In one respect, Training and Development is a little like a retirement savings plan: if you fail to make regular contributions, there won’t be enough in the bank to get you to your ultimate destination.
If you wake up to this reality when you are 64 years of age, it will likely be too late to do anything about it.
Like saving for retirement, there always seems to be an excuse to avoid investment in education for employees. We can always find more urgent items into which we can sink our funds: advertising, promotions, new product development, or new cars for the senior managers. The sexy stuff tends to get priority treatment.
There is an old story that has made the rounds in Operations Management circles. It describes the reluctance of one business leader who finds little value in training and development initiatives. Discussing the issue with his Director of Supply Chain, he argues, “what happens if I spend all this money on training and educating these employees, and they just use it to beef up their resumes, and go to work elsewhere?”
“What happens,” responded the Director, “if we don’t train them, and they stay?”
Sometimes businesses, like people, are not very rational, but they are very skilled at rationalizing.
There can be no doubt that the supply chain has grown in relevance and importance to business enterprises over the past thirty or more years. And with forces such as growth in technology, globalization, and increased need for security at play, supply chains have become exceedingly complex.
Enlightened companies understand that investing in talent, through training, education, and personal development initiatives, is an essential part of human resource management. It requires a long term view of the health of the organization.
It may be true that you, as an individual, are a wonderful teacher and mentor who possesses near perfect knowledge of your business. These qualities are exceedingly rare. But there will come a time when you will leave.
Put bluntly, if you are a senior manager or a business owner, do you care if your business outlives you? Do you care if any employee develops a perspective that is not yours and yours alone?
A commitment to continuous improvement goes beyond business processes and the shop floor. And yet, such investment is often the first casualty of difficult economic times.
Progressive firms now, more than ever, need to hire and develop professionals to act as custodians of the supply chain, and to drive positive change. Forty years ago, it might have been sufficient for a firm to move relatively unskilled personnel into operations management positions. The staff could “learn on the job.” In a localized economy marked by a less acute competitive environment, firms could, and are still able to get away with this approach.
However, as Dr. W. Edwards Deming observed, there is a problem with on-the-job training: poor quality operational processes and procedures can be passed from the experienced employee (the trainer) to the newcomer, just as easily as good ones. Who’s to know whether the firm is on the right operational path? How is one to know if the firm is developing best practices?
Human Resources Professionals and Business Managers need to know that they are hiring qualified people into their supply chain operations, and that their business is developing the proper skill set in existing personnel within their firm.
The next time you are flying on an airplane, ask yourself if you would be comfortable in knowing that the pilot of your aircraft did not have an up-to-date pilot’s license. I know your answer. All pilots of large commercial airlines as well as small private craft must carry a valid pilot’s license, gained through rigorous training and maintained through a process of constant re-certification. The status of a pilot’s license is checked regularly. Lives are at stake. Admittedly, having a pilot’s license does not guarantee that one is a good pilot. But without a license, one is not a pilot at all. It is a prerequisite.
With recognized training, including professional certification, the HR Professional along with senior management – even in the smallest of firms – can be confident that the candidate, or the developing employee, has demonstrated a mastery of the Supply Chain Management Body of Knowledge. Certification is a tangible measurement of a person’s core competency in the areas of supply chain management, production management, and inventory control and planning, as well as an ability to appreciate the impact that decisions made in the supply chain have on the firm’s bottom line.
For any firm, the most sought-after degree or designation is the PWKWTAD: “People Who Know What They Are Doing”. Training and education breeds such talent.
The just-released summer 2012 edition of Canada’s Profit Magazine contains an enlightening article titled “Investing in Talent” authored by David Pimentel.
It discusses the results of a study, the American Express Small Business Monitor, conducted by Amex and PROFIT. The poll surveyed 500 Canadian business owners with two to 100 employees in April 2012. Its purpose was to investigate best practices for training and development. It contains some very revealing statistics:
Entrepreneurs reported improving business conditions and confidence levels heading into the second quarter. Amid this growing optimism about the prospects for their businesses, most respondents are planning to boost their spending on training and development. Small-business owners—who already spend around $1 on training for every $12 in revenue— now plan to increase those budgets by an average of a substantial 7.5% over the next two years.
They are not, however, planning to spread those larger budgets around evenly. When asked which areas and methods of training and development they prefer—that is, those that provide the best return on investment (ROI) and the highest level of satisfaction with results—there was a clear consensus. The majority of respondents chose low-cost, in-house training that is job-specific, as opposed to external training that focuses on more general skills.
For instance, when asked about the ROI on training and development, 67% of respondents who offered training on “company-specific knowledge or skills” reported a high or very high ROI. Similarly, 56% of respondents who offered “job-specific technical skills” reported a high or very high ROI on programs of this type. Those that offered more general training reported that only sales and customer service or client-relations management training delivered a high or very high ROI, at 49% and 42%, respectively.
WHAT TO TEACH
The 8 Subjects delivering the best return on investment
TRAINING OR DEVELOPMENT SUBJECT % WHO SAID IT YIELDED A HIGH OR VERY HIGH ROI* % WHO PROVIDED OR SUBSIDIZED PROGRAMS IN THIS SUBJECT Company-specific knowledge or skills 67% 49% Job-specific technical skills 56% 52% Sales 49% 34% Customer service or client relations management 42% 31% Teaching employees how to coach 39% 12% Negotiation 38% 8% Time management 37% 15% Communication 34% 17%
* Among those who have provided or subsidized training and development on this subject
HOW TO TEACH IT
The 8 teaching methods delivering the best return on investment
TEACHING METHOD % WHO SAID IT YIELDED A HIGH OR VERY HIGH ROI* % WHO USED THIS METHOD On-the-job training, including apprenticeships 70% 53% In-house development programs 60% 38% Coaching by an employee’s manager 51% 41% Coaching by external practitioners 50% 19% Internal knowledge-sharing events, e.g., lunch-and-learn sessions 46% 33% E-learning, e.g., web-based courses and training modules 45% 38% Job rotation, sharing or shadowing 44% 30% Off-site instructor-led training 40% 30%
* Among those who have used this method of training and development
Given the satisfaction that entrepreneurs report with job-specific training, it’s easy to conclude that external training and development (such as seminars, course work, conferences and web-based programs) are a poor use of money. But it’s not that simple.
One interesting result that jumped out at me was that while half of those surveyed agreed that “coaching by external practitioners” delivered high or very high ROI, only 19% use this method. I wonder what the reasons for this gap might be: expense? concern over the credibility of the external practitioner? time management challenges?
You comments and feedback are welcome.
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