When
financial prudence is called for, organisations often try to prune as much from
the training budget as they can. But being forced to do more with less
resources and having to focus on quality is no bad thing, says Keith Rodgers
Like most of her peers in the public sector, Ann Millington, head of
organisation and employee development at Bexley Council in Kent, has seen her
training priorities shift dramatically over the last couple of years. At an
operational level, training programmes that were once delivered in long two or
three-day sessions are now more likely to be structured around bite-sized
courses that can be swallowed in 30 minutes.
At a strategic level, there is a new emphasis on aligning learning with the
council’s business objectives. "A few years ago we would offer courses and
whoever turned up, that was it! It was about training department survival. Now,
it is about what we have to do to help the organisation become better – it’s
much more about organisational development," she says.
Bexley Council’s experiences have been mirrored across the country as both
public and private sector organisations review their training priorities. But
the current economic downturn is in danger of stymying this evolution.
Always near the top of the list when it comes to identifying targets for
cutbacks, training is an early victim when economic cycles slow. In today’s battered
economy, some organisations have managed to refocus their training efforts,
spending their restricted budgets on areas that matter most to the business,
and delivering practical results. Many others, however, have wielded the axe
less discriminately, leaving vast swathes of their workforce under trained and
potentially storing up serious problems for the long term.
That issue was highlighted in February in a report from the Learning and
Skills Council (LSC), which warned that almost a quarter of companies reported
a skills gap in 2002, partly as a result of lack of training. The gaps were
largest in customer services – 24 per cent – and among ‘operatives’ and
administrative staff, while basic skills in areas such as communications were
found to be lagging in more than 60 per cent of cases. Not surprisingly, that’s
led to a wide range of problems, leaving companies unable to meet service and
quality standards and, in almost a third of cases, resulting in lost business.
The LSC believes part of the problem is that training is typically aimed at
highly-qualified or skilled employees, while manual or service workers and
part-time employees tend to lose out.
As Kate Ashton, director for workforce development at the LSC, points out,
that is often because employees who are ‘training-aware’ find it easier to
promote themselves to get on learning programmes.
At the same time, companies tend to be more confident that they will get a
return on their investment from individuals who have already proven their ability
to respond to training, such as graduates. This approach, however, is only
storing up problems for the future. "We now know that 80 per cent of the
peoplein work today are the workforce of 2010," says Ashton.
"Employers won’t be able to cream off new or recent graduates all the
time."
While there is widespread acceptance of that problem, however, some argue
that it is not just lower-skilled employees who are losing out.
Steven Tallman, head of global knowledge, training and technology services
at consulting firm Bain & Co, has carried out extensive research into
companies’ learning strategies, and argues that middle managers may also be
feeling the squeeze. Primarily, that is because other parts of the organisation
often have better claim to scarce training funds.
Many organisations are obliged to allocate large chunks of their training
budget to meet regulatory obligations, for example. Others struggle to cut
shopfloor training because of opposition from trade unions. And in some
organisations, senior management also stakes a high-priority claim for support
in tackling challenging business conditions, particularly if they are squaring
up to unfamiliar business decisions such as whether to outsource parts of their
operation. In each case, these priorities could deprive middle managers of
training resources.
In addition, Tallman believes most organisations are now facing a second,
more brutal wave of training cutbacks. In the early part of a downturn, companies
typically focus on cutting the ‘fluff’ – they switch, for example, to cheaper
hotels for off-site courses, bring more training in-house, reduce the number of
suppliers, cut travel, and attempt to shorten courses. "That
belt-tightening started happening 18 months to two years ago," he says.
"Now they have already tightened as much as they can."
At this stage, training managers have no choice but to cut individual
programmes.
"You look at the strategy of the business – what are the key things
that are important at the moment, and which programmes support our strategic
direction most? Those I hold sacred," says Tallman. "Everything else
I give up now, especially if I can have some sort of commitment that I’ll get
it back when things get better." He points out that the only consolation
is that in a tough environment, employee attrition rates fall and fewer new
hires come on board, so the need for induction-related training falls.
Faced with these difficulties, experts agree that companies need to focus on
business priorities and ensure training is delivering to strategic objectives.
At Bexley, for example, learning themes are agreed for the year with the
management board – currently, they include the need for partnership, project
management and IT skills. Some training cascades down from the need to meet
central government requirements, such as writing bids for funding, while other
aspects, such as training in relation to race relations legislation, are a
given. The remainder come from informal feedback and employee surveys. In the
end, some items simply don’t make the cut – a residential course at Ashridge
for the top management team would be good, says Millington, but it is hard to
establish the business case for something that could cost £40,000. "Most
of what we do is very business-oriented, and the management board is
increasingly pleased that we are delivering against what is important,"
she says.
