Quality Magazine

Evaluate the Value of Training

May 8, 2003
"In a company valued by its owners for its ability to generate cash, training is often seen as an expensive waste of capital," wrote one respondent to Quality Online's training survey.

According to a recent American Management Association survey, there is a direct correlation between increased training activities and improvements in worker productivity, profitability and shareholder value in both the short and long term. The report states, "Companies that increased their training activities were three times more likely to report increased profits and shareholder value than companies that cut back on training. They were 66% more likely to report productivity improvements, twice as likely to reduce their turn-over rates and 150% more likely to improve the quality of their products and services."

While 93.3% of the respondents to Quality's Online survey said their employer provides on-site, off-site or both types of training for their employees, 6.7% said their employers provide no training whatsoever. One of the respondents at a company that provides no training said, "You figure it out the best way you can."

Fortunately for most respondents, that kind of experience is most likely minimized due to the on-site or off-site training that their employers provide; 86.7% of the respondents said their companies provide on-site quality training for their employees, and 82.2% said their companies pay for employees to enroll in quality training courses offered outside of the workplace.

The most popular type of training provided is hands-on, which is made available to 68.9% of the respondents. Hands-on training is followed by classroom, 64.4%; seminars, 60%; book/workbook, 51.1%; computer, 35.6%; and video, 31.1%.

Of those responding, 46.7% said the majority of the training budget is spent on teaching quality management principles. The remainder of the training budget is divided among training on how to use equipment, 15.6%; part inspection and measurement, 11.1%; and quality software, 2.2%.

Despite its importance to the bottom line, training accounts generally for a small percentage of costs. In the Quality Online survey, 74.4% of respondents said that 0% to 5% of the total budget is spent on training at their companies. Another 15.4% put training expenditures at 6% to 10%, while 7.7% said 10% to 20% of the budget is spent on training. Only 2.6% of the respondents work for companies that spend more than 20% of the budget on training annually.

The survey respondents work for companies of varying sizes. And while some might expect that the smallest companies would be least likely to provide training, the survey results don't support that. In fact, all respondents who work for companies with fewer than 100 employees said their employer provides training of some kind. The 6.7% who said their companies provide no training at all work for firms of all sizes, ranging from 100-to-500 employee firms to those with 1,000 employees or more.