Personal Finance

Is staff training investment or waste of resources?

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Companies need to develop a consistent training programme for employee growth. FILE PHOTO | NMG

Evidence shows that organisations investing in effective staff training and development tend to achieve both short and long term benefits.

Training increases overall customer satisfaction because of professional service delivery by the staff, which can only be achieved through targeted customer service training focused on client facing employees.

A recent study by economists at the University of Warwick found that happy employees recorded a 12 per cent spike in productivity, while unhappy workers proved 10 per cent less productive, meaning the same is translated to the customer.

For instance, today Zappos — an online shoe and clothing shop based in Las Vegas — is recognised as a legend in the customer service world.

The company has an employee culture with a singularity of mind-focused on customer service and not in some sort of cookie-cutter corporate way.

A unique thing about this company is that everyone that is hired, it does not matter what position, goes through the exact same training as their call centre reps.

It is a four-week training programme and then they are actually on the phone for two weeks taking calls from customers.

At the end of the first week of training, Zappos makes an offer to the entire class about payment for the time already spent training plus a bonus of $2,000 (Sh206,000) to leave the company immediately after the training. According to Tony Hsieh, the CEO of Zappos, paying new hires to leave may seem counter-intuitive, but it makes simple sense; the goal of is to weed out those who are there for a paycheck.

Increased productivity

A study by the American Society for Training and Development (ASTD) on 540 corporations used two groups where $900 (Sh92,700) was invested in each employee per annum in the first one and $275 (Sh28,325) in the second.

The results revealed that the group with high investment outperformed the other by 57 per cent more sales and 37 per cent higher gross profit.

Besides that, the study noted that increasing training expenditure by $680 (Sh70,000) improved shareholders value by an average of about six per cent. The study concluded that companies which dedicate more resources to training personnel enjoy more success and profitability.

A similar study on 575 companies in the US over a three-year period linked staff training to growth in shareholder returns.

In addition, the study noted that investing in training and development yielded a 45 per cent return higher compared to the market average.

Employees Retention

Retention of productive employees is a major concern of HR professionals and business executives. Data shows that it is more efficient to retain a quality employee than to recruit, train and orient a replacement of the same quality.

Training is one of a few exercises businesses conduct to improve employee and business performance.

Training employees empowers them o perform diligently even in tasks they doubted they could do when joining the company or business.
A good case study is Quicken Loans Inc, Michigan.

The online mortgage lender offers its full-time employees an average of 350 hours of training every year and has a low 13 per cent staff turnover rate.

Data from Kenya is scanty; one study published in the International Journal of Science and Research in 2012 on the influence of training and development on the performance of employees in research institutes in Kenya concluded that the correlation between employee performance and training and development were highly significant.

Bottom Line

Training is a great option for an organisation to build a diversified employee base, with team members learning the ropes and company mores.

But many organisations dump the training programme after they feel new employees have become acclimatised to the organisation.  But this notion could not be further from the truth. Companies need to develop a consistent training programme to allow employee growth.