What Sort of Training Should You Give Your Employees?

When it gets down to training your staff you can waste a lot of money if your don’t think it through carefully. More than once I would overhear my staff complaining over the time consumed in training whcih took them away from their day to day tasks. Often they would come out of a training session questioning the purpose, quietly ridiculing – even despising – the program. (I know this because even as the manager, I was well wired in to the sub-cultures). No matter how good the intentions of the management and HR strategy, staff will judge it harshly. If the training helps them get through their job more effectively they’ll participate with enthusiasm. If isn’t meaningful in the context of day to day activities then it could be doing more harm than good to productivity.

At one company I was working with not long ago, they were sending all the staff through a training program to improve teamwork and cooperation. Some nutter manager had convinced the CEO that this was going to add value and everyone was being force fed through the arduous four hour program. Though it was supposed to be exciting and invigorating you couldn’t help notice the constant reference to watches as participants tried to hurry the time passing and get back to their customers. Whats more, when we surveyed the staff, their real concern was the absence of a quality induction program. They thought their teams were working fine.

There is an opportunity cost to training. If you take staff out of their job to train them, that’s time they could be doing something else – their work or some other type of training or productive activity. With any training strategy, you should ask the question – is this time and money that could be better spent on some other activity? Only proceed if the answer is no.

There are a a number of types of training. ‘Hard skills’ training focuses on skills which are required to conduct specific tasks required to do the job. Hard skills are the basic building blocks of productivity. One class of hard skills concern technical knowledge about the job – computer programming knowledge, engineering skills etc.. Most often you hire staff on the basis of their the hard skills unless they have been promoted to a new position or are trainees where they may need some training. The second class of hard skills concern those required to operate within the company – administrative processes and procedures etc.. Everyone needs to be trained in these – preferably through an induction program at the time they start with a company. At times you need to conduct training to implement new procedures, but only for those who are impacted by them. Also, refresher courses may be necessary, especially for procedures which have legal consequences ( eg. health and safety, privacy etc.).

‘Soft skills’ training concerns training which impacts on the behaviour and beliefs of staff to effect culture and attitudes. Soft skills training involves areas such as teamwork, leadership, customer service, and problem solving which can have a critical impact on performance and productivity. But beware – it can go awfully wrong and as I suggested earlier – if conducted poorly or innapropriately, can be more detrimental than positive. Again a critical condition for success is wether there is staff perceive a need for the training and whether they believe that the training will add value (solve a perceived problem). To find this out you need to ask them – through a survey or focus group perhaps.

Generally it needs to be consultative and participative ensuring that as far as possible it addresses the issues percieved by all staff. Reaching a shared understanding about the nature of the problem or goal and what everyone can do about it is a pre-condition to action. In most cases its not about a top-down command or instruction (which merely precipitates inaudible mutters and anguish).

In some instances, soft skills are better disseminated through examplary behaviour by those in leadership positions. For example, by encouraging participation and consultation in meetings , or informally through modelling behaviour or reiforcement by the manager. In this case formal training must be directed at the manager responsible for the culture and behaviour of their staff.

Training is an important component for a productive company but you should think carefully about what your trying to achieve. The aim is to improve performance but its easy to miss the mark with the wrong strategy.

How much should you spend on employee training? (As much as you need to!)

In my day to day consultations with clients I get some strange questions which often reveal some underlying incompetencies in a company’s strategic and decision-making ability. One of the classics was ‘We need to know how much we should spend on employee training. Can you provide us with industry benchmark data which could be used to allocate an appropriate portion of the company budget for employee training’.

The response I would have liked, but didn’t give was ‘ You should spend about as much as it costs to retrench the person who wants to know the answer!’. But the reality is its actually not uncommon for companies to have expenditure targets for traning and other such employee management strategies.

I could only assume that the question had come from an someone in the finance department or maybe from a Human Resource Manager looking for a way to justify employee training expenditure. Whatever the motive, this sort of question reveals a sadly common ignorance.

I’ve never been a great advocate of using industry benchmarks for anything, let alone employee management strategy. Why should a company be remotely concerned with what competitors are spending. The aim for most businesses is simply to have the largest profit margin at the price which meets your sales/revenue targets (this could be the market price if your just a competitor or the price which meets your growth targets if you have a differentiated product or market niche). What it costs others is of no concern either in the contest of continuous improvement strategy – you just want to consistently achieve better quality, efficiency, market penetration etc.

OK I’m being a bit harsh, but industry benchmarks are often more distracting than useful, other than a few key indicators such as market product price or shareholder dividend measures. Imagine the average expenditure on employee training in your industry is 2% of budget. Does this mean you are going to feel guilty or clever if you only spend 1.5%.? Are you going to overspend at 2.5%? Are you going to send people to training courses they don’t need to achieve the industry rate. More so, in most cases this type of data is not available, and if it is, it probably would reveal a high variance across individual company expenditures.

The answer, is simply as the title suggests. You spend as much on employee training as you need to achieve your performance goals. Training expenditure falls right from the business strategy. For example, you develop your targets for revenue, costs and profit etc. From those you determine your sales targets and/or customer retention and supporting product or service strategies. Following, you determine your capital and employee expenditure targets. Given these, you must determine the adequacy of your employee skills and recruit and train.  Many companies define their skill needs within job position competencies against which employee skills can be assessed.  This level of detail can be useful but again the competencies must reflect the business’ strategic needs if they are to add value, which in turn requires regular review and adjustment.  Whatever the sophistication of the process, it is evolutionary and iterative and requires discipline as your internal and external organisational environments transform.

So for example, lets say you need to improve your customer retention by improving service standards. You have diagnosed a deficiency in product expertise and improved the service framework with new systems and processes. You must train the relevant staff so you allocate trainging expenditure, then sit back and watch the relevant KPI’s – they’ll tell you whether you need more training or not (given the systems and processes are correct in the first place (which is an issue for another time). How much training do you need? As much as it takes to develop the competency of employees on the new system.

The idea that training budgets emerge from business strategy is simple but takes time and effort in planning, measuring and managing continuous improvement. Obviously the amount you spend will differ depending on your business strategy. But the purpose of the expenditure should be transparent and justified and the benefits accountable. Managers across the organisation should be able to say ‘I spent this much to achieve this objective, for this reason and this how close I got’.

As far as industry benchmarks go you’ll probably be setting it, not following it. But who cares anyway?