The pay-off from investing in employees is that they in turn increase their contribution to the organisation.
For two very different companies, Parkes Galvanising and Sainsbury, investment in training their workforce is essential for competitiveness.
Situated in the heart of the London borough of Newham, one of the country's most deprived areas, the Parkes Galvanising factory is at the grimy end of industry. Galvanising is the process of coating steel objects with zinc to weather-proof them. Steel objects such as fencing, girders and lamp posts are cleaned and dipped into a long bath of molten zinc, spattering metal droplets as they are thrown in. There used to be only two requirements for the job - fitness and commonsense.
Since 1983, when Parkes was taken over by the Midlands-based Wedge Group, the demands on employees have increased: literacy is essential, as well as the skills to do other tasks in the factory. The new parent company brought with it an enthusiasm for training, which was just as well because it proved crucial for the company. A jobbing galvaniser such as Parkes has to compete on quality and service as wel1 as price to succeed. There is a two-to-four-day turnaround at the factory and the volume of work is unpredictable. Works manager, Bob Duxbury explains, "We needed more flexibility, and wanted to move people around the factory so they fully understood the process. In the East End it is difficult to attract good quality labour, so we had to train them."
The firm has certainly made great strides in this area. It has achieved management quality standard BS5750, which means it can now compete for big contracts. Duxbury also hopes it will get its Investors in People (IiP) accreditation by Christmas. "It is hard to quantify our improvement in standards because you can never be sure why you lose a customer," he says. "But the business environment is very difficult and you have to improve quality to survive."
Each of the 32 employees gets a regular individual assessment from their foreman. The foremen themselves, men who have worked their way up through the firm, aim at achieving the supervisory standards laid down by the Management Charter Initiative. The "accreditation of prior learning" that this involves means that the foremen's wealth of experience from their years in the galvanising industry can be formally recognised. At the same time they also learn new skills, including running a budget.
The pay-off from investing in the workforce, Duxbury says, is that "we are developing real teamwork". His only concern is that the training will raise aspirations that cannot be met. "We don't have a definite progression through the ranks, being a small company." It is not just a small company problem however. John Adshead, Sainsbury's personnel director, faces the same issue in the new training programme the company is piloting. "We do not want 100,000 people looking for promotion. Although Sainsbury's has long had a wide range of training programmes, its application for IiP has prompted a change of emphasis. This has come with the recognition that it is in our interests to help people not only to do their current job as well as they possibly can, but also to help them grow and develop more," says Adshead. The new programme, called Choices, involves assessing individuals more regularly, both to make sure they can do their current job as well as possible, and also to consider their training needs in the light of future opportunities.
Sainsbury's resources for training are considerable. Each store has a training room, its own personnel manager and one or two instructors. The first thing almost everybody learns on joining the company is how to operate a till. There is a range of training schemes at different levels of the organisation. School-leavers can join Sainsbury's own-brand youth training scheme, which puts them through on-the-job and 24 days off-the-job training during the year, and leads to NVQ level 1 and 2 retail certificates. School-leavers with A-levels and new graduates go through a one-and-a-half to two-year traineeship and can go on to take the Sainsbury's retail marketing degree run with Manchester Polytechnic. For more senior managers, they offer the possibility of a consortium MBA at the City University Business School. From time to time there will be major drives, such as the one that recently put 40,000 staff on a food safety course.
Sainsbury's training programme is a world apart from the kind of facilities a small company can offfer. But the similarity between Sainsbury and Parkes Galvanising is the new emphasis on the individual employee. As an economist might put it, the employee development approach maximises the return from investment in training by getting the most out of every individual. But is it a profitable investment?
John Adshead thinks so. He believes that Sainsbury's reputation as a trainer helps them both recruit and retain staff, as well as to motivate people to perform better while they are with the company. He sees investing in people as a commercial, non-altruistic business practice. "What staff are really interested in is making a contribution. Training and development offers them the chance to contribute by doing their current job better or moving up the hierarchy."
Both Adshead and Robert Duxbury stress that training must not take place in a vacuurn. It must fit into the context of the business. (This contrast sharply with the civil service and some big companies where everyone must take their two courses a year in order simply for training targets to be met.) For this reason Sainsbury does the bulk of its training in-house. Parkes does not have the means to do this, but Duxbury nevertheless insists that, "The training has got to relate to the business. There is no point spending for the sake of it".
Having a more skilled workforce is what Duxbury thinks has helped Parkes Galvanising ride out the recession so far. Although volumes and margins are down, the firm's market share is not, and it is gaining new customers. Meanwhile at Sainsbury John Adshead says, "Good training is one the company's competitive distinguishing features. There is a growing understanding that developing people, training and using them effectively, is a competitive tool". It certainly seems to help - at one of Sainsbury's well-known rivals, a shelf-stacker, when asked what time the store closed, said, completely amazed that anybody should approach him, "I don't know".
Both Sainsbury and Parkes Galvanising believe that good training is the mark of excellence. Faced with a recession, and an increasingly competitive world, they say they would not want to fall short of this.