(In this two-part series we will address the why and how of formal training programs in the work place.)

The man who can make hard things easy is the educator.   ~ Ralph Waldo Emerson

The pressure to gain and protect market share while delivering profit to the bottom line is intense.   Competition in fierce.  The market place demands excellence.  Training is the tool that sharpens the competitive edge in business.  Unfortunately, training programs are among the first things to be cut in down periods.

On August 14, 2003, the northeastern U.S. suffered a massive power blackout that lasted several days.  The costs and lost revenues will be hundreds of millions of dollars.  After a three-month investigation, the U.S. Dept. of Energy issued a report stating that "FirstEnergy’s control room operators were not adequately trained."  U.S. Secretary of Energy, Spencer Abraham said, "their lack of awareness precluded them from taking the preventative steps that could have been done."  Charles E. Jones, FirstEnergy’s Vice President of Delivery said, "systems began to malfuncion - control room technicians were unaware of the problem."

When companies decrease their commitment to on-going training programs, they increase the risk of operational failure.  Successful companies seek and reinforce activities which reduce risks, strengthen sales, and increase profits.  Formal training is one of these activities.  In a recent survey of the collection industry, the American Society for Training and Development found that firms who invested an average of $1600 per worker in training achieved 24 percent more in gross profits than those who invested less.  Leading companies in all industries (Wal-Mart, Southwest Airlines, Sears, General Electric) spend an average of 3.5% of annual payroll on employee training according to the survey, thus protecting their "industry leader" status.

The common thread between successful companies, large and small, is a commitment to educate and train their workers.  There are a number of good reasons why businesses should invest in formal training programs.

RETENTION

The single biggest expense for most companies is payroll.  When you add the costs of turnover and recruiting, retention becomes a top priority.  When asked why he had no real training program in place, a local owner replied," Why bother?  They quit as soon as they get enough training to find a higher paying job."  Training is not an immediate cure for a company’s problems.  It won’t overcome a lack of leadership or structural weakness in the organization.  It will, however, address the basic thirst for knowledge that we all share.  And, by satisfying that basic need, the culture of the organization will improve.  When morale increases, turnover decreases.

SAFETY

Industrial accidents and workman’s compensation premiums are direct costs that can be reduced through effective training.  According to Dr. Abraham Maslow, industrial psychologist, safety is a primary need that all of us seek to satisfy.  Thorough, on-going training programs in the workplace increase the sense of security and safety.  Properly designed training programs also help ensure compliance with OSHA and other regulatory agencies.  By making a commitment to training, organizations reduce costs, increase regulatory compliance, and generate good will within the workforce.  The investment is returned in profits and stakeholder equity.

TECHNOLOGY

The recent productivity increases in the U.S. economy were due to improved technology. The application of new technology in the workplace translates into the introduction of new equipment and new procedures.  Formal training is essential when an organization seeks to remain competitive by implementing technological changes.  By investing in training, a company demonstrates to its employees how valuable they are to the organization.

STANDARDS

Formal training ensures consistency in the product or service a company produces.  It is one component of a successful long-term strategic plan.  By developing training programs which achieve high standards, a company protects its brand equity and is able to increase market share.  Maintaining consistent high standards also reduces waste and/or redundant services.

Sometimes it seems as if there is enough time and money to do something over, if necessary, but not enough time or money to do it right in the first place.  In many cases on-the-job informal training is the usual practice.  New employees are "partnered" with experienced employees to be "trained."  The result is a gradual drift away from the standards, including safe work practices.  Training is the initial step in "getting it done right - first."  Standardized formal training ensures that each new employee is taught according to proper procedures thus preserving the integrity of the standard and the company’s profits.

GROWTH

In order for a company to grow, the people in the company must grow.  The physical expansion of the organization must be preceded by the technical and intellectual growth of the people in the organization.  In addition to ensuring high-level work skills within the work force, formal training prepares individuals for advancement within the organization.  This is a powerful incentive for companies seeking to increse market share.  Promoting from within the organizaton reduces recruiting costs, improves morale, and enables the company to move quickly when opportunities arise.

Increased sales and profits, reduced turnover, high standards, and future growth are reasons enough to invest in training.  Improved morale, higher productivity, and a stronger brand name are the icing on the cake.  By developing, implementing, and maintaining formal training programs, businesses and organizations are preparing for the future.  They are sharpening the edge of the competitive blade. 

This article is provided as general information and is not intended to substitue for legal or other professional advice.