During my 40-plus year career as a fleet management professional, one of the absolutes seen over and over during a slowing economy is either reduction or complete elimination of what I’ve called the “two-T’s” – Travel and Training expenses. As we enter another downturn in the world economy based on rising inflation and significantly higher expenses impacting us as individuals -- and moreover as fleet organizations -- it may be time to discuss and assess impacts associated with eliminating the Two-T’s.
Professional Consensus
During the writing of this blog, I decided to seek out real opinions and advice of experts about what they thought were the benefits of employee training. Referring to an article by Indeed called, “11 benefits of training employees”, I will delve more deeply into five of the 11 and touch very briefly on the remaining six with personal or anecdotal comments from my experience:
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Increased productivity and performance
When employees undergo training, it improves their skills and knowledge of the job and builds their confidence in their abilities. This will improve their performance and make them work more efficiently and effectively.
Benefits of increasing productivity and performance: According to the Association for Talent Development (ATD)[1], companies that offer comprehensive training programs have 218-percent higher income per employee than companies without formalized training. But it doesn’t stop there. These companies also enjoy a 24-percent higher profit margin than those who spend less on training. It would seem that continuing to invest in training and development, even when there are economic downturns, is the smart play.
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Uniformity of work processes
When employees in a workplace are exposed to training, it helps to standardize the work process among the staff. Workers will apply and follow similar procedures as a result of their exposure to similar training.
Benefits of uniformity of work processes: From my personal experience as both a fleet management consultant and vice president of a large beverage company fleet, I have seen process improvements using Lean Management techniques to streamline an “A” preventive maintenance (PM) task that amounted to a 300-percent improvement. Wherein, an 8-hour “PM-A” was reduced to a 2-hour “PM-A” merely by resequencing inspection tasks, staging PM parts and supplies, retraining technicians, and introducing a quality control inspection cadence. This 300-percent improvement allowed the shop manager to perform 4 PM-A in 8 hours versus 1 PM-A. What would this improvement represent as cost reductions in your fleet shop?
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Reduced wastage
When employees are trained, they will learn to make good, safe, and economical use of the company's materials, tools, and equipment. Accidents and equipment damage will be minimized, and this will keep waste low.
Benefits of reducing wastage: Waste reduction methods in the workplace can help reduce overall operating costs on several levels, according to the University of Central Florida[2]. Printing on both sides of a piece of paper cuts the cost of paper in half; sending correspondence via email instead of postal mail reduces the cost of paper and postage; using ceramic coffee cups and dishes in the break room in place of paper cups and plates saves money as well as trees. Repurposing materials also has a positive environmental impact and saves a small business money. Examples include transforming scrap paper into notepads, shredding used paper to use for packing material, and using supply shipment boxes for document storage. Additional waste reduction can minimize space consumed and impact on the environment. How much could waste elimination save in your fleet organization?
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Reduced supervision
Though training employees should not totally eliminate the need for supervision, it can significantly reduce the need for excessive supervision in the workplace.
Benefits of reduced supervision: During my Master of Organizational Management (MAOM) program, we studied the book by Peter M. Senge called, “The Fifth Discipline,” which outlines the advantages of a learning organization and benefits leading to self-managed or self-directed work teams. As an example, the benefits of self-managed teams based on a Howell, 2001 study[3] showed cost savings for a U.S. Electronics firm that reported annual savings of $10 million following the implementation of self-managed teams where members had the freedom to review and improve working practices.
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Promoting from within
When an organization needs professionals with new or specific skills, they don't have to go into the labor market to employ new professionals from outside sources. They can look inward and select promising staff members who can be promoted after they are trained in this set of new skills needed by the organization.
Benefits of promoting within: During my career, the question of promoting from within has continually been debated. However, with the rising costs of onboarding and training employees in our current environment called, “The Great Resignation” this practice may gain more prominence. The cost of bringing an outsider into a company can cost between $1,000 to upwards of $20,000 just to onboard and train a new employee in the organization. As an example, as vice president of a large trash company, we saw costs of about $13,500 associated with hiring a new employee. Promoting from within also has tangible morale benefits which are difficult to quantify.
