Appreciating the Value of Labor – Often Overlooked Source of Wealth
by Dean Prigelmeier, President of Proactive Technologies, Inc.®
Businesses invest capital in new equipment or processes to expand and improve operations to become or remain competitive. The level of investment is not as important as the return on that investment. This consistent practice of determining where to best place capital for the highest return should apply to labor, as well. What is “paid” for labor is not as relevant as the value it adds to the operation and, ultimately, profit; the return on worker investment.
The lack of appreciation for the difference between a “training cost” and a “training investment” is understandable because it is rarely contrasted. The college textbook entitled Financial Accounting: An Introduction to Concepts, Methods and Uses, defines “direct labor cost” as the “Cost of labor (material) applied and assigned directly to a product; contrast this with indirect labor cost.” Indirect labor cost” is defined as, “An indirect cost of labor (material) such as supervisors (supplies).” There is no mention of an expected return on investment. Generations of cost accountants have been taught that there is no good that comes for higher labor costs, which to them is determined by the level of staffing and wage levels. There is no differentiation between strategic labor costs and uncontrolled labor costs.
The profit from, and value of, most worker’s labor comes from task-based work, so all inputs that drive workers to high-performance, high-capacity output are investments.
click here to expandAs discussed in many articles in past issues of the Proactive Technologies Report™, although labor costs are considered direct costs from an accounting standpoint, they should be more importantly considered as an investment in the operation’s overall level of competitiveness. Operations may vary as to the level of return on investment from labor, but each worker’s cumulative expertise gained while employed becomes an asset to the operation akin to intellectual property and, therefore, wages and compensation paid to develop a worker are an investment.
As many operation managers have found out, drastic moves like reducing or maintaining low wage rates, while expecting to maintain the same output quantity and quality, chases off the workers with the gained technical expertise…because they can leave. The investment is lost and so are any returns. Furthermore, it is difficult to find new candidates who are willing and able to “hit the ground running” for an unreasonably low wage rate. And if a good candidate for employment is found and selected, bringing their productive capacity up may be delayed or hindered by the fact that the remaining “subject matter experts” are not as capable of transferring expertise as the technical experts that were driven away.
Scores of competitively run global corporations in the past few decades have withered away chasing short-term numbers to appease shareholders and activist investors, which in the longer run undermined their capacity, purpose, level of service and brand. Read More
Have Advances in Technology Distracted HR From the Fundamentals of Worker Selection and Development?
by Stacey Lett, Director of Operations – Eastern U.S. – Proactive Technologies, Inc.®
Hundreds of billions of investment dollars are driving the advancements in technology into every corner of our lives, including the selection and development of workers. Predictably, the emphasis often seems more on the technology and the money it can make for investors than the practicality for the end-user or those it effects.
It is not just the refrigerators that talk to your grocery store, or watches that talk to the phone in your pocket. Wall Street, with an accumulating mountain of cash, can drive any idea to fabricate a “trend” that often dissipates as quickly as it emerges, sometimes leaving disruption in the wake but yields a return for investors. For investors it is the means to an end. To many, it may negatively affect their life and their future.
In the 1990’s, investors started to look at the National Security Agency’s and Central Intelligence Agency’s “key-word search” capabilities used to scan millions of documents from around the world for specific words and phrases to expand their intelligence gathering reach. They saw applications of this technology in the civilian world, including scanning the mounds of resumes and employment applications employers had to filter in order to find a few new-hires. On the surface, this seemed to be a godsend.
click here to expandSoon employers and employment candidates saw what the developers of this technology did not. The technology first had to count on employers having accurately designed job descriptions in consistent formats, using standardized terms, words and phrases to describe pre-hire knowledge, experience, skills and abilities of interest. The fact was reality couldn’t have been farther from this, with job descriptions written 50 years prior, written precisely for someone the employer wanted to hire (not so reflective of the actual job requirements), or cut & pasted from a handy library resource.
Next, this technology had to rely the applicant knowing the right words and phrases to describe their own pre-hire knowledge, experience, skills and abilities of interest to the employer for the algorithm to recognize a closeness or match. In truth, most candidates even knew less about the difference between a skill and ability, knowledge and a trait, having “experience with” versus being “acquainted with,” or being “fluent” in a topic or having a passing knowledge.
Nevertheless, this technology, with all of its short-comings, stormed the market. Read More
The Key To Effective Maintenance Training…Any Training: The Right Blend of Structured On-The-Job 
Training and Related Technical Instruction
by Dr. Dave Just, formally Dean of Corporate and Continuing Education at Community Colleges in MA, OH, PA, SC. Currently President of K&D Consulting
I spent a lot of my career as Dean of Corporate and Continuing Education at community and technical colleges, in several states. Where we could, we tried hard to provide the best core skills development delivery for technical job classifications the employers in our community requested. We often did this working off the limited, and often suspect, job information the employer could provide to us.