As well as prioritising training in line with business needs, organisations
can also mitigate the impact of training cutbacks by managing the overall
process better. Michael Brennan, analyst at research group IDC, argues that
most companies fail to maximise the efficiency of their training efforts
because the groups responsible for training are scattered throughout different
business units. While this means training departments are more responsive to
the lines of business they support, it means many training efforts are
duplicated.
Hampshire County Council has attempted to tackle this issue by combining "corporate
direction and localised action". According to Rita Sammons, county
personnel and training officer, the council has a corporate training budget
geared towards major change, but most training money is embedded in local
departments, where much of the training management effort is now focused.
"In recent years, we have taken a more structured approach. So we are
introducing individual plans and training portfolios, and building them into
the team and departmental plans. We make sure it has a business outcome –
either for job development or personal career development."
In practice, the council has actually increased its training spend, both in
terms of qualification training within the council and leadership development
for 500 senior managers.
Ultimately, management consultancies such as Bain & Co argue that
companies should continue to invest in training during a recession so they are
better placed to make the most of the inevitable upswing. That is not, however,
a decision that most boards are prepared to take. Where cutbacks happen, the
next best option is to ensure training decisions take into account the short
and long-term of all tiers of the enterprise, but remain focused on those parts
of the workforce that will deliver real business benefit.
The ineffectiveness of workplace training
According to the Learning and Skills Council, skills gaps are
resulting in a wide range of problems including:
– Difficulties meeting customer service standards (57 per cent
of cases where companies reported a skills gap) and quality standards (54 per
cent)
– Loss of business or orders (30 per cent)
– Delays in developing new products or services (28 per cent)
Training staff to overcome these drawbacks is a positive step,
but this often has little beneficial impact as a result of the following:
– Training focuses too much on Health & Safety and
induction, not on increasing productivity or efficiency
– Access to training is focused on trained, highly-qualified
staff, while manual/service workers, part-time and older workers lose out
– Small organisations, with fewer than 10 employees –
representing 80 per cent of all companies in the UK – train least frequently
and least intensively
Source: Learning and Skills Council
Case study B & Q
Strategic gains from investing in training during a recession
While most organisations have been
cutting back on their training costs in the face of the continued downturn, DIY
retailer B&Q has done the opposite. Over the past two years, not only has
it doubled its training budget, it is also made a multi-million pound capital
investment in a learning management system.
At the same time, where many organisations merely talk about
linking training to business objectives, B&Q has directly tied compensation
for more than 25,000 staff to their ability to put their training into action.
For HR director Mike Cutt, these initiatives are not just linked to business
strategy – they are a means of achieving that strategy.
B&Q’s decision to up its training investment stemmed from a
need to deliver better value to its customers, not least in terms of improving
levels of service. The DIY industry has a history of relatively poor customer
service, and the B&Q board recognised the critical links between employees,
service levels and profitability. In particular, Cutt was able to point to a
direct correlation between customer satisfaction and sales – where stores had
demonstrated an increase in service levels, they also generated higher revenue
and profit. "So if we invest in training and increase service, it has a
bottom-line impact," says Cutt.
But with 25,000 of its 33,000 UK employees based in 300 stores
country-wide, mass off-site training was simply out of the question. E-learning
was a better option, providing a platform to distribute training material to
numerous locations and offering access at convenient times to staff.
As Cutt points out, the upfront investment was high – some £3m,
including central management software and the cost of putting the system into
stores (which in some cases required building an e-learning room). The company
also doubled its annual spend on learning modules. But having made the
investment, it is now able to carry out vast amounts of training at an
extremely low unit cost. Investment may have increased 100 per cent, but the
company is now doing five times the volume of training.
To ensure employees took advantage of the system, B&Q
overhauled its compensation programme, canning an appraisal-based merit system
and replacing it with a series of inflation-linked ‘spot’ rates. Employees are
now offered small incremental increases to their hourly pay rate, based on how
quickly they progress through the learning and development programme. The
system is not based on course completion, but on applied knowledge – managers
have to judge how well an employee completes each step of the programme. An
existing scheme offering team-based bonuses – based on factors such as how well
a store fares in sales, service and shrinkage – continues to run alongside the
new compensation programme.
The impact has been significant. For one thing, store managers
now find it hard to argue they can’t spare employees for training – as Cutt
points out, staff simply won’t let them get away with it. In addition, the
annual appraisal has effectively been replaced with a more effective, rolling
appraisal process, that forces managers to review employee progress on a far
more regular basis.
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In addition to the customer advisers, B&Q has also
implemented six-month ‘fast-track’ management training programmes, designed to
promote employees through the ranks of team leader, store manager, general
manager and regional manager.
"The business strategy is all about growth,’ says Cutt.
"HR’s challenge is all about fuelling that growth."
