Continuity and change: employers’ training practices and partnerships with training providers

Why do employers train?

It is notoriously difficult to evaluate the financial return on investment in training in relation to its contribution to organisational productivity, although there have been attempts over the years in Australia. Tharenou (2006) provides a useful overview of work in this area in a meta-analysis of 30 studies from the international literature, concluding that there is conclusive evidence that training improves organisational productivity and output, sales and customer service. Training is considered important not only because it is necessary for building and maintaining an effective workforce, but also as it drives corporate well-being, improves perceived organisational performance and provides organisations with a sustained competitive advantage (Salas et al. 2012; Saks & Burke-Smalley 2014). Indeed, organisations in Australia must see merit in training, as statistics from NCVER (2013) show that in 2013, 88% of responding employers provided at least some form of training for their employees, with 52% using VET, and 48% using unaccredited training. But understanding the factors that influence and motivate these training decisions in organisations largely remains to some extent a ‘black box’ for researchers and policy-makers, as Smith, Oczkowski and Hill (2009) note in a study analysing Survey of Employer Use and Views (SEUV) data.

Some general drivers that influence employers’ decisions regarding training have been agreed upon. Broadly there is the rate of organisational change, increased globalisation and competition and in response the need for organisations to train and up-skill their employees. More specifically, a number of studies (Smith & Hayton 1999; Smith, E et al. 2005; Smith, A et al. 2008) have identified key drivers for employers supporting training around the availability of government funds, responses to skills and labour shortages, the need to improve the overall capability of their organisations or compliance with changes to external regulations and legislative or licensing requirements.

In a major investigation of the factors that affect decisions about training in Australian private sector organisations. Smith and Hayton (1999), in a large-scale study funded by the Commonwealth and Victorian governments, developed a model of training in organisations that comprised three key factors. The initial drivers for training provision by employers were found to be workplace change, new technology and quality assurance. The drivers triggered the decision to train. However, the nature of the training provision that occurred depended on another set of factors, ‘training moderators’ which were the specific characteristics of organisations that influenced the amount and type of training that employers provided. These included the size of the enterprise, the occupational structure, industrial relations, management attitudes to training and government training policies. The mix of training drivers and training moderators was different for each enterprise and resulted in the unique configuration of enterprise training observable in each enterprise. The diversity of training arrangements included the level of formality of training, the use of internal or external training resources, the focus of technical or non-technical skills and the focus on specific versus general training. This work revealed the complexity of training decisions in enterprises and the reasons for the diversity of training arrangements that can be observed. Figure 1 illustrates the findings of this project.

Competitive

pressure

TRAINING MODERATORS

● Enterprise size

● Industry training
● Occupational structure
● Industrial relations
● Management attitudes
● Government training policy

TRAINING
ARRANGEMENTS

● Formal v Informal

● Internal v External
● Technical v
Behavioural
● Generic v Specific

TRAINING
DRIVERS

● Workplace

change
● New
technology
● Quality
assurance

Strategic

Response
Figure 1: Model of enterprise training (Smith & Hayton 1999)

Training may also serve as part of an organisation’s branding strategy. Employer branding is ‘the package of functional, economic, and psychological benefits provided by employment and identified with the employing company’ (Ambler & Barrow 1996). Promises regarding training and professional development almost always encompass these employee value propositions and branding initiatives. Building a reputation or brand around providing training can help secure the best and the brightest employees. The desire to project the image of being an ‘employer of choice’ is an important driver for some organisations, particularly in tight labour markets. Indeed, as Kaplan (2005) notes, workplace education – and not necessarily work-related – almost always appears on the menu of great places to work, and ‘77% of us would prefer to work for an employer that supports learning and training than one that gives large salary increases’.

As a corollary to training as a branding strategy to recruit the best employees, employers may also offer training and development in order to foster loyalty to the organisation. Recent Australian international studies, for instance, reveal that increased loyalty or organisational commitment decreases employee turnover, and in turn drives the economic performance of the firm (Smith, L et al. 2013; Robinson et al. 2014 ). However, the Australian Institute of Management (2006) found that the provision of development opportunities around access to training or rotation was only eighth of the 16 identified reasons for why employees stay with an employer. Training is also used to reward good employees. In an Australian study on managers’ decision-making about training in medium-sized organisations (Coetzer, Redmond & Sharafizad 2012), it was shown that managers selected for training employees who were more committed to the organisation, who showed positive work attitudes, while training was seen to encourage their intentions to stay (Coetzer, Redmond & Sharafizad 2012).

Drivers for nationally recognised training

Employers are able to make a choice about whether to provide accredited or non-accredited training for the employees. Estimates by the National Centre for Vocational Education Research (NCVER) ten years ago suggested that up to 25 per cent of employers provided nationally recognised, or qualifications-based, training to their employees (Cully 2005). The primary reason for employers using ‘nationally recognised’ (or ‘accredited’) training for their employees has been found to be to meet external regulations such as legislative or licensing requirements or to fulfil the provisions of industrial agreements, awards or enterprise agreements (Smith, Oczkowski & Hill 2009). The provision of specific job – or business-related skills for their organisations is the second most important reason (Smith, Oczkowski & Hill 2009). In addition, many employers use nationally recognised training to enhance their competitiveness by improving quality or by responding to the demands of new technology. Enterprises gain significant benefits from providing such training. These include the ability to attract high-quality staff (i.e. as ‘employer of choice’), accessing government funding to defray the costs of training provision, the possibility of integration of training with everyday work and the confidence to be sure that workers are trained to a recognised standard (Smith, E et al. 2005). Simons and Harris (2014) add some additional advantages of nationally-recognised training for employers: that they can achieve greater consistency across different areas within an enterprise; that they can save money by using nationally-developed learning materials; and that they receive external validation of their training

Employees also gain from nationally-accredited training. For many, their employment-based qualification is the first they ever have gained, and in many cases their qualification adds to their attractiveness to future employers, although the importance of qualifications varies among industries. Women in particular benefit from nationally-recognised training delivered through or via their employer, as some of the traditional constraints on women achieving qualifications are absent (Smith, E 2006). In a British study based on a national household panel survey, Booth and Bryan (2005) found that nationally-recognised training financed by employers was more associated with higher wages than non-accredited training. This applied both to people’s current place of employment and their future employers. Using Human Capital Theory, they argue that employers should not be paying for this ‘highly portable’ training (Booth & Bryan 2005, p.394).