Myth Busting 19: High performing organizations spend too much…
These days everyone seems to be cutting spending. It’s entirely discretionary, so it’s easy to eliminate. But is that a smart move?
But today, times are tough. Trade wars, protectionism, and generally sluggish economies before those were a factor have all contributed to poor corporate performance. Shareholders want more. But can you really cut costs to become profitable? No – of course not, at least not in the long term. Cost cutting, if not done intelligently, is an immediate measure that often ends up reducing capability and / or capacity and leaves the organization weaker than it was before.
Training is a discretionary cost and it is easy to cut. If your organization is bleeding red-ink and needs to chop drastically to stay alive, then by all means cut it. But don’t fool yourself into thinking those cuts can be sustained for long. Natural attrition and forced attrition (layoffs) will combine to reduce your staff numbers, but also your collective knowledge of how to run your operations and maintenance. If you haven’t re-engineered the way you work (i.e.: your business processes), then you haven’t changed the underlying need for people nor the numbers you once had.
We’ve all heard about the success of “learning organizations.” We all know that none of us would be where we are today without some form of education and training plus the experience we’ve gained over the years. None of us wants to hire uneducated, untrained and unqualified individuals, unless we are prepared to do a lot of investment in that individual’s education and training. That’s what apprentice programs require of us – a blend of education and training along with time to gain experience on the job.
Change how you work and you can change what’s needed to run it. But there’s a catch – do that, and you’ll now need to retrain people to do things the new way.
So, if you are low performer and want to sustain your company, even considering that today you need to save all you can, then you’ll be well advised not to cut needed training.
If you are a high performer though, chances are you don’t feel these cost cutting pressures – at least not so much. Your finance folks “get it” – sustaining high performance requires a capable workforce and that, in turn, requires training and education. They’ve also realized another key fact – once you are very good at what you do, you require less training to stay good, than you did to get good.
Engineers, lawyers, doctors and many other professionals spend a lot of time in university to get their initial education and qualifications. They graduate knowing quite a lot, then begin to realize just how much they don’t know. They embark on journeys of self education and development that, in most cases, last for the rest of their lives. Much of that is done through experience augmented by the occasional course or program of post graduate study. The intensity of that ongoing learning is, however, much less than it was when they were in school. It took a lot to get qualified, a lot less to stay qualified and current.
Training for your workforce is similar. To get skills and capabilities built there will be a need for a lot of education and training – an intensive effort. That will invariably cost quite a lot. But once that is done, and assuming that knowledge and training is put to use, it won’t be forgotten. New developments will require some additional training and upgrading along the way, but those will be far less expensive than the initial cost to build the capability.
Lower performing organizations are often lacking in those skills and knowledge sets required to improve. They need to invest in training. Higher performing organizations have already made that investment in their human capital, they don’t make the mistake of cutting it out as a short term measure, and they continually invest in it. That continual investment is far less expensive than the initial cost of early training.
We see that in maintenance performance benchmarks. The lowest performers spend almost nothing on training. Lower or mid-range performers who are working to improve will invest 80 or more hours per year per trade person. Higher performers invest 40 hours or less.
Higher performers all enjoy many other benefits. Having invested in their human capital and used it wisely, they enjoy lower costs overall, better asset reliability and increased production / output levels.
While higher performers may have invested more in training overall, they don’t spent a lot to stay there and they gain substantial benefits well beyond what their lower performing counterparts experience.