks like one of the most expensive things that you do.
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What do we do about it?
First, I’m deliberately oversimplifying these issues to make a point that I think policymakers need to consider. There are, of course, more reasons employers might not be jumping into workforce development. There also are other ways policymakers could help move them in that direction—including modifying the tax code to encourage employers to make more investments in people, not just things.
Second, does this mean that I think companies shouldn’t fix their hiring or invest in workforce development? Nope! They should. The benefits can be really good for them and the workers, and it can give them a competitive edge that they won’t be able to conceptualize until they see it in action.
But we do need to find a more compelling business case for workforce development—one that goes beyond saving money an employer might spend one day. We need to frame the case around the money employers are losing now—in language that hits as close to home as possible—and the money they could make by investing a little of what they have in their people.
That’s hard, and the case probably won’t land for a lot of policymakers who drive this conversation. But they’re not the ones who do the employing. Yes, I definitely believe employers can be moved further than policymakers are pushing them now. However, employers are made of people, and people respond to arguments that make them feel seen.
So, what makes them feel like policymakers see them and the money that’s actually in their pocket, today?
Card subject to change.
One, in a bit of synchronicity, next week I’ll have an interview about what a better business case might look like. It was a blast and I’m looking forward to sharing it.
Two, that whole election thing is going to keep happening. I’ve noticed a trend with lawmakers on the hot seat. I’ll have thoughts on that Thursday in THE MONEY, along with what change here might mean—for better and for worse.