The remaining benefits of training are listed below:
- Improved organizational structure: When a company has an organized system of training for employees, it helps them learn in a consistent and systematic way. It also prevents the employees from learning by trial and error.
Benefits: The cost of trial and error and employees making unnecessary mistakes can be costly in any organization. I would venture to say most new employees make mistakes that could have been prevented. What would you estimate the cost of employee mistakes to be in your organization?
- Boosted morale: Employees of organizations who go through training programs will feel like they are a part of a supportive work environment where they are appreciated, which will boost their morale and make them approach their job duties with more self-confidence.
Benefits: Brad Bird, director of award-winning films at Pixar Animation, makes the business case for employee morale: "In my experience, the thing that has the most significant impact on a budget, but never shows up in the budget, is morale. If you have low morale, for every dollar you spend, you get 25 cents of value. If you have high morale, for every dollar you spend, you get $3 dollars of value, not to mention a beautiful product."[4]
- Improved knowledge of policies and goals: A good training program will always help employees get acquainted with their organization's ethics, values, policies, visions, and missions.
Benefits: What’s the value in your organization to have employees acquainted with your cultural values, ethics, vision, and mission? My experience has shown that this is paramount as I’ve traveled all across the U.S. and Canada conducting employee listening sessions. Understanding the company’s policies and procedures can save many hours of unnecessary supervisory time to enforce. Additionally, a simple practice where employees leverage the company’s established supplier contracts can amount to significant savings in an organization. Are your employees aware of policies and supplier contracts you want them to leverage?
- Improved customer valuation: When employees of an organization are exposed to consistent training, it improves their skills on the job and makes them work more professionally and productively. Customers will feel the impact of this elevated service, and it will improve their opinion of the organization.
Benefits: What is the cost of customer retention in your organization? An untrained or inexperienced employee can have a significant impact on your customers success if they lack the critical knowledge necessary to help customers be successful.
- Better workplace environment: Consistent training will help employees work more effectively in the workplace environment. This brings about an atmosphere in the organization that encourages every employee to feel valued and welcomed.
Benefits: Making investments in each employee sends a message that each is important to the organization. Experience has shown that the optimal level of training for each employee is around two percent (40 hours) of their total annual work hours. Companies with Learning Management Systems (LMS) available at an employee’s fingertips assists in growing talent. LMS systems help companies increase revenue, reduce costs related to safety, and promote employee retention via continuous learning. They also help companies close the manufacturing skills gap, reduce customer questions, increase the visibility of metrics, and lower the cost of manufacturer training[5].
- Improved and updated technology: With the ever-increasing change in technology across all industries, exposing employees to new techniques in advanced technology will help to increase efficiency and productivity in the organization.
Benefits: Exposing your employees to new technology and workplace techniques increases productivity and morale. Many allow their employees to travel to venues like industry-related tradeshows to take advantage of nascent product and service offerings that will impact them in their role as an employee. It’s hard to assess the cost of continued learning for employees but it is regarded by many as necessary to retain a talented group to move the company forward.
Summary
As I’ve worked with several organizations throughout my career, I often counsel new managers to look for other areas of the budget to reduce expenses and leave the “Two-T’s” alone. As a veteran manager in the fleet industry and an advocate personally for continued education and learning in the workplace, I can’t imagine working for an employer that immediately cuts the “Two-T’s”. In my experience, cutting the “Two-T’s” during an economic downturn sends a clear message that employees are less important than the organization’s bottom line. Learning employees are happy employees and happy employees enhance the bottom line, not detract from it!
Resources:
https://www.shiftelearning.com/blog/statistics-value-of-employee-training-and-development
https://work.chron.com/advantages-disadvantages-paper-trails-organization-15136.html