General Training And Firm Specific Training

1474 WordsApr 30, 20156 Pages
There are two types of training that can be offered by employers. General training and firm-specific training, I am going to explain the differences between these two types of training respectively as well as the risks of both types of training. General training is the type of training that give employees the skills or knowledge that can rise employees value in both inside and outside the current firm, by increasing their productivity, and the amount of value increases in the current firm and other firms are equal in theory. This kind of skills and knowledge are called general human capital. For example, learning a new language and studying MBA are both general human capitals, because these are skills that can be used with many employers…show more content…
Especially when there is a low job mobility cost for the employees from switching jobs, its not recommended to provided general training or the firm should require the employee to pay for the training by receiving a very low salary during the training period. So in general most employers don’t pay for education. However, there are some cases that employers do offer education to their employees. 1. implicit cost to employee and benefit to employer: the employee accepting lower salary or have a contract with the employer to pay back the tuition if they quit within a few years of graduation. 2. Matching: Some selected employees are strong match for this employer, and the firm expects them to stay for several years, and may wish to groom them for key positions. 3. Recruiting: offering tuition reimbursement as a benefit to attract harder working and more ambitious workforce, and those workforce tend to be young, for some firms that require young and strong employees. 4. Arbitrage: if there are tax benefits to paying for education or training, the firm might have a cost advantage in paying for schooling compared to the employee. Instead, the firm can have independent institutions for training, for example: “ control data corporation” was one of the first builders of supercomputers. They established a division called “control
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