Training As a Strategy

Training, till recently, was a peripheral activity. But it is increasingly taking centre stage as a strategic lever that organisations have. No sensible businessman would expect machines to not undergo maintenance and up gradation for years, and still expect performance and productivity to continue at the same level.

However, many of us don’t offer the same courtesy to our employees. Training and development for employees is akin to maintenance and upgradation. Unfortunately, training budgets are often the first on the chopping block when organisations experience uncertain times.

“What’s worse than training your workers and losing them? Not training them and keeping them.” This quote by Zig Ziglar really hits the nail on the head regarding why many companies shy away from training. However, the costs of not training far outweigh the risk of not training. Not only do good employees leave if not given opportunities for personal growth, it also reduces your competitive edge due to stagnant productivity.

Most companies undervalue the impact training and development can have on productivity and business growth. This is especially relevant for the Indian economy, where 60% of GDP is from the service industry. Which means, human capital is our biggest asset, and the key to growth.

Studies by leading international bodies such as Association for Talent Development (formerly, American Society for Training & Development) and American Marketing Association (AMA) have proved the linkage. Companies that invest more in employee training and train more employees have higher profits, better sales, and higher shareholder return. An AMA study showed that companies that had high investments in training had a return which was 45% higher than the market average on the S&P 500.

The effect of training on profits is backed by solid evidence. However, there is more than meets the eye to what causes such an effect. The way I see it, training has two benefits – the apparent and the inherent.

The apparent benefit is that employees are better skilled. The competency gap is reduced. They are better equipped to do their jobs and require less management.

The inherent benefit, is far harder to measure, but the effect is just as profound. As the many psychological experiments have revealed, training makes employees feel valued. This leads to a host of business benefits such as improved morale, new energy in the workplace and it also helps to earn loyalty.

What is most crucial for businesses to understand, is that this is what employees want. A recent survey by PWC demonstrated that training and development is the most valued benefit for millennials, with cash benefits taking the third place.

The dream of India becoming a super power can become a reality only with proper utilization of its resources. With the service sector in India having such a large impact, the proper utilization of human resources is critical. Therefore, training may seem expensive, but it would be doubly risky to try doing without it. When talent is the key differentiator in a crowded market place, training inevitably becomes a key driver of growth. And with more and more training companies willing to showcase the ROI training has, hopefully more businesses can decode the impact training has on business.

- Published in The Hindu