If You Thought Training Was Pricey …

If youre planning your companys technology spending budget for this year, you might be reaching for the antacids right about now. With bad economic karma everywhere you look—PC sales down, dot-coms still going up in smoke, and everyone from Amazon.com Inc. to Lucent Technologies Inc. to Daimler-Chrysler AG slashing jobs—you might be seeking expendable items on that budget list, just in case the bad times hit your bottom line.

If you think IT training is a good place to make the first cut, heres something to think about: Some human capital management experts say that even if cutting training budgets saves you a little money now, its likely to cost you a lot more in the long run.

Thats because, when you discover you have an urgent need for, say, three Extensible Markup Language experts to complete a project, you may end up with no choice but to go out into the marketplace and hire them to get the project moving more quickly than you could if you waited for current workers to finish training. And that will cost big bucks.

“No matter what, hiring a new worker is an extremely expensive proposition,” said Maria Schafer, an analyst at Meta Group Inc., in Stamford, Conn., and an expert on IT staffing issues. Meta Groups research shows that when an employee leaves, it costs from one-and-a-half to two times his or her salary to hire a replacement once you include salary increases, advertising, and third-party recruiter fees and hiring bonuses paid to the new worker, Schafer said. Filling newly created positions can also cost a sizable chunk of that new workers salary. “Its absolutely cheaper to retrain your existing workers. When you think about the cost of filling a $50,000 position, its clear that you can buy a lot of training for that money,” Schafer said.

And chances are youll need to train anyway, even if youre not deploying new technologies in the near future.

“The nature of IT is that you need constant retraining,” even to support holdover projects, said Rick Beal, strategic rewards practice leader at Watson Wyatt & Co., a human resources consulting company in Washington.

But Beal cautioned IT training managers to evaluate training requests on a case-by-case basis. Some expenditures may be needless, he said.

“If you need workers with a specific skill for a project that will only happen once, it makes more sense financially to hire contract workers for that project” than to train current workers or hire new ones, he said.

Besides increasing retention and eliminating the cost of looking for and hiring IT workers, maintaining a robust training program can have another benefit, experts say: It can give your company a recruitment advantage when the time does come to hire, said Bob Zawacki, an independent HR consultant and a professor emeritus in the management program at the University of Colorado, in Colorado Springs.

“Offering career development tools such as training, solid salary and benefits, and all the resources workers need to complete technology projects is the best way to give your company a competitive advantage” in hiring IT workers, Zawacki said.

“If you treat them right, most of them wont leave,” he said.