Great products and services can take a company only so far. People shape the long-term success of every business, making investment in their development more important than ever before. But for smaller businesses with less time and fewer resources, staff development has become essential.
Developing talent can mean the difference between lasting success and mere survival. The quality of people correlates directly to the quality of the decisions being made in your business and its overall results.
To build a business with real results, companies need to invest in developing their own staff - and not just their IT skills. Companies must equip employees with core business skills, including project management, business analysis and leadership. People with these skills give companies a competitive edge to address new business threats and attain the next level of growth.
Wanted: management skills
Businesses typically invest in staff to lift overall performance or develop management depth. For small, family-owned companies, the latter might entail family members moving into management roles to replace a senior member: succession planning by another name.
Staff development will be one of three types. It could be about technical or job-related skills such as how to conduct an effective sales call or deal with customer complaints. Or it could be about frontline management such as business skills or thirdly staff development could be around behavioural modelling. The diagram below suggests that for a small business to be fully effective these three areas of expertise must be present. It will vary from person to person as to how much of each development area the individual requires.
Technical
Job related skills such as knowledge of processes and procedures, ability to operate equipment and manipulate data
Managerial
Business skills such as planning workflow negotiating contracts and legal requirements surrounding employment matters
Behavioural Modelling
Skills associated with getting the best from your team and being a role model for the way employees need to behave to each other, customers and stakeholders
We have seen many New Zealand organisations in the past 10 years invest heavily in top-level leadership development but not for staff charged with managing those coalface employees who touch customers or suppliers every day. These frontline leaders need to hone their general and people management skills. They need to be aware that simple things will turn attitudes, motivate employees and generate extra discretionary effort in their day-to-day activities.
It is clear that this level of management want professional development. They believe that the best employers are not necessarily those who pay the highest rates, but the ones who help to keep their skills, and employability, up to date.
The right type of training
The need for more education is put forward as one of the reasons for poor productivity in most companies. Yet while this diagnosis may be correct, the prescription is often wrong.
Rather than organising work-based educational programmes, employees are sent on generalised courses in management or leadership. Too often, the wrong people are being trained in the wrong way for the wrong job - with obvious consequences.
Constantly evolving technology, faster rates of product development and the need for employees to work across several disciplines should make companies more aware than ever of the need to get their staff development programmes correct. This means developing the right staff with the right training.
Small businesses must avoid sheep-dipping exercises where everyone is run through a two-day programme with the expectation they will emerge better at what they do. The aim is to identify skills gaps in particular individuals.
Justifying the cost
There is a dire need for more leadership and management skills in small business. This is because growth, productivity and profitability do not come from the shop floor, but from the skills employees must possess in order to drive the business with confidence.
Many small companies are too concerned with daily business demands to worry about matters such as helping staff acquire new professional skills. They also find it difficult to afford such investments, whose benefits might not be realised for several years.
This is why training is often the last item added to a company’s budget and the first to go. Small business has failed to take training as seriously as it should because it is difficult to demonstrate exactly how much impact it has on the bottom line.
The problem is compounded by the fact that it is not just the money spent on the training, but the value of the time an employee could have been spending in the workplace. The opportunity cost for a small business is huge.
Return on training and development spending is difficult to measure because of all the other factors that contribute to improved productivity or performance, especially in a manufacturing or warehouse environment, for example.
In a sales setting, other factors cloud the performance issue, such as changes to sales commissions or remuneration structures, improved promotional activities or even changes to products or sales channels. It is difficult to quarantine performance as it relates to staff development.
However, if you consider staff turnover and what this costs small companies, it could be that what you choose not to spend on staff development will be dwarfed by what you then have to spend on staff recruitment.
If staff leave because they were not growing in their position or felt they were in a dead-end job, you can start to calculate the true cost of not spending on their development when they are gone. So long as employees are likely to change jobs at any time, employers will question whether they should be paying for training. But the simple answer is that companies cannot afford not to.
Arguing the value of soft skills to hard-nosed business owners
There is plenty of statistical and anecdotal proof that the more engaged your employees are the more discretionary effort they will put into the business. There are many ways you measure employee engagement and many ways it can be improved. These drivers vary from business to business.
For example, ask a simple question such as: does my team supervisor deal with the poor performance of other staff? If the answer is no you will get lower employee engagement from everyone. Human nature says people will not work harder if they see others cruising along with minimal effort.
Hard-nosed small business owners need to monitor, and when necessary, do what they can to lift employee engagement and therefore improve the total effort people are willing to put into their business.
Developing soft skills among your employees may not produce an immediate or obvious benefit, but they are vital to the long-term health of any business.
Conclusion
It has never been more important for small businesses to invest in staff development. With the right people involved in the right programmes, success - and clear return on investment - is certain.
Time and money will remain significant barriers to small businesses wanting to provide professional development to staff. However, for companies that want to expand, the question is whether they can afford not to spend the money.
As the old saying goes: “If you think training is expensive, try ignorance".
