Who Owns Your Paid Training?

When an employer offers to provide new hires with paid training, then who “owns” the skill set that is being built within the employee?  Obviously, the employee himself owns the skill set, right?  How could it be any other way?

Well, maybe there is a way in which the employer could retain partial-ownership of a skill that he has paid you to learn.  And if he could, then that would have a very happy side-effect in that it would give the employer an incentive to offer you more paid training. There are just three special challenges that would need to be resolved: Measureability, Enforceability and a Compensation-Structure.

Learning to speak Spanish

Presumably, any new job-skill that you learn will (statistically speaking) increase your future ability to make money.  And some skills will increase your future ability to make money more than other skills.  This is an important distinction to grasp, since, obviously, for the purposes of making money, it makes sense to learn skills that are likely to provide a bigger payoff, rather than skills that will only provide a minimal (or zero) future payoff.

For example, lets suppose that your employer offers to pay you to learn how to speak Spanish.  Now, for most companies, having that extra language ability will mean that you are going to be worth more to the company.  So you will probably be offered a higher wage once your training is complete.

Measurability

Exactly how much higher of a wage will you be offered? Well, that is a difficult question to answer.  But lets imagine that the Training Company (TC) (who pays you to learn Spanish) has a way to measure exactly how much more you are going to be paid (due to your ability to speak Spanish) in each of your subsequent jobs (say with Employers-A, B and C).  Then wouldn’t it kind of make sense that the TC would have a legitimate claim to receive (at least) some of the increase in your future salaries? Sort of like a royalty payment?

A special clause in the contract

This idea probably runs counter to our usual way of thinking about who owns the skill sets that we have – even when we get paid to learn them. But lets suppose that you could start out with that kind of a special clause in your TC contract. In other words, suppose that, from the very beginning, you had made an agreement with the TC such that:

  1. TC will pay you to learn Spanish, and
  2. For all future jobs that you get for the rest of your life, you will be required to pay a royalty fee back to TC, where the royalty fee will be equal to 50% of the *fraction* of your increased pay that you receive due to your added Spanish skill.

So, if you take a job with Employer-A, in which there is *no* added salary due to your ability to speak Spanish, then you would not be paying anything back to TC. But, if you subsequently take a job with Employer-B, in which there is an additional $10K in your annual salary (due to your ability to speak Spanish), then you would have to pay TC a $5K annual royalty fee.

Of course, the problem is that it is going to be very difficult to measure just how much more an employee will be earning (at future jobs) due to their ability to speak Spanish.

Enforceability

The other challenge is the question of Enforceability.  For example, a dishonest person (who was originally trained by the TC to learn to speak Spanish) might just say to a future Employer-X:  “By the way, I can also speak Spanish, so I am sure that you will be willing to pay me a little more, right? But, just don’t report that back to TC, because then I’ll have to pay that ridiculous royalty fee. In fact, why don’t we just split the difference of the royalty fee between you and me? Wink-wink.”

Compensation-Structure

An employer is not going to pay you to learn a new skill unless they believe that there is going to be a long-term profit potential for the company.  Normally, when an employer offers paid training, they are hoping and expecting that the employee will use their new skill in on-going (paid) service of the company that did the training.  The longer that it takes for an employee to complete the paid training phase, the longer that the company will need for the employee to stick around (following the paid training) in order to make it worthwhile for the company to have paid for the training.

But, in the scenario in which the TC maintains partial ownership of the skill that has been taught to the employee, then, whether or not the employee stays with the TC or not, the TC still has a reason to hope that it will make a profit on it’s training investment. This is because of the contracted agreement for future partial payments which would come back to the original TC.

In the example “contract” that we described above, the TC was going to receive 50% of the increase in the employee’s future wages (due to the paid training.)  But that number (50%) and the time frame (all jobs for the rest of your life) were just drawn out of a hat. In practice, there would need to be a careful balance struck, so that the TC could be reasonably certain that they were going to make their money back (on the one hand), and so that the would-be learner would be willing to agree to mortgage their future earnings (on the other hand.)

The exact details of the contract would form a Compensation-Structure agreement that would have to be signed by both parties.  And that could get complicated.

