Management

Human Resource Training and Development:

Expense or Investment?
Manal Khalil*
PhD, University Instructor, BCU

In the midst of the information age and globalization, job description and demands are constantly changing, bringing organizations to their utmost challenge: what should be done to keep a competitive advantage and be distinguished as pioneer leaders rather than mediocre achievers? The question might be answered in different ways. But let us take a shortcut and look at leading organizations in the world and ask: what are they doing

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differently? What is their critical success factor?

To remain competitive in a highly dynamic environment dominated by fast changing technology and globalization, organizations have turned into learning organizations; organizations that acknowledge and value continuous training and development (T&D) practice and take appropriate steps to initiate it. According to the American Society for Training and Development (ASTD), the annual spending on training and development by companies and other organizations rose to $955 per employee in 2004 from $649 in 2000, an increase of 47%. In addition, the annual average number of learning hours per employee that was 24 in 2000, reached 26 in 2003, and 32 in 2004. The result is that training and development budget in corporate America gobbles up to 2.25 to 3% of payrolls every year, with BEST award winners raising this up to 3.2%. The British Chartered Institute of Personnel and Development
* manalekhalil@hotmail.com

reported in its 2005 report that the private sector expenditure on T&D was 1,001,213, with an average annual period of training per employee totalling to 6 days and costing 817.37 per employee. Moreover, the British public sector annual expenditure was 377,254, with a cost of 414.43 per employee and a 6day training period as well.

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Human resource development is a concept broader than training.

Training refers to instruction provided for a current job. It has a rather narrow focus and should provide skills that will benefit the organization rather quickly. The financial benefits to the organization will usually occur quickly. Development, on the other hand, has a broader scope and may not be focused on either the present or future job but more on the organizations general long-term needs. The payoff is less direct and can only be measured in the long term. Yet, the two terms are sometimes used interchangeably.

The goal of training and development programs is not restricted to maintaining or improving the performance of individuals, and, in doing so, that of the organization; But the vital goal remains to turn employees into continuous learners and re-learners. Leading business companies have appointed a Chief Learning Officer (CLO) to confirm the strategic view of training and development. Training and development methods and media are numerous: from classroom programs, and videotapes, to tuition assistance programs, for which American corporations spent $20 billion in 2005, to desktop conferencing and virtual reality. Some large companies have chosen to design and build elaborate employee training centers called corporate universities, which offer a variety of training courses in all types of areas. Most of these companies recruit and select university graduates into their training and development programs. They would groom a human capacity endorsed with both aca-

demic basis and required competence for success. So, what they are actually doing is incubating potential capabilities to see them grow into future business leaders and proficient staff members. Some of these centers are so well established, such as Home Depot, that the American Council on Education (ACE) recommended them for undergraduate college credits. Other companies have chosen to get into a partnership relation with renowned universities to train and develop their human resources. They work jointly to develop customized and innovative programs to fit business needs. Substantiating the importance of training and development is easily said than done. It cannot be confirmed until organizations change their perception about the issue from viewing T&D as expenditure to long-term investment in their most important asset: the human capital. Training and Development should be perceived as a preemptive strategy to save in terms of future wasted productivity and results.

Company Wal-Mart Retail

Industry

Training and Development facility and facts Wal-Mart University The worlds largest corporate training program with operations reaching 1,000 employees daily and an operating budget of $24 million.

General Motors

Automotive

The GM Service Technical College (1999). 2007 winner of the Optimas Award for Financial Impact.

Goldman Sachs

Financial service

Goldman Sachs University. 2007 winner of the Optimas Award for General Excellence.

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McDonalds

Food

Hamburger University (1961). Number of graduates per year: 5,000 restaurant managers, midlevel managers, and franchise owners.

Intel

Technology

Intel University. In 2005, T&D budget: $377 million.

Disney

Entertainment

Disney Institute offering courses in people management and customer service. The Ritz-Carlton Leadership Training Center. Partnership with Kaplan University, Strayer University, and Capella Corporate training courses are turned into college credit.

Ritz-Carlton Home Depot

Hospitality Home improvement retail university.

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How companies deal with Training and Development:

Management