Centralized Training May Be Answer to Replace-or-Retrain Dilemma

Don Tennant

One of the toughest challenges facing public companies in this country is figuring out how to satisfy Wall Street without decimating their loyal but costly workforces. I've met no one who has defined this problem more strikingly than Ron Hovsepian, the CEO of Novell.


In an interview a couple of years ago, Hovsepian told me that over the course of the preceding year, he replaced a quarter of his workforce in order to acquire the skills he needed:

One thousand of our 4,000 employees are new to Novell. So the change we're going through is pretty significant. Candidly, among all the good revenue stories and the profit improving, people don't realize how much we've really gone in and changed our workforce to get the right skills here.

When I asked him why he didn't put a program in place to retrain and develop his employees rather than replace them in order to fill the skills gap, Hovsepian indicated that he simply didn't have the luxury to retrain on such a sweeping scale:

We're taking some of our youngest, best and brightest talent and investing in them further, around business management and other skills, so they grow. It's done with great thought and care, while balancing it against the financial demands of what we've got to get done. And the cycle time is the biggest issue. The brutality of the pressure the company has to operate under in 90 days is what drives us.

Ah, yes-the 90-day driver. If you don't show the Street the numbers it expects to see during that quarterly earnings call, nothing you've otherwise done to strengthen your company or serve your customers seems to matter all that much. As long as it's dramatically cheaper to replace than it is to retrain, that's the tack that companies will be forced to take to defend themselves against "Street brutality."


Hovsepian's answer to the problem warrants consideration. He said we need to take advantage of the economies of scale that would be created by centralizing training under an IT industry organization:

I'd be happy as a company to contribute toward more unification of training of people across the industry, by an industry body, because all of us individually probably don't have the money or the time to get in and do that. But if there was an industry body, I'd be all ears. Other industries do it. Go look at banking, go look at retail. The National Retail Federation does training.

It's not a bad idea. The logical candidate in the IT realm is TechAmerica, the trade association established a year ago with the merger of AeA (formerly the American Electronics Association), the Cyber Security Industry Alliance, the Information Technology Association of America, and the Government Electronics & Information Technology Association. The members include Novell and about 1,500 other companies, including just about every high-tech outfit you can imagine.


TechAmerica has dipped its toe in the training water by offering free IT training in California through a partnership with Saisoft, a provider that caters to workers seeking training under federal- and state-funded programs. The organization is in an excellent position to partner with professional associations that represent IT workers who aren't employed by TechAmerica member companies, and to create a viable means of providing the skills U.S. IT workers need not only to keep their jobs, but to advance their careers.


If Hovsepian's eagerness to fund training through a centralized body is any indication, TechAmerica's members may well be prepared to pony up the money to expand the organization's training offerings well beyond a government-funded program in one state. There's something kind of sick about an employment landscape where a company is compelled to replace a quarter of its employees for want of needed skills. The remedy suggested by Hovsepian is worth a try.

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Feb 10, 2010 8:46 PM Stephen Wolfe Stephen Wolfe  says:

It is entertaining that CompTIA isn't considered a viable alternative...


Feb 15, 2010 1:08 PM Ernest Deitz Ernest Deitz  says:

Maybe I am missing the big picture here?  If CompTIA is the answer then, why would the Brain Bench exams or even practices exams from numerous sites not show the current employees are trained?

The real issue here is that employees are hired and become comfortable.  They do not feel the need to continue learning and few companies give any incentives for going above and beyond.  The industry for IT is constantly changing and the employees who understand this and continue to adjust, and learn new skills, on their own, are definately not being fired!

It is sad that we are in the current situation where employees have been with a company from the beginning of the Internet boom, and are now no longer an asset.  However it is the nature of this business that you continue to look for change and learn what is necessary to offer more to your company.

The CompTIA, Cisco, Microsoft and other company certifications are not a huge amount of money to take a test.  Also there are plenty of sites and deals for learning these materials.  Currently I am showcasing VoIP classes from Cisco and Avaya for fellow employees.

Perhaps that is what companies should do more of, present the information on where to go, where to study, and how to register for advance training.  Maybe then employees would take the initative to do it themselves?  If not then atleast the companies could say they offered the suggestion of trainning before finding new employees who have drive and ambition.

