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Want a 2:1 return on investment? Train your people!


According to one research study, training offers contractors multiple benefits, including a very attractive return on investment, a substantial productivity increase and reduced employee turnover. So why don't contractors make a bigger commitment to training? About 15 years ago Dr. Roger W. Liska, the former head of the Department of Construction Management and Science at Clemson University, was involved in a study to better understand why some contractors don't train. It identified the following eight major reasons why some contractors say they don't do so: We don't have enough money in our budget for training: Most of those who responded this way had never researched the cost of training or established a training budget. So they didn't really know how much money some form of training would cost. We don't have enough time: Many contractors did not consider the time they spend doing on-the-job training and continuous coaching as an investment in training. We lack the knowledge to create an effective training program: People who have never developed or conducted formal training are often intimidated by the prospect. For those who see the value of training and want to do it; help is out there in many forms. There are private companies like VISTA Training, often the employer's insurance company and even local equipment dealers may offer some form of training for the products they carry. We have too much turnover: An interesting thing Dr. Liska's study turned up was that employers who had an ongoing training program reduced employee turnover by an average of 18%. Indications are that employees who viewed their employer as caring enough to train them felt more valued and were more inclined to stay with their current employer. Our workforce is too small: The study didn't say what "too small" was. But even a four-person operation can have an expensive or fatal accident due to a lack of training. In reality, no workforce is "too small" to benefit from training. And as we've talked about before in this blog, accidents are more expensive than you may have ever imagined. Our past training efforts were not effective: The study didn't indicate what "past efforts" consisted of or what the "effectiveness" measure was. But I suspect that the survey participants' past efforts were not well planned. Measuring effectiveness requires establishing a benchmark; without one, it's almost impossible to measure progress. VISTA Training can help you to design a training program and measurements that are tailored to your firm's needs. We hire only trained workers: Trained in what, by whom and how? What verification existed of prior training? Or did the contractor accept the word of the candidate who claimed to be trained because he or she wanted the job? Did prior training involve the policies, practices and rules of the new employer? We need to evaluate some of these "trained workers" before we pass judgment on this excuse for not training. Lack of employee interest: The study clearly indicated that when the employer showed a good-faith effort to do training, employees responded in-kind. This comment is based on the following little gem that practically jumped off the page of this study: "Training results in an average rate of return on investment of 2:1, an average increase in productivity of 18% and an average reduction in employee turnover of 18%." "The study concludes that many contractors aren't committed to training their employees because they aren't aware that such a program will result in a positive return on investment for the company." " The study found that contractors who do train effectively invest an average of 2.5% to 3% of their payroll to train all levels of personnel. In return, they are more effective, productive, and less hampered by absenteeism." And the final gem that came out of this study was: "No studies were found that suggested there are any disadvantages to training."

So is training a good investment? Based on Dr. Liska's data, absolutely. The biggest take-away from it is getting a 2:1 return on an investment on training. There aren't many investments you can make that will bring that kind of return to the bottom line. Add to that the large increase and productivity and reduction in employee turnover, and you're well on the way to becoming a truly high-performance organization! Interested? To view all of our possible training programs click on the "Training Products" link on our VISTA homepage.

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