Benefits of Training

Anecdotal evidence suggests that an increase in productivity resulting from targeted training can yield a return on investment of more than 30%. Unfortunately studies definitively demonstrating these returns on training investments are rare. This can create issues for managers seeking budgetary approvals to invest in upskilling staff as they are unable to point to case studies to justify their training expenses. Within the transport and logistics industry the declining fiscal outlook in recent years has led to a reigning in of spending.


In the past it may have been sufficient for business owners, managers and human resource professionals to spend money on training on faith and intuition alone under the assumption that it directly related to increased productivity and profits. This however is no longer the case. Project administrators have a renewed focus on 'Return on Investments' (ROI) and due to the lack of Australian models and case studies that inform the benefits of training, it is becoming increasingly difficult to justify training expenditure.


As a result many companies, including Transport and Logistics companies may not be aware of the significant increase in their bottom line that can occur if they identify and pursue the highly profitable training opportunities that exist.


Through the SA Freight Council's Skills and Careers Management Team investigations it can be concluded that a company's bottom line is generally improved through training with positive impacts being demonstrated in the following areas:

  • Safety;
  • Profitability / Productivity;
  • Morale / Increased Employee Motivation;
  • Customer Satisfaction;
  • Market Share; and
  • Company Reputation and Profile.

The few Australian studies that have investigated the return on training investment to an enterprise have universally promoted the positive benefits and highlighted that the financial rewards outweigh, often significantly, the associated costs of training. However, specific details of the physical monetary benefits are not generally provided.


Nonetheless, Doucouliagos and Sgro (2000, p.1) established that "...on the basis of the literature, it can be concluded that significant returns can be expected and these are independent of industries, ownership, structure and nature of business operations."


Taking this statement as a given, where there is no available information on the ROI of training to a Transport and Logistics specific enterprise, evidence of positive impacts on the operations similar to those undertaken in the Transport and Logistics industry may be utilised.

 

McDonald and Fyffe (2001) reporting to the Australian National Training Authority claim through their research that the best performing Australian companies have a sustained commitment to training, not because higher profits allow for increased expenditure on training but rather increased expenditure on training increases profits.


While few examples exist demonstrating the monetary benefits of training for transport and logistics companies, what has been identified illustrates the real benefits that engaging in training can offer.
Academic studies have highlighted that substantial returns can be achieved from skills development regardless of the size of the company or the business it is engaged in.


The available literature indicates that training contributes to enterprise performance, either by increasing productivity or reducing production costs, and impacts positively on other dimensions of operations such as absenteeism.


Not only does training lead to increased profits, further Australian research has found that the profitability of firms is directly related to the quantity and quality of training they provide (Blandy, R, 1999).
It is however important to note that simply throwing money at training will not produce the desired benefits. Training design must be well planned and facilitated to fit into a company's structure but where this is achieved significant benefits are there to be realised for transport and logistic companies.

 

The full report can be downloaded here.