January 2006
Training Works!
A major skills survey of manufacturing companies published this week has highlighted the clear link between the productivity and profitability of manufacturers who not only place a high priority on training, but more importantly, relate their training plan to their strategic business goals.
The survey published in a report Skills for Productivity: can the UK deliver? is the first of a two part analysis of current and future skills, education and training in UK manufacturing.
It shows widespread acceptance of the link between a more highly skilled workforce and improved performance, with two thirds of companies saying improving productivity was the main reason for increasing training. As a result, over the last year half the companies surveyed had improved their productivity suggesting the gap with their competitors may be closing.
Encouragingly, the survey also showed that firms had increased their training spend over the previous twelve months and were planning to do so over the coming twelve months, despite their margins being under intense pressure. The survey highlighted that companies which place greater importance on business plan than available budget when planning training and target the right types of training across the whole business, get more out of their training efforts.
One indicator of such an approach is adoption of the Investors in People standard, a framework for linking training to the business strategy and communicating this to employees. Of those companies with the Investors in People standard, almost two thirds had seen an improvement in productivity in the last year compared to only 20% without the standard. In addition, just under 30% of companies with IiP had improved their profitability compared to just over 10% without.
The survey also showed wide variation by company size with only 10% of SMEs adopting the Standard compared to almost a third of larger companies. These figures suggest there is a renewed need to promote the benefits of Investors in People in the manufacturing sector and to SMEs in particular.
Engineering Employers Federation Director General, Martin Temple commented:
"This report demonstrates that increasing the amount spent on training is not enough on its own to improve performance. The companies that are able to steal a march on their competitors are those with a business culture which clearly aligns their investment in skills and training to their overall business goals."
Ruth Spellman, Chief Executive of Investors in People UK said:
"We are very excited by this report as it shows what we have already seen to be the case: that a strategic approach to people development linked to business planning is an integral part of improving the productivity of any workforce. The Investors in People Standard is a strong framework for supporting organisations to achieve this.
There is good evidence from this work and our own research to suggest that companies who invest in their staff's training and development enjoy lower employee turnover, higher productivity and improved staff morale. All of these elements affect a company's financial performance and can make the difference between business success and failure."
An Investors in People survey showed that 67% of recognised organisations believed that the Standard had improved their bottom line results. Managers who have yet to take these issues seriously are at risk of losing market share to their competitors.
The survey also showed that manufacturers still face a range of barriers to increasing their investment in training. These include the bureaucracy associated with the current system of funding training and a lack of clear information on training courses and providers.
There are a number of forthcoming initiatives designed to support employer training and overcome the current barriers to training, such as the National Employer Training Programme and Manufacturing Skills Academy.
However, for these to succeed the reports clear message is that companies must be encouraged to better relate their training needs to their business goals.
For more information on training and how it can be effectively linked to your business goals contact Steve Stones on 024 7632 3260.
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