Training and development activities are often controversial within
organizations because they can be wasteful if implemented poorly, can
take a while to pay off, and may have benefits that are difficult to
measure precisely. For these reasons, many companies fund training
and development activities only when business is good and find it easy
to cut back during difficult economic times. However, some
extraordinary companies have committed themselves to training and
developing their employees even when there is no obvious business
benefit to be derived. The managers of these companies feel strongly,
though, that offering training and education improves the quality of
workers that can be recruited, improves retention, and makes workers
better.
There is little dispute that poorly trained workers are unlikely to be
able to innovate because they lack the mental tools that are essential
for problem solving. Furthermore, an understanding of what they are
doing and why they are doing it is nearly always a basic requirement
before improvements can be identified. Companies like Frito-Lay and
General Electric invest heavily in training employees at all levels in
problem-solving and quality improvement techniques. By encouraging
employees to not just go through the motions of their jobs every day,
but to critically examine what they are doing, companies promote
innovation. Furthermore, the management of these companies
demonstrate openness to receiving ideas from their employees and
implementing those that will work. Without such training, however,
employees are less likely to identify improvements. And if the
management is uninterested in its employees' ideas, there is no
incentive for employees to innovate.
Some companies go far beyond specific training limited to immediately
relevant business objectives, believing that educated workers will be
inherently more innovative, regardless of what they choose to study.
There is certainly plenty of evidence that using the brain for problem
solving, regardless of the types of problems solved, promotes mental
health and cognitive abilities. Workers that are used to thinking,
whether or not their formal education is specific to their jobs, are
more likely to have the skills to critically examine their jobs and
identify innovations.
UTC believes so strongly in the benefits of having educated workers
that the CEO has established an Employee Scholar Program. The
program, which has been in existence for eight years, provides workers
with up to three paid hours off a week to study and pays upfront for
virtually any type of education program. The program funds books,
tuition, and fees, and covers every employee of the company, including
international workers. Furthermore, for each degree an employee
earns, he or she receives up to $10,000 in UTC stock or options.
The company has determined that employee scholars in the United States
are 20% less likely to leave the company, which reduces turnover and
increases profitability. The company's financial results also been
impressive, making it among the top five performers in the Dow Jones
industrial average during the past three years. This is despite the
Employee Scholar Program's costs of $60 million a year.
While specifically measuring the impact of training and development on
a company's bottom line can be very difficult, engaged and motivated
employees are far more likely to be innovative than those who are
simply showing up to receive a paycheck and have very limited skills.
However, there is little doubt that many types of training and
development initiatives can be measured. The implementation of
quality management, including Six Sigma in the United States, has
generated enormous improvements in the quality of goods and services
and has improved companies' financial performance. While the effects
of more diffuse programs like UTC's are much more difficult to
measure, the company maintains that nearly all of its innovations in
the productivity of its manufacturing facilities have occurred through
better processes.
Although technology has aided the company in product innovation, the
CEO cites his firm's success as being based in process improvement.
The company has trained many production line workers in quality
improvement processes, and these efforts have led to dramatic
measurable results. For example, one process innovation regarding
improved placement of elevator parts will save $26.4 million worldwide
this year. The company has also streamlined its purchasing processes
to save over $1 billion in annual costs. Further process improvements
have improved the company's speed to market by a factor of three, with
only one third of the inventory and at least 20% fewer costs. To
further train and develop its employees, the company launched an
in-house university accessible to all employees where executives and
production line workers can train other employees in quality
management procedures.
Clearly, the company's quality management efforts and investment in
its employees have paid off. It is not surprising that the CEO
believes that enabling employees to acquire education of all kinds
will further their ability to innovate.
Sincerely,
Wonko
Source: "The Unsung CEO" by Diane Brady, BusinessWeek (October 25,
2004) http://www.businessweek.com/@@RBt5TWYQlc1hDg0A/premium/content/04_43/b3905001_mz001.htm |
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