Corporate training positions your company for future growth Featured

8:00pm EDT June 25, 2010

The training was a failure. All of that time, all of that effort, all of that money, just gone, just out the window and gone. What other explanation was there, after all, for drop after drop in the hard numbers from a talented sales team in the wake of a training and development session?

It could have happened at any business, but for the purposes of this story, it happened at a large technology company with headquarters in the Midwest. The top executives, frantic for answers, called a corporate training firm. “Our sales are down,” the executives said. “We need training.”

That technology company was part of a large percentage of businesses that continued to invest in corporate training, education and development during the last couple of years. Thousands and thousands of others turned away from training, unable or unwilling to spend more money during the recession.

But a panel of more than 30 industry experts and academic professionals agreed that it would have been far better for businesses to continue to spend on training during those tough times — to invest in their employees and to show the extent of that investment, to improve the business and keep it up to date, to be in a better position when the economy ultimately turns around — than to tighten the budget. The same rule applies now, too.

“Training is always important but even more so in times like this,” says Pat Galagan, executive editor, ASTD. “This is when you really have to come out of the gate running. It’s a big mistake to cut your training budget when times are tough because it leaves you unprepared for better times.”

Make a plan

Members of the corporate training firm arrived the next day and talked with as many employees as possible at the technology company, from executives to engineers to those slumping sales representatives and everyone else in between. They prodded and probed and asked questions. They were curious about what, exactly, had happened.

They wanted to know, before they embarked on another training session, whether another training session was actually necessary.

This is what you should do when you’re in the process of determining whether to invest in training and development for your employees. You should prod and probe and plan, because just as you shouldn’t approach a new business venture without a model and a solid idea of what you want to accomplish, neither should you approach training without thoughts of what you need to tackle.

“Typically, businesses start by looking at their goals and their objectives for a period of time, usually the coming year,” Galagan says. “Some companies will do what’s called a skills audit to see if they have the skills to support the direction. Then if they don’t, they will try to train to fill any gaps that they find.

“It’s a very comprehensive process of looking at the skills that employees have in key areas and matching that against the skills you feel you need.”

And even though those needs will vary from business to business, from industry to industry, there are a number of common training areas on which almost all businesses should focus. Leadership development, project management and team building are all increasingly important because of the changing demographics and economy and because general communication and technology skills are as important now as always.

“We recommend organizations first pick a strategic initiative,” says Len Brzozowski, executive director, Xavier Leadership Center. “Then assemble the team of people who have to make it happen, identify the gaps they have around the initiative and train to those.”

Open your wallet

Those members of the corporate training firm remained in the offices for a couple of days. They wanted to follow every lead and turn over every stone. They wanted to find out what had happened to the sales team after that apparently disastrous training and development session. And the technology company executives had no problem paying to keep them around. They wanted to find out what happened, too.

Do you want to keep your top employees after the job market opens again? Do you want all of your employees to be happy and to enjoy their work right now? Investing in training and education is an important part of helping you do just that. The average business spends about $1,060 on training and education per employee per year, according to research by ASTD.

Businesses that have the most success tend to spend between 2 and 3 percent of their total payroll cost on training, education and development. The average is in the middle, of course, right around 2.3 percent.

There are also effective ways to spend a little less, if your revenue is still down or if you opt to not invest as much in training. Turning toward local colleges and universities to design a custom program for your employees is often less expensive than sending them to open enrollment courses, as are distance learning and online courses. Some businesses opt to look within for employees who are experts in a specific area and can train the rest of the staff.

“We know adults learn by actively doing things,” Brzozowski says. “Very few people learn by just reading about it or by sitting in a classroom and watching PowerPoint slides. They have to implement it to really have the learning stick. It’s when you struggle to apply it when you begin to understand whether you really grasped the concepts.”

Keep an eye on results

At last, an answer for our corporate training firm and our technology company in the Midwest. That previous training session, as it turned out, was not to blame for lower sales numbers. No, the culprit was instead the fact that the technology company executives had recently installed a drastic restructure of the compensation program. That program encouraged the sales team to try and sell only one of their many products, and that is what changed everything.

The training had not been the problem at all.

In fact, without that recent training session, the technology business might have planted itself in more trouble because of the new structure of the compensation program. The best money spent might well have been the money spent on the training — and the worst might have been the money that was about to have been spent unnecessarily correcting that training.

“When you launch a training initiative, you never begin that without an understanding of what success looks like,” Brzozowski says. “Presumably, you wouldn’t spend the money unless you saw a business value in improving something. How much of the return on investment was made in training, as opposed to just working on business problems, is hard to say.”

The only way to know where you are is to know where you were. In order to receive a more relevant return on your investment, watch the progress from the planning stages through the training itself, then during the months, even years, beyond.

“Training is a bold statement on the part of the corporation,” Brzozowski says. “That says to employees, ‘We value you. We think you are worthy of the investment.’ I believe employees who feel valued work smarter, work harder and work better. Some executives I have met believe that as a question of faith. They’re not looking for the ROI calculation — they just know it to be true.”