If Your Organization Classifies Your “Greatest Asset” as an “Cost,” You’ll Continue to Have Workforce Issues

By Dean Prigelmeier, President of Proactive Technologies, Inc. 

How often have we heard by an employer that their “greatest asset is their people” or, “we need to invest in our people to continue to grow?“ These are statements affirming the importance of the worker to the overall success of the enterprise. However, actions taken by employers often hollow out these motivating themes, rendering them as repeating platitudes bordering on the disingenuous.

Actions that cast suspicion on her employers sincerity that their workers are at the greatest assets include:

• Cutting the training budget, if one was in place at all, while bragging about the companies, growth and profitability;
• Laying off workers at the first sign of trouble ahead for quarterly report to shareholders;
• Withholding increases in employee wages, cutting of benefits;
• Hiring workers from the outside, instead of training, grooming, and promoting internally.

It is often a sad mistake for employers to remind workers how important they are, while carrying out any of these types of contradictory and potentially counter-productive actions. Especially when companies have seen a steady increase in profits, these acts are self-defeating. Showing shareholders that even if they have had a slight decline in quarterly profits for investing in worker development, causing the shareholders earnings per share to be only slightly affected, might be acceptable to all if the goal is worthy and communicated effectively. And slight decreases in this year’s returns as a result in small investments in training that will lead to an expected increase in next year’s, and the year after that’s, performance seems reasonable and ripe for the asking.

Employees accepted the platitudes for a number of years because they wanted to believe it, thought accepting it was for the greater good or felt they had no choice. The major fact that company profits and CEO wages have continued to rise over the last 30–40 years while the average workers pay has remained flat is good evidence of that.  One would think that after 30 to 40 years of benefiting at the expense of the employee and their family that employers would collectively say that they had a good run, and it’s time to share the wealth with the ones who made it possible.

Developing workers, creating opportunity paths to advancement and increases in individual wealth, are not only a good way for an employer to improve overall capacity, promote sustainability and flexibility, but it provides the employer with an empirically proven increase in return on each worker’s investment, and collectively the organization’s return on investment to the operation.

CFOs are starting to explore the fact that they have not been measuring the return on worker investment, which made worker training, and worker’s themselves, susceptible to be in the first in line as “costs” needed to be cut to improve the company’s financial position at the end of the quarter.  Historically, accounting departments have not been able to make the connection between attending a class and improvement in performance, and they are therefore inclined to deny classroom training unless the direct link to return is clarified for them. It has to be seen as an investment and there has to be evidence, empirical or anecdotally without a doubt, that makes them feel the expenditure is worth it.

More difficult for CFOs is the connection between informal on-the-job training and return on investment. They tend to see one-on-one training as labor costs associated with an informal, unstructured, incomplete, and undocumented process – even though the one-on one-training makes it possible for an employee to contribute to the enterprise’s business model. Since it was drilled into them in accounting books that “labor=cost” therefore “training of labor=costs,” it is difficult for some to conceptualize return on worker investment, so the contribution is ignored or dismissed:

For as long as the highest paid worker is informally training a reasonably paid new hire, two people contribute less productivity than the productivity provided previously by the expert alone. It is in the employer’s interest to structure the on-the-job training to “accelerate a transfer of expertise” to the new-hire, document progress toward full capacity, document each worker’s accumulating value through training and make an effort to recognize the achievement. Creating internal pathways to advancement through opportunities to cross-train and expand personal growth keeps the employee motivation going while expanding the individual’s ROWI. Accounting practices have not yet been standardized to measure this, but even anecdotally one can surmise that structured, deliberate, on-the-job training has to provide a higher return-on-investment than informal, unstructured, one-on-one training that is provided to every employee in the organization anyway.

Through our efforts at Proactive Technologies, we’ve been able to document the starting capacity of the incumbent workers in every project that we establish for employer. It is not uncommon to find average worker capacity for a job classification starting at around 30 to 40%. This shows how, over time, workers fall through the cracks and are not developed to their full potential before an employer decides to hire more and put them in the same situation. However, through structured on-the-job training we’ve been able to track each worker’s progress towards “full job mastery” for every job they are assigned to. Since the structured on-the-job training is “best practice, work process-based,” it is not difficult to apply an hourly trainer and training wage to the experience to document the investment and the reductions in opportunity costs through higher worker performance and compliance. Data can also show the negative impact any reductions in the investment necessary to train workers for each additional worker and the cost to the company for not making that deliberate and focused investment.

Changing the asset definition of a worker to investment, and efforts to improve the value of the investment as “return on worker investment,” are long overdue and necessary for their increasingly competitive world. Capital equipment are classified as “assets” and “investments,” so why not the worker who runs them?

Proactive Technologies’ structured on-the-job training system approach develops incumbent, new-hire and cross-training workers to full job mastery through the accelerated transfer of expertise^TM system.  To see how it might work at your firm, your family of facilities or your region. Contact a Proactive Technologies representative http://proactivetechnologiesinc.com/contact-us/   today to schedule a GoToMeeting videoconference briefing to your computer. This can be followed up with an onsite presentation for you and your colleagues. A 13-minute promo briefing is available at the Proactive Technologies website and provides an overview to get you started and to help you explain it to your staff. As always, onsite presentations are available as well.