Definitely near-term … and probably long-term

We can clearly see how the TC’s investment in an employee’s education would definitely be a near-term plus for the employee (since the employee would be getting paid to learn the new skill.)  And we can also see how an investment in the employee’s education would probably become a long-term plus for both TC and the employee (since both TC and the employee will probably make more money from future jobs as well.)

The only thing standing in the way of making this kind of a win-win deal happen is that we would need to resolve the three challenges of Measurability, Enforceability and the Compensation-Structure.  So, how can these three challenges be solved?   

If you can think of a way, then you get the job!

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13 Responses to Who Owns Your Paid Training?

  1. PAL says:

    There are many people who struggle in poverty and unemployment, but who seem to be very uninterested in using their free time to learn useful skills by, for example, reading educational books. The challenge that they face (I think) revolves around 1) the payoff horizon and 2) the certainty of the payoff for their efforts. In other words, they are very willing to work at a job – so long as they are guaranteed to be paid at the end of the week. But they are much less willing to work at a job (like reading educational books) for which the payoff may not come for weeks or months or years – and even there, the payoff is not certain.

    So for a person who is stuck in focusing on the near-term payoff-horizon with guaranteed payment, this idea of being paid to learn a job skill would probably work wonders. Because it would switch the focus from the near-term benefit to the long-term benefit.

  2. NHS says:

    The Paradox of Disingenuous Inference

    You claim that you can accurately infer my (allegedly) disingenuous mental state (of hatred for the poor). And yet you also claim that it is impossible for me or anyone else to accurately infer anyone else’s disingenuous mental state (of laziness.). That doesn’t make sense.

  3. NHS says:

    There are two kinds of work. One kind has a certain near-term benefit. (This is what people normally think of when they talk about a job.) The other kind has uncertain long-term benefit. The difference has to do with belief. In the first case there is little or no need to exercise faith – bcz the worker can clearly see his goal. In the second case, faith and belief are crucial to motivate the worker to keep moving – because he cannot clearly see his goal.

  4. PAL says:

    What this article is really about is the three pathways of self-exertion: Working, Selling and Learning. Many people are 100% willing to participate in the Working pathway (which has a near-term, guaranteed payoff) but much less willing to participate in the Selling and Learning pathways (which both have long-term, non-guaranteed payoffs.) So, this current article discussed a way to encourage an unemployed person to participate in the Learning pathway by wrapping up into the Working pathway via a financial instrument (mortgage on future earnings) that will be initially financed by an investor. So, why not try the same thing with the Selling pathway?!! In other words, all you would need to do (same as with the Learning pathway’s conversion) is to solve the problems of Measurability (how much extra $ came to the person due to their (paid) exertion in the Selling pathway), Enforceability (again kind of difficult to do) and a Compensation-Structure. This is a really cool idea!!! 😀

    • NHS says:

      There r actually more ways to self exert – self-improvement should be the last category – and learning is a subset of it. Also includes loosing weight, getting a haircut, getting into better shape re endurance (bcz u need to stay at work for 8 hours – which an out of shape person could not do.). And improving the suitability of your mind emotionally in order to handle the stresses of a job.

  5. Anonymous says:

    Vocational schools as well as colleges should jump on the bandwagon with this ideology because it seems a waste of time to the students (potential future employees ) like student loans can be with no promise of employment . After all, that only seems is fair for both parties. In fact, the employer
    can work out a volume discount contract with the training school that could save each of them money because fuller

  6. fulltime_80 says:

    Excellent ideology in this article! I think employers should jump on the bandwagon with volume discount contracts with vocational schools and colleges as an incentive to both parties and the students (potential employees) . The employers save money, the training schools get paid more with more students, and the students are guaranteed employment. Instead of paying off a school loan with no guarantee of employment, the students should be happy to pay off royalty fees that could be automatically deducted from their checks and the amount deducted should be negotiable.

  7. Leader says:

    This is reminiscent of working as an apprentice. Then, for the first few years you are a gopher – before u can start making good money.

