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FMI Quarterly/December 2013/December 1, 2013

Can You Afford NOT to Train Your People?

Tech9_imageLeading a construction or engineering company involves many moving parts. Leaders work diligently to do more with less while maintaining quality and meeting the needs and expectations of the client.

In leading a construction or engineering company, who:

  • Interacts with our clients and prospects?
  • Reviews the specifications and develops the cost estimate?
  • Operates and maintains our equipment?
  • Manages the laborers in the field?
  • Puts the work in place?

Answer: Our people. Whether we treat them like it or not, our people are our greatest asset and can be our most prominent differentiators or greatest liabilities. Creativity, innovation, pride, hard work, efficiency, safety, client care — all start and end with our people.

As leaders in your organizations, do you feel there is a strategic imperative to train your people? How do you intend to compete with firms that hire, train and retain high-quality people? In our experience, firms with robust training and development programs are comprised of employees who understand how their actions affect the finished product, the bottom line and client satisfaction. When clients are asked in a qualifications-based selection why they selected a contractor or engineer, more often than not the answer is because of the people the contractor or engineer proposed to them. The majority of the time, selections are made not solely on price, but on a strong and trusting relationship nurtured between a client and a contractor or engineer and the specific experience of the people proposed. People select people to deliver projects — not systems, materials, equipment or installation techniques.

An acknowledged challenge in our industry is the war for talent. As baby boomers retire or prepare to exit the workforce, there are not enough Gen X-ers and Millennials to fill the void. If you were looking for a job, would you join a firm whose employees raved about their company’s robust onboarding-orientation program, its industry-leading safety program, comprehensive personalized training and development program, and formalized mentoring program? Alternatively, would you join the firm that said, “Trust us. We’ll tell you what you need to know on the job.” In today’s tight job market, firms with formalized and successful training and development programs will attract and likely retain the best and brightest.

BENEFITS OF TRAINING

People are people — not machines. However, let’s assume for a second that the superintendents out on the job are bulldozers. The dozer comes straight from the dealer to our worksite shiny, primed and ready for action. After a thousand work hours, some hoses start to break, lines need to be flushed, oil should be changed and certain parts replaced. The dozer (or our superintendent) has gotten through the initial excitement of getting on the job, but is now faced with new challenges. These challenges have caused parts to break, general wear and tear, and reduced performance. In the case of the dozer, we hire a specialized mechanic to come in, provide maintenance and fix the broken parts. Similarly, the superintendent needs training and mentoring to improve performance and reliability. The training could include improving communication skills to enable the superintendent to better interface with the project manager or client; possibly leadership training to learn to motivate, inspire and truly lead their crews; or project execution to help his or her team execute its tasks more efficiently.

With any job, there are general knowledge and skill requirements that are needed before someone can effectively perform the roles and responsibilities of that job. However, as jobs, companies and individuals change, training needs to occur to increase that individual’s level of knowledge and skill enable them to tackle new challenges. In the example of the superintendent, we suggested communications, leadership and project execution training to handle unique aspects of his or her job. After the superintendent receives training, he or she will have new skills to use on the job. These results are referred to as primary outcomes.

Primary outcomes are the main results of an initiated training program. Primary outcomes usually are established by creating focused objectives based on some level of “pain” noticed by an individual or upper management. These primary outcomes also should be aligned with corporate strategy. Primary outcomes are the main goals that management hopes to achieve by initiating a training program. Primary outcomes generally are used to measure return on investment (ROI) for training programs.

Secondary outcomes are often overlooked, but are a direct result of a training program. When a training program is initiated with an individual or a group of people, a secret handshake occurs in which a business says, “I’m making an investment in you.” Although this is almost never spoken, the employee feels that he or she are getting special and focused attention. Improved self-esteem and belief that the company finds him or her valuable creates longer-term, loyal employees as a secondary outcome. FMI found in its 2011 Talent Development Survey that 56% of construction companies used training as a corporate strategy to retain employees.

