OPENING THOUGHT 

A company’s human resource practices—its commitment to the skill and training of its employees—“are far and away the most powerful predictors of improvements in companies’ productivity and profitability.” 

Does Training Pay? Evidence from Australian Enterprises

National Centre for Vocational Education Research (Blandy 2002)

FOOD FOR THOUGHT

Last week I had the opportunity to participate in some "leading edge" meetings related to workplace learning in Canada. The following is an excerpt taken from Connecting the Dots...Linking Training Investment to Business Outcomes and the Economy - a research paper by Allan Bailey of Learning Designs Online. The paper will be available later this year, through the Canadian Council on Learning. In the meantime, if you would like to discuss this topic further, please don't hesitate to contact me!

...Canada’s preparedness to compete in the increasingly competitive, knowledge-based, global marketplace is in jeopardy. For some years, Canada’s economic growth has been lagging precariously behind that of its major competitors such as the United States. From the research, it seems clear that this downslide is rooted in a chronic national blind spot—a lack of awareness that investing in the human capacity of Canada’s workforce is paramount to success.

This is regrettable because much of the research literature on training’s impacts on business performance suggests that firms which invest more in training typically report higher productivity and wage levels. A recent World Bank study of 1,500 enterprises, for example, found that the return on training investment was 24%. It found that an increase in training of 10 hours per year per employee was associated with a 0.6% increase in productivity. Such results suggest that the level of investment by Canadian firms in skills development may have an important bearing on economic performance and will become especially critical as we advance further into the knowledge economy.

Training’s Links to the Economy

Over recent years, Canada’s economic performance has fallen behind many of our major competitors. Between 2000 and 2005, for example, the rate of Canada’s productivity growth has been only 25% of that of our major trading partner, the United States.

A key reason for this weak performance may be low levels of investment by Canadian firms in workforce training and skills development. It is known, for example, that the most important factor explaining the difference in economic growth between countries is the relative level of skills of their workforces. According to Statistics Canada, investment in education and skills training is three times as important to economic growth as investment in physical capital.

A low participation rate in training is particularly evident in the small to medium size enterprises (SME) that make up the vast majority of Canadian companies. Workers employed in large firms are almost twice as likely to participate in training as are workers in small companies....

If training initiatives are aligned with organizational objectives, then the ROI (Return on Investment) will likely be greater. To what extent are employees in your organization given opportunities to improve their personal and professional performance through participation in employee development training initiatives? As an organization, can you afford not to provide these opportunities?

Janet Stewart-Lussier

Member of the Canadian Association of Professional Speakers