May 15, 2014 CB Insights
In today’s rapidly evolving business landscape, staying ahead of the
competition requires strategic investments in the most valuable asset of any
organization – its employees.
Research conducted by CB Insights sheds light on a crucial aspect of this
investment – the effectiveness of employee training in essential skills. The
findings highlight how enhancing literacy, numeracy, and essential skills
among your workforce not only contribute to personal growth but also
translate into significant value.
In this article, we’ll explore how such training initiatives can result in
remarkable returns on investment, improved customer satisfaction,
increased productivity, and reduced costs. As business leaders, it’s
imperative that we understand the pivotal role essential skills training plays
in shaping the future success of our organizations.
Read on to discover the insights that can help your company thrive in
today’s competitive landscape.
Key Words #Employee Training #Business Value #Essential Skills
Workplace Learning
Research reveals the ROI from training employees in essential skills is high
and adds great value to the business. The information that follows provides
insights on how essential employee training is in adding value to
businesses:
Businesses increasingly require employees to have strong literacy,
numeracy and essential skills. But almost half of Canadians are ill-equipped
to be their best at their jobs. Companies continue to devote little money to
supporting and training them. This is a strategic oversight by companies
like yours. New research shows that, when executed well, workplace
literacy, essential-skills training and other initiatives can actually make you
money.
One study, which looked at Canada’s hotel industry, found a 25% average
return on investment for training programs, with some participating
companies reporting returns as high as 300%.
The research, conducted by Social Research and Demonstration Corp.
(SRDC) for the federal government’s Employee and Social Development
Canada, looked at direct benefits to business, particularly in improved oral
communication and customer service. It found far-reaching benefits.
―What’s surprising,‖ says David Gyarmati, research director at SRDC, ―is
that even adequately skilled people saw performance gains they wouldn’t
have otherwise had.‖
Essential Skills Training Provides Solutions for:
fundamental change in the business
health & safety concerns
paperwork & document-use problems
communication, teamwork or leadership needs
errors & waste
Source: Advancing Workplace Learning Project: a joint initiative of
Canadian Literacy and Learning Network & ABC Life Literacy Canada
Indirect Organization Benefits
There are additional indirect benefits to businesses that undertake training
in workplace literacy and essential skills (WLES):
more customer satisfaction
productivity gains
fewer production mistakes
WLES underpins other, more complex skills, so if you organize formal or
informal higher levels of training—such as quality-assurance systems or
computer use—you could be missing out on the full value of those programs
if your employees don’t have foundational literacy and numeracy skills.
Workplace Literacy and Essential Skills (WLES)
Literacy and essential skills are the foundation for all learning, and involves
not only reading but interpreting information in all forms.
What’s the problem here? According to the OECD, about 13% of workers
are under-qualified for their jobs, significantly affecting productivity at
your firm. Low literacy and essential skills is a compounding problem
because low-skilled adults benefit less from other training that sits atop
basic skills—and their skills remain weak or deteriorate over time.
―Differences in the average use of reading skills explain around 30% of the
variation in labour productivity across countries,‖ states the OECD study
Skills Outlook 2013.
In Canada, the opportunity to improve is immense—the number of people
with inadequate literacy skills has increased to almost one in two the past
decade. If you are facing challenges with WLES in your workplace, you are
not alone, but you can profit from available resources.
Growth in the size of the national labour force—expected to increase by as
much as four million people by 2031—won’t solve the problem. By that
time, one worker in three may be foreign born, and many others will be 55
years or older. Both groups have special WLES needs. Skills proficiency
falls off steadily for those in their 30s and older.
Why Invest In WLES
Whether training is formal, extensive and delivered in a classroom, or
modest, brief and embedded in the workplace, results have been
impressive. In the SRDC study, the performance of 1,500 hotel-industry
workers who received 20 hours of WLES training, was measured against
workers who didn’t receive training. Where employers paid the entire cost
of WLES training—$2,300 per employee, plus the cost of covering missed
shifts—they enjoyed an average return on investment of about 27%. That
includes both revenue gains of more than $2,000, and savings from
improved productivity adding up to about $1,900. Employers saw increased
customer satisfaction, room occupancy and food-and-beverage sales.
The 9 Workplace Literacy Essential Skills (WLES)
reading text
document use
writing
numeracy
oral communication
computer use
thinking skills
working with others
continuous learning
Source: Government of Canada
The study demonstrated impressive returns on investment and showed how
to maximize benefits. Essential-skills training undertaken by engaged
employers and employees, made just 20 hours of training effective for most
participating businesses. ―You can get short-term gain from modest
intervention,‖ says Gyarmati.
While the SRDC findings translate most easily to companies in the service
sector, bottom-line benefits from WLES training have been observed in
other sectors also.
