Productivity is synonymous with investment in an enterprise and the cost of labour is one of the major parts of such investment. The continuous sustainability of such a resource ensures a higher return for the company in either the short or long term-context and investing in employees through on-going training is crucial to an organisation’s sustainability.
The alignment of knowledge and skills to business success is the topic chosen for discussion at the seminar being held by the Foundation for Human Resources Develop-ment (FHRD) at the end of May.
However, in today’s cost-conscious environment, managers have to convince their CEOs and boards of directors that expenditure on training is truly an investment that will translate into concrete results. Training can no longer be justified by vague promises of ‘it will be good for our people’. The evaluation of training is inherently a good thing. But because short-term priorities always crowd out strategic planning, it is typically something we plan to do better next year: after all, we’ve got away with it so far, so another year won’t hurt! And even if training evaluation is undertaken, it is usually at the easiest and lowest level – the measurement of participants’ reactions through happy sheets. Reactions are important, and happy sheets serve a purpose, but will they be enough to back up our arguments when there is a need for greater investment in training, when major changes need to be made, when there is stiffer competition for resources, when times get tough?
Measurement of the return on investment is vital and necessitates a more scientific methodology for its effectiveness. So how and what do we measure, and in what context?
Training should be regarded as a business tool, with the main focus directed at the training design and methodology best suited for the company’s short and long-term needs. Planning a training programme should consider the direct and indirect costs incurred vis-à-vis projected increased output. This entails accounting for the number of employees being trained, the formal and informal learning processes throughout the session, the creation and enhancement of networks, the resulting increase in efficiency and behavioural and performance changes in employees.
A return on investment (ROI) can only be ensured if the exercise is carried out diligently and thoroughly. ROI is a measure of the monetary benefits obtained by an organisation over a specified period of time in return for a given investment in a training programme, that is, the extent to which the benefits (outputs) of training exceed the costs (inputs).
Investment in training includes assessment of needs; programme design, development and delivery; promotional, administrative and departmental costs (including pro-rata apportionment of employees’ salaries participating on the programme) and materials, facilities documentation and evaluation expenses. On the other hand, the real benefits of such investment should result in improved perform-ance – traditionally the hardest training outcome to forecast or measure – with care being taken not to include the same basic bene-fit under more than one heading.
Areas to focus on for forecasting and measuring benefits should include the labour savings envisaged through enhanced work processes, the productivity increases through improved skills and higher levels of motivation, other cost savings through lower staff turnover, fewer machine breakdowns and other income generation through successful bids and ideas for new products.
Besides the traditional classroom setting, training can also be delivered through e-learning, computer-based training or web-based training. Consideration should also be given to chosing the ‘best buy’ through comparing the ROI for e-learning compared with that for a standard classroom setting.
For the investment to truly bear fruit, benefits should be experienced by all stakeholders: the trainee, through increased job satisfaction, motivation, morale, self-confidence, safety and work flexibility and the organisation, through higher profits, standards, cash turnover and better use of resources against reduction of wastage, complaints and staff turnover.
However, for these results to materialise and be cost effective, it is important to recognise when, and in which department, employees have developed learning needs. This can be seen when current performance fails to match established standards of business: handling complaints, repeated mistakes, inconsistencies; communications failures. Whenever changes arise that affect current practices, equipment, products and responsibilities, the need for training is a must.
The organisation has also to focus on managing the company’s knowledge for its development and best use to support the achievement of strategic objectives. Knowledge Management (KM) addresses the identification, growth and re-use of a company’s intellectual capital to enable business growth.
Training is definitely not a cheap option. It comes at a cost – sometimes at a relatively high cost. However, the strategic planning, implementation, monitoring and evaluation of the training needs of the company can only lead to higher productivity. It is through this investment in the organisation’s human resource that the organisation can ensure its sustainability.
Dr Borg is the Executive Director of Consultancy & Training Acumen Centre Ltd and is a management consultant with a track record in strategic management and human resources in both the international and local arena.
The subject of her article will be fully discussed at the seminar the Foundation is organising on 28 May at 2pm at the Intercontinental Hotel, St Julian’s, entitled The Alignment of Knowledge and Skills to Business Success. For seminar details visit www.fhrd.org. This seminar is sponsored by: Agenda Bookshop, Air Malta plc, the Employment and Training Corporation, FIMBank plc, International Safety Training Centre Ltd, Keep Me Posted, Koperattivi Malta, Outlook Coop, Reed Consulting Malta and IBM-SPSS, Standard Publications Ltd, St Martins Institute of Information Technology, Studio 7 Co. Ltd and The Insiter magazine.