Companies investing in employee performance: training costs up almost 30% for 2012

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Moscow – 12 August 2013 – PwC is pleased to present the results of its seventh annual HR Benchmarking Study (PwC Saratoga 2013). According to the study, companies are paying less attention to acquiring experienced professionals and are instead shifting their priorities towards the development and retention of current employees. The research indicates that investment in staff training and development has increased by almost 30%.

The PwC Saratoga 2013 study collected data from over 67 companies with more than 100 quantitative indicators, which were calculated on the basis of the results for the 2012 financial year. The participating companies operate in 10 different economic sectors of the Russian market (financial services, manufacturing, oil and energy, consumer goods, as well as the telecommunications and hi-tech sectors, etc.) The study allows us to trace the dynamics of key indicators in human resource management (HR) in comparison with previous years.

According to the study, one of the key priorities for companies is increasing the efficiency of employees. A significant increase in training investment and staff development was noted. This year it was increased by almost 30% per employee (from RUB 7,200 to RUB 9,900), while education scope showed an increase from 47% to 64%. At the same time, employers have been showing a preference for training programmes from outside providers as opposed to their own training programmes.

The growth of investment in training and development reflects a long-term approach to company management of human capital, and this is a positive trend. Companies are realising that short-term measures, such as aggressive wage growth and the acquisition of candidates from the labour market, have exhausted their usefulness.

In parallel with investment in talented employees, companies continue to optimise processes for the quantity of staff. According to the study, there was an increase in the rate of lay-offs by employers (from 3.9% to 5.3% of the total number of staff in an organisation, excluding the impact of lay-offs for violations of labour discipline). At the same time, the recruitment rate decreased by three percentage points compared with the previous year (from 16.2% to 19.4%). In turn, employees are less actively considering changing their employers. This may indicate a decline in dismissal by the initiative of the employee (from 16.3% to 12.8%).

Ruxandra Stoian, Partner, Human Resource Consulting, PwC Russia, said:

"We attribute this trend to several factors. First of all, there is a decrease in demand by employers. As companies optimise their ranks, it becomes more difficult to find a new job. Furthermore, in the face of rising competition on the labour market of a given company, employers are beginning to invest in the development of their employees, attracting fewer external staff. Finally, employees find themselves facing a difficult market situation and must decide carefully on making a transition to a new job."

In the process of optimisation, companies are now eager to increase efficiency by managing the cost of staff compensation, paying more attention not only to the level of involvement and motivation of employees, but also cost impact indicators.

Thus, according to the study, the rate of return itself is from reductions in staff costs. For each rouble invested in employee remuneration, a company received an average of RUB 1.92 (in the previous year this figure was RUB 2.55). This occurs in part because of the rapid growth of the total cost, compared with the gain. In this situation, companies keep the same structure of remuneration and benefits. For instance, a company may continue to maintain a culture of reward for results (as in the past year, 19% of payments were variable, of which 16.3% were awarded for high performance). In this case, companies are cautious with respect to increasing wages (the growth rate was 7.9% compared with 10% from the previous year).

Ruxandra Stoian, Partner, Human Resource Consulting, PwC Russia, comments further:

"Today, human capital management remains a key challenge for companies in the Russian labour market. Of course, within different industries the dynamics of certain specific indicators can be observed, but on the basis of this study's results, we note that the general trend is a shift in priorities towards developing long-term solutions. It can be said that companies have begun to show more wisdom by optimising costs while also recognising the need for long-term investment in the development of staff."

Note to the Editor:

  1. The study was conducted by PwC Russia with the methodology of the Saratoga Institute. Today, Saratoga is a leader in the assessment of the effectiveness of human capital. Their research has been used by many companies around the world for more than 30 years.
  2. The PwC Saratoga 2013 Report, based on the results of the research, includes data from more than 60 companies operating in the Russian market within 10 economic sectors (financial services, manufacturing, oil and energy, consumer goods, as well as the telecommunications and hi-tech sectors, etc.). The number of company employees as participants for the study included more than 3,000 people, 58% of whom were women. More than half of the respondents fall between 26-40 years of age. In order to ensure continuity in the data, a comparative analysis was only performed for companies that participated in the study in 2012 and in 2013 (43 companies).
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