To justify keeping someone who is comfortable in their job to the point that they offer no new skill set for the ever changing market of technology is emotional business failure.  Facts are facts, money is money, and when it comes down to the dollar companies need confident, knowledgable people, who strive for more than a sustainable paycheck!


Feb 15, 2010 8:36 PM user1343129 user1343129  says: in response to Stephen Wolfe

Agreed. This smacks vaguely of a pitch for TechAmerica.

Feb 15, 2010 8:45 PM Don Tennant Don Tennant  says: in response to user1343129

It wasn't meant to be. My intent was simply to get the discussion going. CompTIA might very well be the more suitable organization to tackle this.

Feb 15, 2010 8:47 PM user1343129 user1343129  says: in response to Don Tennant

Thanks for the response, Don.  Duly noted.

Feb 18, 2010 10:57 AM 121212bbc 121212bbc  says:

Define training?

The junior college near me used to offer programming classes. I took JAVA, C++, and  VB.net classes there and learned everything they had to teach. I would have taken a C#.net there too but the class canceled. In fact they were all canceled. The reason was that people stopped coming. Even with an 'A' in the class the students couldn't find work.

Employers want three years of paid work experience. What kind of training would a centralized training organization provide that would overcome the work experience hurtle? The fact is that what 'the industry' wants is the equivalent to a four semester full time curriculum programming eight hours a day on a real world project. Technology moves so fast that by the time you complete a course you have fallen farther behind. There is no real substitute for on the job training.

What it all boils down to is a failure of capitalism that economists refer to as a negative externality. The software development managers cut corners everywhere they can pushing the costs of their operations onto their employees. The employee becomes responsible for working a full and productive day while constantly pursuing continuing education at night. Some employers will pay for the classes but the transportation and opportunity cost of attending rests solely on the shoulders of the employees. The costs are externalized off the manager's books and in return the employees that are stupid enough to play along get to keep their jobs until they get sick from stress related illnesses or they are outdated by new technology. The ones that refuse to absorb the costs are laid off in mass under the guise of not having the right skill set.

As a survivor of the cut, I've seen the results of mass layoffs first hand. There are consequences to this type of behavior. Within months after the lay off the remaining employees who made the cut start having stress related illnesses. Job satisfaction wanes, creative productivity goes out the window, quality control cost start to rise, and than there is the health care costs. The health problems are yet another externalized cost that the employees must bare alone.

Hovsepian by his own admission externalized the cost of training onto the quarter of his workforce that paid the ultimate price with an extended period of unemployment. Think about the message that sends to the remaining employees. This company doesn't value its employees enough to invest in them and they too will be discarded when it becomes convenient.

A happy engineer is a bonanza of innovation. They wake up in the morning egger to solve problems. Unhappy engineers driven by fear of loosing their jobs quickly loose their creative edge. They become mediocre innovators and a technology company that inspires mediocrity dies a slow death constantly looking for new talent. When I hear a CEO stand up and state they can't find qualified talent to fill their needs after cutting a quarter of their work force, I'm thinking not a healthy place to work; to many externalities. 

Feb 18, 2010 5:48 PM Stephen Wolfe Stephen Wolfe  says: in response to 121212bbc

Good post.  Many organizations have held training out as carrots for more productivity which I think is real dumb because the training would benefit the organization as much as the individual.

I think OJT in new technologies with existing employees committed to stay with the organization on projects that count for the organization would be an excellent solution.  However, to make that solution work there would need to be an outside organization (i.e. CompTIA) that could provide the technology training expertise with courses that are much better designed than the typical Microsoft MOC - which pablum level at best.

Again, CompTia which is addressing the 8570 needs of the DoD can address this across vendor platforms - they should fire-up a working group to study the application and deployment viability of the doing an onsite OJT technology course (pick your own particular poison) in conjunction with a real project; putting in place all the needed safeguards to make a company feel comfortable in implementing program.

Discharging people to re-hire another with a more advanced technology set is not the answer - in my opinion it is immoral on the organization's part if it cannot show where the employee failed to take advantage of some type of training.

My .02


Dec 31, 2010 4:51 PM  DoD 8570 DoD 8570  says: in response to Stephen Wolfe

wow great blog i like it. specialy

TechAmerica has dipped its toe in the training water

Feb 3, 2011 1:23 PM Xfinity Xfinity  says: in response to DoD 8570

Excellent site, keep up the good work. I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I'm glad I found your blog. Thanks


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