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Employee training not expendable

By T. Shawn Taylor, Knight Ridder, 3/23/03

Patricia Thorp, owner of a small Miami public relations and marketing firm, used to spend $6,000 a year per employee on training. This year she cut the figure to $4,800.

But Thorp & Co. is still a believer in employee development - she's just keeping the training in house. That means no more fee-for-service motivational speakers; she now uses volunteers. And gone for sure are the management seminars in New York.

Thorp said her new emphasis on in-house training is not only good for the bottom line but is more successful at giving employees the skills they need. In fact, Thorp has taken the route most experts would suggest. Instead of slashing employee training, she has reevaluated and reallocated employee education and training dollars to work more efficiently.

Too often, specialists say, in a down economy companies often first swing the ax at employee training and development because they see it as an expenditure, not an investment. But putting training on the back burner can come back to haunt companies, they say.

''What happens is you start mortgaging your future,'' said Stephen Burnett, professor of strategic management at Northwestern University's Kellogg Graduate School of Management. ''The labor shortage is not going to go away. You counter that by having more productive employees. But you won't if they aren't properly trained.''

According to the American Society for Training and Development, training expenditures across all industries increased to $704 per employee in 2000 from $677 in 1999, and increases were predicted for 2001 and 2002.

Eustace Koon, a research officer for ASTD, said those predictions are based partly on heightened requests for tuition reimbursements - particularly for advanced degrees - and the move to more in-house, online technologies.

''College is on the upswing. Companies are not particularly budgeting more but employees are using [these programs] more,'' Koon said. ''Expenditures on learning technologies increase because [employers] are looking for innovative ways to deliver training.''

But for all the talk about investing in human capital, when companies do look for expenses to cut, they ''tend to be expenditures for the future,'' said Burnett of Kellogg, which has seen an increase in MBA candidates but a decline in executive education and customized corporate training programs in the last year.

Burnett runs Kellogg's Advanced Executive Program, a course for senior-level managers with profit-and-loss responsibilities. It's Kellogg's most popular management series, he said, and one of the most expensive at $26,000 for four weeks.

He blames lower participation partly on cuts in corporate travel budgets after Sept. 11, 2001.

This lull in training is temporary, Burnett predicts.

Employers similarly cut education and training budgets during the 1991 recession, but many were returned to full funding by the end of 1993, said Mike Hostetler, who heads executive education programs at Cornell University's Johnson Graduate School of Management.

''This is the kind of investment people can defer. But it can catch up with you,'' Hostetler said.

Not all companies are cutting back. Allstate Insurance Co. in Northbrook, Ill., has maintained its level of education and training, including tuition reimbursement, spending an estimated minimum of $2,300 per employee.

''Not everyone is going to take advantage of it, but we've already sent a message that this is the kind of environment we have here. It shows we care,'' said Steve Scholl, assistant vice president of human resources.

Training is good for employee relations, but few companies measure the long-term benefits of training or its impact on their bottom line.

''A lot of companies don't know how to measure it,'' said Lisa Aldisert, a management consultant and author of ''Valuing People: How Human Capital Can Be Your Strongest Asset.'' ''It's a combination of art and science.''

Some academics, executive coaches and human resources professionals argue that companies that provide education and training are almost always more profitable than those that don't, and in an information age, companies cannot afford not to maintain programs.

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