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Does Training Improve Organizational Performance?
2003-01-01
As organizations continue to struggle to be more efficient and effective in what they do with the same or fewer dollars, the age old question continues to resurface: Does Training Improve Organizational Performance? In today's column, we will try to shed some light on this very important question.
A practical examination of this question would lead a casual observer to conclude that there is a positive correlation between training and organizational performance. It only stands to reason that if someone is trained on ways to improve their individual job performance then that leads to job satisfaction, which leads to improved job performance all of which translates into improved organizational performance. While this unscientific conclusion may have been satisfactory in the past to spend dollars on training programs and initiatives, organizations today are searching for more concrete proof that this conclusion is in fact accurate.
| | | | The Study | | The International Alliance for Human Resources Research (IAHRR) recently examined this question and reached some very definite conclusions. IAHRR looked at training and firm performance and the linkages with other Human Resource practices, most specifically, training, training with incentive compensation, job satisfaction and firm performance. The Study examined data of over 3000 firms supplied by the Business and Labour Market Analysis Division and the Labour Statistics Division at Statistics Canada. | | | | The Results | First, training was significantly related to firm performance. Second, training was more strongly related to firm performance where incentive compensation was provided and especially for those firms whose incentive compensation levels were higher. Third, training was related to job satisfaction when used in conjunction with compensation incentives especially when they were higher. Finally, job satisfaction was significantly related to firm performance.
It was found that the highest firm performance and the highest job satisfaction were observed when training, incentive availability and amount of incentives paid were all high. Conversely, the lowest firm performance and the lowest job satisfaction were observed when training, incentive availability and amount of incentives paid were all low.
Further, training and job satisfaction predicted firm performance and training was most likely to impact job satisfaction and firm performance when used in conjunction with incentive compensation.
The results of the IAHRR study support the findings of The Conference Board of Canada's Training and Development Outlook 2001 Survey which found that greater investments in training are positively linked to performance and higher levels of profitability. Canadian organizations annually spend between $800-$850 per employee, which is less than spent on training in the United States, Europe, Asia and the Pacific.
| | | | Conclusion | The study concludes with the following recommendations for organizations:
* Increase investments in training and development programs
* Design training programs to maximize trainee learning and facilitate the transfer of learning
* Design training programs in concert with other HR programs
* Evaluate training programs
Therefore, the answer to the question: Does Training Improve Organizational Performance? appears to be "... organizations can influence and improve firm performance and remain competitive through the use of training and development." |
Contact:
 | Paul R. Hawn, President, Hawn & Associates Inc. | | Suite 507, 421 Bay Street, Sault Ste. Marie, ON P6A 1X3 | | info@Hawn.ca | | http://www.Hawn.ca |
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