A project by Build Force Canada found that if employers spent $132.90 per
newly engaged apprentice on essential-skills training, the return was
$26.34 for every dollar invested, based on at least 80% of apprentices
completing their employment requirements. (Results vary depending on
the number of apprentices who finish their work periods.) One study
suggested apprenticeship programs across a number of trades are more
successful when tied to essential-skills training.
Other WLES Benefits
Rather than increasing the risk of losing skilled employees to competitors,
research shows that WLES makes employees more likely to stay. A Wendy’s
restaurant in Fredericton, N.B., credited WLES training for reducing staff
turnover to between 65% and 80%, down from between 125% and 150%
two year earlier, saving the franchisee $5,000 annually in new staff
training. The SRDC study confirms that employees who had undergone
WLES training were more likely to stay with their current employer, even a
year later. And they continued to perform at a higher level than untrained
peers; WLES-trained staff were 35% more likely to meet or exceed industry
standards, could work with less supervision and made fewer errors.
In an increasingly competitive global marketplace, essential-skills training
is not nice-to-have, it’s a must-have. ―Employers don’t just want their
employees to do the same job faster, they want them to do a different job
due to changing technology, materials and structures,‖ says Nancy Jackson,
a recently retired associate professor in Adult Education at the Ontario
Institute for Studies in Education. ―The majority of workplaces are now
running quality assurance, whether it’s a hospital or a hotel or
manufacturing operation, and they’re all done on paper or computer.
You can argue that you don’t have to be able to read or write to clean a hotel
room, but you do have to be able to read and write in order to document
that work.‖
The Need to Take Action
Five excuses for not investing in essential skills training that don’t add up:
―The schools should be teaching essential skills, not me.‖ True or not,
that argument comes 20 or 30 years too late.
―The education system cannot solve the problem for the current
population of working-aged adults,‖ says Gillian Mason, president of
ABC Life Literacy Canada (ABC). Nor can the nation’s school systems
account for foreign-educated adult immigrants, the dated skills of
older workers and the changing needs of workplaces, which are often
driven by technological change.
―If I train them, they’ll just get another job.‖ ―But what if you don’t
train them and they stay?‖ asks Lindsay Kennedy, president and CEO
of Canadian Literacy and Learning Network (CLLN). The much
greater danger is from not developing employee skills and providing
supports to match the performance requirements of a business. This
impedes business objects and thwarts growth opportunities. Although
poaching does happen, Alan Middleton, professor of marketing at the
Schulich School of Business at York University and former board
chair of ABC Life Literacy Canada, says employees feel a greater
commitment to workplaces that have invested in them. Companies
that have offered WLES training typically report lower employee
turnover, higher commitment and increased engagement.
―I’m not convinced skills upgrades will make any difference.‖ It is true
that many of the benefits of WLES training are indirect. But
companies report many bottom-line positive outcomes too. The
Getting to Yes report prepared for the CLLN and ABC under the joint
Advancing Workplace Learning Project, found that employers who
offered WLES training and integrated WLES into their businesses
reported improved employee confidence, better communication and
teamwork, new or improved skills, greater interest in further
learning, improved morale and employees who can take on other
jobs. And there were knock-on benefits in the form of improved
health and safety performance, higher rates of employee retention
and internal promotion of employees, improved productivity, reduced
mistakes and waste, and improved customer service and satisfaction.
I can’t afford to hire trainers.‖ Even though professional trainers can
be hired for less than $100 per hour of training, government funding
can make WLES free or at least more affordable through grants, tax
credits and other means. Provincial programs in Manitoba, New
Brunswick, Quebec and Prince Edward Island are equipped not only
to provide advice, but can provide the training itself. The new Canada
Job Grant program will see federal and provincial governments
together pick up two-thirds of training costs of up to $15,000 per
worker.
Sources: OECD, Statistics Canada, IPOS Reid 2013, Canadian Chamber of
Commerce
Reducing Mistakes & Costs – :How one company profited from
essential-skills training
Convey-All Industries, based in Winkler, Man., makes custom conveyors
for agriculture and other industries. A few years ago, the company learned
it was incurring high costs from employees having to rebuild faulty
assemblies. It realized that its workers were making mistakes because they
had trouble reading and communicating in English. Winkler is a magnet for
immigrants from Europe and Latin America who have good trade skills and
apprenticeship certification, but their English is often inadequate. ConveyAll needed them to get things done right the first time.
While some local businesses simply hired expensive interpreters to
accommodate foreign-trained workers, Convey-All tried WLES training
instead.
In 2009 the company accepted an offer by Workplace Education Manitoba,
the provincial agency tasked with improving labour skills to provide 20
weeks of free WLES to all 16 of its welders.
