Further Training Pays Off for Companies

Providing further training is worthwhile, increasing a company's productivity. Company productivity rises by on average 0.3 per cent when the number of employees participating in furthering training programmes increases by one per cent.

However, not all forms of training increase productivity. These are the findings of a study carried out by the Mannheim Centre for European Economic Research (ZEW) based on representative data from the business survey carried out by the Institute for Employment Research (IAB). Formal external and internal classes, courses and seminars have the greatest impact on productivity. Having far less of an effect are quality circles, workshops (also known as "learnshops") and self-guided learning with the help of resources such as computer-assisted learning programmes and text books. Meanwhile, fairly common types of training such as instruction and introductory training in the workplace, participating in lectures, symposiums or trade fairs, and job rotations have no influence on company productivity. In light of this, personnel managers might want to cast a critical eye over the effectiveness of some of their preferred training methods.

German companies are investing considerable amounts into further training for their employees and in doing so are ensuring that they have flexible, complex and diversified production processes which, even during periods of personnel shortages, can be adapted to meet the latest challenges. Two thirds of these firms still rely on traditional forms of professional training such as formal internal and external courses. However, more than 72 per cent also report using other forms of training.

Most greatly represented among these companies are not in fact those firms "who can afford it" due to surplus profits, for instance. On the contrary, it is largely companies with flagging productivity who turn to training in order to try to correct their competitive disadvantage. This calculation seems to work out in their favour, with further training resulting in increased productivity. Further training schemes are also particularly popular among companies who invest heavily in information and communication technologies, have many highly qualified employees and are equipped with the latest modern technology. On top of this, firms tend to provide further training if they already provide vocational training and are tied into wage agreements.

The different forms of further training also have varying effects over the course of time. While external formal courses increase company productivity for on average at least two years, the positive effects of internal formal courses can no longer be detected after two years. The positive effects on productivity resulting from quality circles, however, only reveal themselves after at least a year has passed.

Contact

Prof. Dr. Thomas Zwick, Telefon: 0621/1235-131, E-Mail: zwick@zew.de