E.g. a type rating for a business jet might cost $150k or more to obtain. If a firm pays for a type rating for a pilot, that pilot is immediately more valuable to every other employer with that jet. The optimal strategy from a game theoretical point of view would be to let another employer pay for the rating, and then pay the pilot say $40k/year more than the original employer could afford to pay.
So reasonable terms that require repayment of pro-rata portion of genuine training, etc, for some small number of years can make sense.
Or, be honest about the whole deal and make it an overt loan to the pilot. That's how it works with my employer -- if I want to get trained in a specialty that benefits my employer, they will partially cover the cost and extend me a loan for the rest.
If I leave employment before I've repaid the loan, I'm still on the hook to repay it -- but I have not been turned into an indentured servant.
Sure-- these terms have to be disclosed to be binding. So you can say-- we'll pay for your type rating but if you voluntarily leave within 3 years you must pay back the pro-rata portion of the training.
(This is better for the employee than a straight loan because if they are e.g. laid off they can just walk away).
It's my understanding that the current cost of type ratings for G-IV/G-V are ~$120k.
You spend $100k on the type rating + increase their pay to $n per year.
Someone else poaches them for $n+1 per year and saves the $100k.
Employers who poach instead of paying for training win in a market like this.
The only way to prevent this is to make employees bear the cost of the training / investment in their skillset-- either explicitly (Go take out a loan and get a type rating!) or implicitly (Pay us back if you leave before N time). The latter can be more employee friendly, because it removes some of the risk from the employee's point of view.
When an employee knows they are more valuable getting paid $0/yr extra lets them know they are guaranteed to be leaving money on the table, vs increasing their salary by some amount which let's them know they are getting some sort of value out of their new skills. Its not like the training is free of effort or time investment on the employee's part either. US companies try to be so cut throat with their employee's and make sure they don't leave a dollar they could have extracted out of them. I don't get why they are surprised that when they've put zero effort into the relationship for decades, that the employees treat them the same. They need to put in some up front effort or collateral to prove there's loyalty there and behavior like, I will invest in a skill that takes time for you as an employee to learn, and is only worth it to you because it will let you command a higher salary, but I am not going to give you a higher salary, is the type of behavior that incentives jumping ship and makes the strategy of "poachers" viable.
Also as an aside, I hate the term poaching. I'm entering into business relationships with other businesses when I change employment. When managers or companies use the term poaching its a little too on the nose with how they view me as their property.
The employer that doesn't incur the large cost can afford to pay the employee much more and still come out ahead versus hiring an employee who still needs the rating. The Nash eq outcome is that no one pays for type ratings and externalizes the cost completely to prospective employees.
> They need to put in some up front effort or collateral to prove there's loyalty there and behavior like, I will invest in a skill that takes time for you as an employee to learn, and is only worth it to you because it will let you command a higher salary
This doesn't work for the business jet case. If you have a Gulfstream V that you want to fly, you need to either hire someone with a GV type rating or immediately get the new guy the GV rating. Hence, you tend to put in the offer letter a requirement to repay.
This assumes that such a system would actually produce enough people willing to bear the cost instead of underproducing resulting in reverting to prior strategies in order to continue existing with the primary successful strategy being successful long term relationships with workers including paying them the new market rate after training is complete to make "pouching" non trivial.
> including paying them the new market rate after training is complete
This structure doesn't work. If a pilot is worth $100k to a firm that pays for training, surely he is worth more to a firm that won't have to pay that expense. There is no "market rate" that you can select that doesn't incentivize employers to try and "just grab trained employees" from other employers. It's a classic case of the free rider problem.
Everyone is both looking to grab other firms already trained employees and train their own.
Exclusively using the former strategy is only a useful strategy in markets full of shitty employers. Functional good employers will lose no more on average to poaching than they gain from it.
If employer A pays $100k to increase the value of new employee B over a span of a couple weeks... a big proportion of the time new employee B will decide to divide the value of that $100k with employer C, no matter how nice employer A is. People very often choose to act in their own economic interest. This is especially true when they don't have a longstanding relationship with employer A.
> Exclusively using the former strategy is only a useful strategy in markets full of shitty employers.
Here, you need a pilot or two. Paying to train without any kind of security is a very risky strategy versus paying a somewhat higher price for an already trained employee.
Undergoing any sort of training imposes a mental and time cost on the employee and if their current employer does not increase their compensation at all, then they are shouldering a cost for no benefit. The employer offering the training doesn't need to match what other companies could offer if they don't pay for training, they just need to offer enough that the newly trained employee doesn't care to switch.
No, I'm treating them as rational actors seeking to maximize their compensation. It may not always be so, but it is an assumption that will be true at least some of the time of a new hire that you're going to immediately invest $100k in.
> Undergoing any sort of training imposes a mental and time cost on the employee
Generally they are paid for their time doing the training.
> and if their current employer does not increase their compensation at all
Odds are they make more money in the new type, but not quite as much as an employee showing up with the rating already in hand.