The company supplied a room and two hours’ paid time per week for the
workers. Provincial instructors focused on two main areas: document use,
aimed at helping workers better understand specialized blueprints, and
numeracy. These were aimed at reducing the measurement errors caused
by metric-trained employees working in an imperial-measurement
environment. Topics included vocabulary and abbreviations, trade math,
fractions, decimals, percentages, geometry, bill of materials (the list of raw
goods needed to make a product) and oral communication.
When human resources manager Gloria Lee interviewed the welders after
the program, she found their ability to understand instructions and ask
questions had dramatically improved. Time spent fixing mistakes
―dwindled right down,‖ she says. The improved literacy skills also fed into
the company’s efforts to achieve higher health-and-safety standards.
Since 2004 the company’s workers’ compensation premiums dropped to
95¢ per $100 of payroll, down from $3.52. Lee attributes that to better
employee understanding of workplace hazards and safety procedures.
Retention among the 16 employees who took the training has been almost
100%, impressive given the competition from other manufacturing firms in
Winkler.
Building Better Workers – How to Setup a WLES Program in Seven
Easy Steps
Workplace literacy and essential skills (WLES) strategies can range from as
simple as a company supporting an employee’s voluntary skills upgrading
at a local literacy center to more sophisticated efforts. Efforts such as a
custom-made WLES program delivered in-house by staff educators. A few
simple steps will help you maximize the return on your investment.
- Learn about available resources. Because cost often influences a
company’s embrace of WLES initiatives, you should start by talking to
provincial governments and literacy organizations. Some provinces
have agencies that can provide employers with free one-stopshopping for WLES services. First Nations, Métis, Inuit, immigrants,
apprentices, lower-skilled workers and official-language minority
communities may be eligible for funding. If your province doesn’t
provide funding, there are provincial and local organizations that can
help. - Assess your needs and goals. Literacy organizations can point you to
educators or services who can help you identify your needs and assist
in making a strategy. They may interview staff, analyze tasks and
processes or administer standardized tests. - Establish a WLES team. It should include someone from
management, union and non-union staff. A government
representative or educator might also take part if the training is
funded by a government program. Among small to medium-size
enterprises, management might work directly with a WLES service to
help set up a team. - Determine the approach. Services that do assessments usually can
also design your firm’s WLES program. Design is often included in
the cost of instruction itself. The most common way to teach essential
skills is through classes, small groups or workshops taught by
instructors from outside your company. Embedding WLES
curriculum in other training has become increasingly popular,
providing instruction that meets your specific needs while avoiding
the embarrassment of singling out employees with low skills. - Understand the costs. Even when the government is paying,
employers are expected to contribute, usually paying employees for
some or all of their time in the classroom, as well as providing space
and other resources. Total costs vary, depending, for example, on
whether the needs assessment, program design and delivery are
purchased as a package or sourced individually. Is the curriculum
generic or custom? Does it last a few weeks or a year? Quebec and
Manitoba have developed training approaches for smaller firms in the
same industry to pool resources. Indeed, SRDC has found that a
curriculum customized for your industry gets better results than
generic training. - Get employee buy-in. Involve your employees from the very start.
Needs assessments should not single out individual employees but
should be aggregated. When employees ask for training, keep their
requests confidential. It’s important that employees see this as a
potential benefit and not a personal shortcoming. WLES is a tough
sell when employees worry that training means their jobs are on the
line. - Make a learning culture your business culture. Improving employees’
essential skills makes it easier for them to learn new ones and helps
them innovate. Your learning culture is a foundation for creating
better products and services, and fostering a new competitiveness and
profitability. ―Creating a learning culture in your business is
imperative for innovation, growth and economic success‖ says Gillian
Mason of ABC. The corporate return on your investment in essential
skills is real and attainable.
Resources & Information
Workplace training benefits health and safety, productivity, job satisfaction
and profitability. Successful workplace education programs are built on
good partnerships that help to:
lower costs
facilitate knowledge-sharing
provide access to resources
Partners can come from government, industry associations, sector councils,
unions, colleges, essential-skills organizations and literacy groups.
Visit Advancing Workplace Learning for resources to successfully
implement workplace training programs. Advancing Workplace Learning is
a joint project between Canadian Literacy and Learning Network and ABC
Life Literacy Canada, and is funded by the Government of Canada’s Adult
Learning, Literacy and Essential Skills Program (ALLESP).
ABC Life Literacy Canada is a non-profit organization that inspires
Canadians to increase their literacy skills. Through leadership in programs,
communications and partnerships, ABC mobilizes business, government
and communities to support lifelong learning.
Canadian Literacy and Learning Network is the national hub for research,
information and knowledge exchange, increasing literacies and essential
skills across Canada. CLLN, a non-profit charitable organization, represents
literacy coalitions, organizations and individuals across Canada.
The opinions and interpretations in this publication are those of the authors and do not necessarily reflect
those of the Government of Canada.
This report was produced by CB Insights in association with ABC and CLLN’s joint project,
Advancing Workplace Learnin