Fundamentals of Human Resource Management 5th Edition by Raymond Noe, John Hollenbeck, Barry Gerhart, Patrick Wright

Exercise 10

WHO GAINS FROM EMPLOYEE DEVELOPMENT?
When Derek Christian wanted to run his own business, he bought a cleaning company called My Maid Service. The company had decent revenues but little growth, and Christian figure out why: employees were constantly quitting. With a turnover rate of 300%, Christian was filling the same job three times every year. The reason was simple. No one wanted a career cleaning houses, so people worked for the service only until they could find something closer to their real goals. Higher pay didn't address the problem, so Christian accepted that no one would stay forever. He opted for an unusual kind of employee development: if an employee agreed to stay with My Maid Service for two years, the company would pay for training and development (including stretch assignments at the company) to help the employee toward the next step of his or her career plan. Christian determined that the costs of this program are far less than he was spending to constantly hire and train entry-level employees. Customers, too, are more satisfied and loyal because they prefer having the same people clean their homes each time.
Derek Christian's plan for employee development is clever, and because he is the business's owner, he didn't have to convince anyone but himself to try it. But imagine trying a similar program at a corporation that is owned by many stockholders. They might conclude that the cost is not in their best interests as investors in the business. Some employers even insist that employees pay for any training they receive because the employees are the ones who get the greatest benefit from what they learn.
One person who might not see a conflict is Wendy S. Becker, associate professor of management at John L. Grove College of Business. Becker advocates the idea that human resource practices should be sustainable. By acquiring, developing, and managing employees in a way that is socially responsible-concerned for their welfare and the welfare of their communities-organizations can, over the long term, be the places where the best people want to work. One way to do this, Becker says, is to hire people not just for their experience and accomplishments but also for their potential, even though these employees will reach their full value after the company has invested in their development. There is a risk that employees will take their newly learned skills elsewhere for better pay, but there is also a perhaps greater likelihood that employees will be more committed and loyal after the company invests in them. Perhaps if employers treat development programs as an investment in employees' future value to the company, rather than as an expense to minimize, employees, too, will focus more on their value to the company.
When a company spends money on employee development, who should receive the benefit-investors, customers, employees, or someone else? What is the most ethical way to distribute the benefits?