  8. PAL says:

    Here is an article that talks about the value of learning a foreign language: http://money.cnn.com/2013/10/30/news/economy/job-skills-foreign-language/

    You get 5% to 20% more money per hour if you know a second language: http://www.salary.com/should-i-earn-more-for-being-bilingual/

    Another factor to consider is that a potential employer would probably consider a person to be more likely to be a good learner or “smart” if they were fluent in another language – most particularly if they had learned the second language as an adult. For that matter why not throw in a third language? It sounds like it would take a smart person to learn that much. So, *if* you want smart people in your organization, then such a person might be a good hire. Or at least it would give a job-seeker a bit of a leg-up so-to-speak when they are trying to, at least, get an interview.

  9. PAL says:

    I Will Pay You To Study

    When someone applies for a job they always make two promises to the hiring manager. The first promise is: I will give you my Reasonable Self-Exertion (RSE). The second promise is: I will stick around long enough to be a net-positive to your business. In other words: “I’m not going to quit half-way through the new-hire training period.”

    New workers do not always state these two promises explicitly, but at least implicitly that is what the boss is looking for: Someone who will put in a reasonable effort (RSE) and someone who will stick around long enough to become a worthwhile cog in the machine.

    BTW, it might seem kind of crass to talk about a worker as a “worthwhile cog in the business machine”, but remember, this is a business relationship – not a friendship or a romance. In the business world, money is the basis of the relationship. And that is okay.

    This article is about the second promise: “I will stick around long enough to be a net-positive for your business.”. Many jobs have a fairly long training period that you have to go through before a new worker is ready to do the actual work that the boss wants. So, the longer the boss has to pay his new employee to learn how to do the job, the longer that the employee will need to stay around (keep the job) to do enough work for the boss to get a profit. Also, depending on the specifics of the exact training stage, the more likely it will be that the trainee will develop a valuable skill set that can now be sold to another boss. So a worker might be tempted, after the training period is complete, to just quit job A and look for another job B. So this creates a bit of a dilemma for boss A because he hired and trained the new worker based off of the assumption that the worker would keep “Promise 2” long enough to pay boss A back for training him.

    So the sticking point, from boss A’s perspective (when he is deciding how much time and money to invest in a new worker’s training) is the problem of “How much can I trust this person to keep his commitment to continue to work for me?”

    If the answer is “ten years”, then it would make sense for the employer to put a lot of time and money into the new worker’s training. In fact, it might even be worth it to pay the new guy to study in college for the first four years.

    Which brings us back to the title of this article.

    But who can you trust to keep both Promise 1 and 2 for a full (four + ten =) 14 years?

    Now there is an interesting observation. Which is that people who tend to rank high on the self-discipline scale tend to also rank high on the can-be-trusted-to-keep-their-commitments scale. Which kind of explains why it does not make a lot of sense to pay someone to get a higher education if they won’t do it for their own sake already … No, on second thought I disagree with that idea.

    Opportunity Makes A Thief

    All ppl tend to find it difficult to keep commitments (I.E, “Promise 2”) when their own pocketbook would be better served by not keeping the commitment. That’s just human nature. We tend to settle for moral guidelines which, (coincidentally), also benefit our wallets. That’s why it becomes very easy to switch from boss A to boss B once the paid training is complete.

    The government is a bit of an exception exception to this rule because it has the power to compel ppl to pay tax. So, from the governments perspective, if they can invest $50K over the next four years, in order to produce a higher earning citizen, then they can harvest (through taxes and reduces public welfare costs) $100K over the next ten years, then it will be a net-positive for the public purse. Of course these numbers are hypothetical, but you get the idea.

    The problem, from the perspective of a private citizen (who would also like to invest $50K in your career in order to harvest $100K over the next ten years) is that, unlike the government, there is no easy way to enforce the harvest.

    So if we can just work out that problem, and we can nail down Promise 1 and Promise 2, then, yes, I would be happy to pay you to study!

  10. PAL says:

    Improvement Versus Steady Improvement

    My idea to clean the apt with San was daily small improvement. But like so many other tantalizingly simple ideas this one always gets away on me. But a supervisor could easily keep tabs on it.

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