WHAT HAPPENS IF WE DO NOT TRAIN?

For those companies that do not see a need to invest in training, the bottom lines could be affected in much bigger ways. First, if employees do not feel as though they are being challenged or getting the skills needed to grow and develop, they will start to look for an opportunity at a company where they will be stimulated and nurtured. This can lead to high attrition rates, which causes lost productive time, organizational inefficiencies and increased recruitment costs. Second, it causes perceptions, both internal and external, that the organization is not on the cutting edge and does not focus on employee development. To an external client, your company may lose work for not being as “sophisticated” to handle the demands of the modern workforce. To a perspective employee, you may be passed over as being behind the times or uninterested in growth and development. Both of these results combine to lower profit margins.

The investment in training your employees keeps them focused and on the cutting edge, while providing skills they need to grow within your company. Not training them creates negative consequences that lead to higher attrition rates, not being the employer of choice and lost projects and profits.

ROI IS IN THE EYE OF THE BEHOLDER

For every dollar you invest in training, you want to be able to say you realized X dollars in return. Nobody wants to invest money, time and energy in a venture that will not achieve the desired objectives. To measure ROI for training, you must begin with the end in mind. Training must be aligned with your strategic plan. This involves developing a training program that:

  • Addresses the gaps between the existing and desired state of competence in your employees
  • Defines the outcomes you wish to achieve
  • Holds people accountable for implementing what is learned
  • Rewards your employees for embracing and making a change

If this is executed correctly, you will realize an impressive ROI. In 2000 the American Society for Training and Development (ASTD) collected training information for more than 2,500 firms. The findings indicate that companies that offer comprehensive training to their employees have 24% higher profit margin than those that spend less on training.

Measuring ROI for training should not be entered into lightly. Often the ROI is in the eye of the beholder, so to speak. It can be difficult, but not impossible, to empirically measure improvements realized through effective training. Productivity, efficiency, quality, safety and client satisfaction are a few examples of things that can be measured to calculate an ROI for a training program. However, to be successful, management has to build the ROI approach into the design stage of the training program. Management must be prepared to benchmark current “soft” and “hard” data, select and set specific measurable goals, and collect and review the data at some prescribed point or points after the training has been implemented to evaluate its financial benefits.

CONCLUSION

Training is often considered discretionary spending, especially during tough economic times. Training should not be considered a discretionary expense; it should be viewed as a worthwhile investment in your company’s present and future. Just as we make monthly contributions to our 401Ks and retirement plans, companies should make this same investment in their people.

Many times we hear the slogan, “Our best asset is our people.” For the asset value of people to grow, a company needs to invest in training and developing the knowledge and skills of its people. It is the people who lead the organization, who drive sales, who put work in place and who manage the projects. Organizations grow and evolve just like the business world. Training keeps our human assets sharp by providing tools to help employees step into new roles, face new challenges and manage their day better. It can create leaders, drive efficiencies and teach new skills. People, naturally, need to be accountable for improving their skills and using them for the company to realize a return. Hiring people without providing career-long training is like planting a fruit tree in the desert. It is not going to thrive or grow. The tree needs good soil, water and nutrients to take root and blossom into a fruit-bearing plant.

Ignoring the strategic imperative to provide training to your people can lead to lower morale, your competition gaining an advantage, lost projects, damaged client relationships and margin fade. The perception of your company, both internally and externally, might be one that is slow and out of touch with reality. This can cause attrition and lost work based on perceived value — all of which are extremely expensive and easily outweigh the costs of training! Continue to invest in the future, create value and keep morale high by training the future of the organization. Can you afford NOT to train your people?


Matt Marshall is a business developement director at FMI Corporation. He can be reached at 303.398.7289 or via email at mmarshall@fminet.com. Scott Moyer is a consultant with FMI. He can be reached at 919.785.9350 or via email at smoyer@fminet.com.

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