Often we were up against budgetary constraints that limited our efforts to customize programs and keep the programs up to date when the instructor was willing to maintain the relevance of the program. If that wasn’t enough, school leadership often showed ambivalence toward adult and career education due in part to the fact that its demand was driven by gyrations in the economy. Furthermore, the institution was built upon, more familiar with and understood better credit courses for the more stable subjects such as math, science, literature, history and the social sciences.
We tried a lot of innovative programs for employers in the community within the constraints mentioned, but if I was to be honest we rarely kept up. What we thought we knew of the targeted job classifications and their requirements, and upon which our programs were built and measured, seemed to become increasingly misaligned within just a few years. Not only was advancing technology putting pressure on the content of our learning materials and program design – a constant push toward obsolescence – the employers were continually rethinking the design of their job classifications to meet their business goals and budgets. We were finding less and less similarity in job classifications between employers, by job title and job content.
click here to expandInevitably, and not from lack of effort or desire, it was difficult to keep technical curriculum current to within 5-10 years. The “Maintenance” job classification was a perfect example and could be incredibly different from company to company. In the early days, Maintenance was thought of as multi-craft; a maintenance person was responsible for maintaining all aspects of the operation. Some companies tried to hold onto that concept of Multi-Craft Maintenance but, as Multi-Craft Maintenance Technicians were becoming harder to find and therefore required higher pay, more and more companies began to deviate from multi-craft to specialty and single-craft positions that cover only limited areas such as facilities, electrical or mechanical. Read More
“Learning” v. “Training” Confusion In Workplace – Obstacle to Effective Worker Development Strategies and Apprenticeships 
by Dean Prigelmeier, President of Proactive Technologies, Inc.®
In an article appearing in EHS Today entitled, “From Seat Time to Skill: How Leading Safety Teams Are Proving Competence, Not Just Compliance,” an important point was made of the difference between “compliance” – seat-time based – and “competency” – being able to apply what is learned during seat-time to the competent performance of a task. “Learning” has become wrongly synonymous with “training,” when in fact they are two different methods, affecting two different domains, meant for two different outcomes. Classroom information delivery may seem to meet a management objective for the time being, but having a name on an attendance roster does not excuse management of accountability when the attendee mal-performs. to internal and regulatory requirements.
This principle should apply to all tasks required of a worker. What is the point of going through the expensive ritual of recruiting, hiring, onboarding only to stop there and let the employee find their own way to meeting management’s expectations? It is a process that is widely utilized and increasingly risky and wasteful:
- underdeveloped and underutilized human capital investment,
- risk of poor performance and malperformance,
- risk of non-compliance with engineering, quality, EHS and OSHA requirements,
- and risk of litigation due to operator injury or death due to inadequate of non-existent training.
For centuries one resident expert has been training new-hires to perform tasks “expertly” and it has worked very well. In the last 40 years, the shift has been away from “training” which admittedly takes a little more time but the benefits are substantial, to the easier to deliver but mostly futile “learning.” According to the article, “Studies summarized by the National Safety Council show that workers forget up to 70% of newly learned information within 24 hours if it is not applied. After one week, retention can drop below 10%. Long refresher courses delivered once a year are among the least effective ways to preserve safety-critical skills.” This could be one reason CFOs who witness this firsthand have grown to reject projects to improve “training,” so it is allowed to occur informally when it could be enhanced, accelerated and maximized.
For the anyone searching for information to help them choose a worker development strategy, a web search of “on-the-job training methods” might produce thirty or forty informative, but confusing, charts. The search result is a mixture of domains, methods, philosophies – one seemingly in conflict with the other. A non-practitioner of workforce development strategies can gather from this search result alone why there is a perpetual state of confusion between even “experts,” marked by decades of employer and trainee disappointment in the lack of recognizable strategies and outcomes, which are often devoid of meaningful results. Read More
Read the full March, 2026 Proactive Technologies Report™ newsletter, including linked industry articles and online presentation schedules.
Proactive Technologies, Inc.®; PROTECH®; Human Resource Management for Tomorrow...Today!® and logo; PROTECH©® System of Managed Human Resource Development™; Accelerated Transfer of Expertise System™; Certificate of Job Mastery Program™, Certificate of Task Mastery Program™ are all trademarks of Proactive Technologies Inc.®;