Free Up Revenue with Effective Employee Training

Authored by Steve Holden. Published in the Sacramento Business Journal May 2013

Ask any human resource professional. They will tell you that employee training is essential for any organization.  Despite that belief, private enterprises and non-profits actually do very little employee training and are doing even less in recent years.  Moreover, the training that is conducted is generally focused on product knowledge and specific job skills as opposed to personnel management.

The world of personnel management and employment law compliance is considerably more complicated today, yet it appears that companies are spending less to train.  The American Society for Training and Development reported that just less than $1500 per employee was spent on training in 1996.  In its most recent report, the number dropped to less than $1200.  The poor economy could certainly be one explanation.  Unfortunately, the poor economy has not reduced the number of employment claims and lawsuits by any significant measure.  In some areas, employment claims and lawsuits have increased because of the economy and employee desperation pointing to an increased need for personnel management training.

Why don’t organizations train or train as much as they should?  It could be that executives and business owners hold the belief that employees have adequate training from school systems, prior employers and society in general.  It could be that they believe it is the employee’s responsibility to come generally prepared to do the job.  This could explain why training tends to focus on the employer’s job-specific needs.

The number one reason why organizations do not train: Most executives and business owners view training as an expense.  With the possible exception of training for sales employees, they believe that training does not generate revenue.  This mindset is made worse in situations where the decision-maker questions the return on investment.  For example, employers who experience high rates of turnover are much more likely to hold back on training.

From a strict accounting standpoint, the decision-makers are correct.  Employee training is an expense on the profit and loss statement.  But, it need not be only an expense.  Done correctly, personnel management training can do two things.  First, it can increase productivity and actually create revenue thereby adding to your bottom line.  Also, in a well-trained workforce, employees focus on doing their jobs as opposed to the bad behavior of other employees or the organization’s failure to deal with the behavior.  Moreover, managers and supervisors are freed from the non-productive time spent with lawyers defending claims.

Second, personnel management training can free up revenue.  The revenue that would otherwise be spent on the costs of dealing with employee claims (attorneys’ fees, court costs, settlements, judgments and interest) can be moved to cover other expenses, thereby increasing the bottom-line profitability of the organization.  Let’s look at a real world example.  ABC Company has been growing rapidly and now has 52 employees.  Those employees are managed by four executives, three managers and six supervisors.  Personnel management training for these employees which includes harassment prevention and several other essential topics will cost the company about $1300 per year or $100 per person.  Unfortunately, ABC’s President does not have adequate human resource support and does not know that some training is required by law.  He also holds the “training is just an expense” point of view.  The company does not train.  An employee complains that she is being harassed by her supervisor.  The lack of training results in a poorly handled complaint, itself a violation of California law.  It also results in a civil lawsuit.  The lawsuit eventually settles, but the total monetary cost to ABC in the end is $300,000.  The avoidance of this one lawsuit would have freed up 230 years’ worth of training revenue.  That’s a pretty good return on investment.

While the most effective employee training is customized and will be different for different organizations, several types of personnel management training are essential.

Harassment Prevention

California employers with 50 or more employees are required to train all supervisors on the prevention of sexual harassment.  The interactive training must be at least two hours long and must be conducted every two years.  Trainers must have specific expertise in harassment prevention, discrimination and retaliation law.  The training mandate can be fulfilled by online training programs that meet the specific regulatory requirements.  Although only larger employers are mandated to train, all employers have a duty to take all reasonable steps to prevent harassment in the workplace.  An employer who fails to conduct any harassment prevention training will be hard pressed to meet this legal standard no matter how small the employer.  This creates the practical reality that all employers must train to avoid liability.

Ironically, the law that mandates harassment prevention training only expressly covers “sexual harassment.”  Effective training should include awareness and prevention information on the many forms of potentially unlawful harassment, including race, religion, age, disability, etc.

Discrimination Prevention

While the law that mandates sexual harassment prevention training makes a passing reference to the inclusion of content on preventing discrimination and retaliation, many training programs focus almost exclusively on harassment.  This is a mistake.  Employers face just as much exposure and just as many negative consequences in discrimination and retaliation lawsuits.

Handling Medically-Related Issues

The employment rules and regulations that come into play when an employee has a medical issue are some of the most complicated, confusing and conflicting in all of the law.  Employers must understand and navigate Workers’ Compensation, the Americans with Disabilities Act, the California Fair Employment and Housing Act, the Family and Medical Leave Act and a host of other laws.  The cacophony of obligations also frequently defies common sense, resulting in a perfect trap for unintentional liability.  Managers and supervisors could not possibly be expected to know all the rules and how to apply them.  To avoid unnecessary exposure, however, they must be trained to recognized situations where expert assistance is required.  They should also be trained in the organization’s operational procedures designed to ensure compliance and avoid mistakes.

Leaves of Absence

Perhaps no less complicated are the ever-growing rules and regulations governing protected leaves of absence.   Again, managers and supervisors need awareness and protocol training.  The goal is not to make them experts in leave law.

Managing Employees and Documentation

It is extremely common for employment claims to arise out of poor management.  The perception of being treated unfairly is at the root of virtually every discrimination and harassment case, whether or not the employee was actually subjected to unlawful behavior.  High quality management of employees drastically reduces the chances for perceived unfair treatment.  It also increases the chances for an environment in which issues can be successfully resolved before maturing into an actual claim.  High quality documentation of issues can also drastically reduce an employer’s exposure to claims.  Conversely, poor documentation can drastically increase an employer’s exposure.

Training for the sake of training is a waste of time and money.  Not all employee training programs are the same.  Look beyond the cost alone.  Carefully evaluate the quality of the trainer, the content and the likelihood that the training will be retained and effectively used by your employees.  Most importantly, get past the notion that training is merely an expense.  Think of it as the expense that can increase productivity and free up revenue.