For an organization to run smoothly, it is important that they have a pool of trained resources who can not only perform well but are able to adapt to the changing technology landscape

Over the last few years, the technology revolution coupled with the proliferation of smart devices has brought about some fundamental changes in the way that organizations function. Across the board, companies are finding value in undergoing a digital transformation. They are also embracing an increasing number of digital tools to conduct business faster, better and more efficiently. 

In this knowledge economy, employees have emerged as the biggest asset for any organization. For an organization to run smoothly, it is important that they have a pool of trained resources who can not only perform well but are able to adapt to the changing technology landscape. Employees must be up to speed on the latest technologies that the organization is using. At the same time, they must be equipped to learn and embrace any new technologies that the organization may implement in the future. Being able to achieve this could mean the difference between success and failure for the organization. 

Given the pace of change, there needs to be a persistent focus on upskilling existing employees to deliver in a changing environment. Companies may choose to either conduct appropriate training in- house or look at external partners to deliver the required training. 

One of the most interesting concepts that have emerged is the notion of a ‘skill allowance’ awarded to employees to enable them to enroll in the necessary external training courses and build their skills in relevant areas. 

Some companies are already doing this, while several others are seriously exploring the concept. For instance, IT Services major Cognizant recently awarded about 40,000 employees a skills premium allowance for excelling in the field of digital technologies. Others have offered premium compensation to employees who bring in those precious niche digital skills into their organizations. Both Infosys and Tata Consultancy Services rolled out lucrative compensation packages for fresh graduates who possess superior skills with respect to coding and digital skills.  

Here are some reasons why providing a ‘skills allowance’ can be a great idea:

Greater Control to Employees

Most companies mandated in-house training courses are created to cater to a large group rather than being tailored to meet individual needs. Employees often attend these courses half-heartedly to meet minimum criteria etc. However, giving a skill allowance puts the employee firmly in the driver’s seat. It affords them greater control over how they can shape their career. It puts the onus of upskilling firmly on the shoulders of employees, by encouraging them to develop the skills they need to grow within the organization. Of course, the organization must still provide the necessary guidance and point them in the right direction. 

Focus on Core Competency

By leaving the training to experts, the company can focus on what it does best – running the business. 

The company no longer needs to dedicate resources and time to schedule training, track compliance, etc. At the same time, the company can rest assured that the training aspect is being managed seamlessly. 

Also, by putting their money where their mouth is (through the skills allowance), companies can effectively reiterate the importance of upskilling in order to grow within the organization. 

Better Resource Pool

The right training at regular intervals can help ensure that the organization has a ready pool of trained resources who can deliver on company goals and also take up new responsibilities over time. The company can leverage the benefit of being able to promote its own employees, rather than looking for external hires. Not only is this good for the company’s bottom line, but it also helps improve employee retention. 

Regular training also translates into more productive and well-trained employees who can deliver even greater results for the organization. Employees also gain the confidence to explore new streams or take on additional responsibilities. 

Like any other initiative, a skills allowance program too needs to be implemented in the right manner, with the right controls in place to ensure that it works. For instance, the company can define broad guidelines around the areas/technologies where the allowance can be utilized. This can ensure that the courses that they sign up for are line with their professional goals as well as the overall direction of the organization. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house