The Value of Training

The business case for training
Feedback from senior industry leaders resounding confirms the sound business case for training. It is also clear from the feedback that where training is of immediate relevance and application to an individual's job function, the cost benefits are able to be easily identified. However, it is also clear that not all training provides added value to the business.

Employers clearly benefit from having a more highly skilled workforce which gives greater productivity and competitiveness and leads indirectly to a more skilled market enabling them to support business growth.

All new entrants need to be inducted and given Health & Safety training as well as the essential skills training. And there are very substantial and cost-effective advantages to be had by continuing to train, develop and recruit existing industry workers.

Training areas to cover
Although each company's training policy will vary according to its business, there are a number of key factors it should address:

• The training priorities of the business
• The labour and skills requirements of each discipline
• The need to demonstrate the competence of the workforce
• The formulation of a training budget
• A succession plan
• Support for national and local training needs.

Members seeking guidance on training policy within the HVCA Inspection & Assessment criteria can receive a Guidance Note from the HVCA Education & Training Department. Visit the HVCA website at www.hvca.org.uk (Inspection & Assessment, Education/Training).

Training to improve skills
Training to improve skills is different from training to improve performance. Although improving skills is likely to have a positive impact on performance, improving the skills of the entire workforce so that they become more competent is in everyone's interest. This training must be relevant and related to enhancing an individual's skills. However, this skills development is frequently not recognised as being training and is all too often left in the hands of people who are themselves under-skilled. A structured approach is therefore essential.

Training to improve performance
Training to improve performance and training to improve skills are not only connected but are dependant on each other, but training to improve performance has to take into account other issues like supervision and motivation.

Assessing the true cost of training
Having a clear understanding of the cost of training is essential in order to understand its contribution to the bottom line.

However, an analysis of recent industry trends highlights some of the difficulties involved in finding the true cost of training:

• The most significant trend in recent years is the reduction of the size of central training departments
• There is an increasing use of local trainers to respond to operational needs with costs met by the relevant business area or unit
• More and more companies are outsourcing their training
• There is an increasing need for employers to take responsibility for their own training, and drive the con cept of self development by 'leading by example'
• PC-based training packages and on-line learning that can be used in-house are increasingly available
• There are now a large number of agencies involved in education and training.

All these trends make it difficult to pin down the real cost of training. Some managers accept the positive benefits of training and its impact on the bottom line without any hard evidence. This can mean they are also willing to look at other training activities that might influence revenue or costs in other ways, for example employee turnover.

There are a number of ways in which training can influence staff turnover. Recruiters and line managers can be introduced to effective recruitment techniques to improve their decision making. What is sometimes overlooked is the importance of creating an environment where employees want to stay, which is just as important as the initial selection decision. The need for effective appraisals and performance management techniques is therefore fundamental.

Making the most of available training funds
There is financial assistance available from the Government to support a company's investment in training their staff. For young workers, the most common scheme is the Modern Apprenticeship Scheme which attracts funding to assist the company to pay for their achieving of an industry recognised NVQ, but there are other schemes that may apply to your workers dependant upon their age and the region in which they work

There are also funds for Adult workers both in terms of new entrants to the Industry and those that already work within it, again to assist in paying for achieving industry
relevant qualification. Once again these will vary from region to region according to the local Businesslink and regional Development Agency

The majority of managers believe that training is a worthwhile investment. But it is not always obvious how best to deploy training budget to get maximum return on the investment.
For most employers decisions to invest in training are made in the context of the company's needs, taking account of:

• The total budget available
• The competitive position of the organisation
• Skills and labour shortages
• Succession planning
• People-driven demands, for example, the need to improve skills in new technology and ICT
• Market-driven demands, ie, the need to respond to changes in the market place (multi-skilling, pre-fabrication, etc).
  

Funds for training existing workers will often be under pressure because some elements of the training budget are likely already be committed to apprenticeship and Health & Safety training. However, it is the care with which the discretionary element of the training budget is spent that can often really make a difference to the extent to which training can contribute positively to a business' bottom line.

Return on investment
Training delivers benefits to an organisation in many ways. Most managers and employees appreciate and value the benefits of training. However, any evaluation of training should focus on the rigorous benefits derived and less on 'feel good' benefits which are often short-lived. A training evaluation should be less of an audit and more of a stimulant or motivation to constantly improve performance.

All training should seek to improve a company's performance by enhancing individuals' skills and competencies, giving the employer who invests in training a competitive edge over the employer who doesn't.

Evaluations by a number of our member companies clearly show that new entrant training Craft Apprentices and Student Engineers can be cost effective within the duration of the Modern Apprenticeship programme. These analyses have included consideration of wages/salary, NI contribution, administration, college fees, loss of production through day/block release, induction and in-house training as well as special needs courses balanced against support funding and achievement grants.

This type of equation - distilling the days available for work against the total costs and training days - is valuable for employers in formulating their new entrant training schemes and ensuring they get a return on their investment during the initial Modern Apprenticeship training period.

Conducting a cost-benefit analysis
Conducting a systematic comparison between the full costs of both direct and indirect training is relatively straightforward. When considering the benefits side of the equation, it is important to include all the benefits, whether they are direct or indirect, financial or social and even those benefits that may be intangible.

Most employers only evaluate the effectiveness of the training delivered but it is even more important to evaluate the total expenditure on training and make sure that it delivers value for money.

Training can only be evaluated on the basis of the contribution it makes to business success. Does the training lead to improved personal performance which in turn leads to improved business performance? This evaluation can only be undertaken by operational managers who are the direct customers of the training