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NATIONAL WORKFORCE ASSISTANCE COLLABORATIVE
Employee Training Briefing Paper
DEFINITION
Technical training is training designed to improve the ability
of individuals to meet job requirements. It differs from
educational programs in that it is directly tied to job performance,
not the ability of an individual to be a better member of society or
a more well-rounded person. It presumes workers have adequate basic
skills to support their performance on technical, job-related tasks.
In practice, however, the distinctions between literacy/basic skills
training and technical training become blurred, particularly in
high-quality workplace literacy programs that teach literacy through
the functional context of the job, and high-quality technical
training programs that integrate literacy and skills training.
Definitions of technical training vary widely. Some experts,
such as Anthony Carnevale, define it narrowly to include only the
training to develop, install, and maintain new technology. Federal
policy makers tend to define technical training as any training
designed to improve a worker's performance on the job that is not
literacy/basic skills training. This latter definition could
include technical and skills training; professional training;
training to meet regulatory requirements placed on the workplace;
customer interface training; and managerial, supervisory, and
executive training. The National Workforce Assistance Collaborative
must determine whether it wants to provide assistance in all of the
areas encompassed in this broad definition, or whether it should
focus on some subset of these areas that is key to improving the
competitiveness of small and mid-sized businesses.
Recent estimates suggest that employers spend from $30 to $48
billion per year on training activities, excluding the considerable
amount of training provided informally on the job. Analysis of
training expenditures show that training occurs predominately in
large companies (over 1,000 employees), with only insignificant
training investments being made by small and mid-sized businesses.
Just 15,000 employers (0.5 percent of the total) account for 90
percent of the $30 billion spent on training annually, according to
the American Society for Training and Development (ASTD).
MARKET STRATEGY
Historically, the customer for technical training has been the
employee, not the company itself, and technical training has been
largely employee-driven. Among small businesses, the market demand
for technical training is driven first and foremost by changes in
technology, and secondarily by customer requirements placed by large
companies on their small and mid-sized suppliers.
The impact of technology on training in small and mid-sized
businesses is mitigated by the fact that, as a nation, we under-
invest in technology and equipment compared with other countries,
and train insufficiently for the equipment we do purchase. Our
investment in technology and equipment is half that of the Japanese,
and only two-thirds that of the commitments among the G-7. Where
numerically-controlled machine tools are installed in the U.S., only
25 percent of workers are trained in their use, as compared with
virtually 100 percent in Japan.
To maximize the competitiveness of American businesses, we must
stimulate increases in both technology investments and the training
investments needed to assure that the technology is optimally used.
The gap is massive between the level of technology-related training
provided currently and what would be needed if we invested in
technology at the levels of our international competitors.
Few employees outside companies with over 10,000 employees get
training. Only 16 percent of American employees have ever had any
training from their employers. The good news is that this
percentage is on the rise: in 1983 the Bureau of Labor Statistics
reported that only 11 percent of employees received formal training
from their employers. ASTD estimates that, by the year 2000, 23
million people will be employed in professional and technical jobs
that will require ongoing training. An additional 50 million
workers, it says, need additional training just to perform their
current jobs effectively.
Typically, workers at firms with fewer than 100 employees have
greater training needs than those at larger firms, because they tend
to be less well educated and have a less stable employment history
than do workers at the larger firms. However, small firms are less
likely than larger firms to provide structured training because they
have higher labor turnover and less access to capital to finance
training. They are also less likely to participate in subsidized
training programs because they frequently lack awareness about such
programs, and lack the capacity to handle the administrative
requirements associated with such programs
PRODUCTS AND SERVICES
The technical training needs of small and mid-sized businesses
are currently being met through technology vendors, community
colleges, training consultants, industry trade associations such as
National Tooling and Machining Association, and training consortia
such as the Consortium for Supplier Training. The training needs of
individual employees may be met through proprietary schools or adult
basic education programs as well.
Although the largest provider of incumbent worker training is
the community college system, anecdotal evidence suggests that
equipment vendors are the predominant training providers for small
businesses. In addition, some large companies provide training to
their small company suppliers.
Communications among service providers generally are segmented
by the type of provider. That is, in-house trainers communicate with
each other, community college personnel communicate with each other,
etc., but rarely do the communication lines cross provider lines.
In the typical, small, family-owned business, training is
generally provided to the owner and the other family members who are
a part of the business. The family then in turn trains the rest of
the employees, so that the core knowledge is kept in the family.
The training needs of employees at other types of small companies
are usually met by supervisors or co-workers informally teaching new
hires (Office of Technology Assessment).
Traditionally, federal programs in employment and training have
provided skills training to those outside of the workforce: the
unemployed, the dislocated worker, and the future worker. Only
recently have federal industrial modernization policies created
explicit, though largely unfunded, links to training investments,
through Manufacturing Technology Centers and the Technology
Reinvestment Program in particular.
The federal government has also funded incumbent worker
training through adult basic education, a very fragmented system.
In 1991, the federal government sponsored 78 separate adult basic
education programs through 12 different federal agencies (Jobs for
the Future).
The states have been more active in this arena, though the
level of their investments is still very small. Seventy state-
financed workplace training programs are run in 46 states, according
to the National Commission on Employment Policy. States spent a
total of $375 million on workplace-based training programs in 1989.
The highest funding levels reported were in California ($55
million), Illinois ($37 million), Ohio (32 million), and Michigan
($25 million). The "typical" (median) state devoted less than $2.5
million to these programs and served fewer than 4,000 employees.
A 1990 study by Northern Illinois University found that most
state programs were serving small and mid-sized businesses. Only
one state program (out of 45) reported spending 70 percent or more
of its funds on companies with 500 or more employees. In contrast,
seven spent all of their money on small to mid-sized companies
(those with fewer than 500 employees), 11 spent 90 to 99 percent of
their money on small to mid-sized companies, 16 spent 65 to 89
percent on small to mid-sized companies, and 6 spent 31 to 64
percent on small to mid-sized companies.
Nevertheless, the administrative burden of applying for state
funds might be excessive for many small and mid-sized companies.
According to Northern Illinois University, many large states work
through umbrella organizations such as community colleges and trade
associations to address the common training needs of small
businesses.
RESEARCH AND DEVELOPMENT
Research resources in the training field include the American
Society for Training and Development, The Modernization Forum, the
Committee on Postsecondary Education and Training for the Workplace,
the Center for Science and Technology Policy, the AFL-CIO, and the
American Association of Community Colleges.
National research is housed in the U.S. Department of Labor,
the Department of Education's Office of Vocational and Adult
Education, and in the military. State and local governments
generally have information on state or local labor market
requirements for training and area training providers.
Little cross-cutting research exists on the training needs of
small employers. Most of the existing information is anecdotal at
best. There is a great need for quality research that goes beyond
case study examples of training in small and mid-sized businesses.
Perhaps the best information can be obtained through state
customized training programs such as Illinois' Prairie State 2000
and California's Employment Training Panel, state economic
development offices, and trade associations.
Further attention also should be paid to the development of
collaborative networks that allow businesses to share costs. The
Consortium for Supplier Training represents one model. The school-
to-work demonstration programs offer other models of small business
collaboration, as do the training programs offered by the National
Tooling and Machining Association.
Little attention has been paid to the use of loans to
individuals or institutions to encourage work-based learning. This
area of inquiry, including methods for linking such training to
workplace needs, merits more attention.
ORGANIZATION AND MANAGEMENT
Anthony Carnevale characterized the organization and management
of the technical training "system" as a "crazy quilt." The
technical training field has no clear boundaries, potentially
including such disparate disciplines as organizational training,
technology-related training, skill training, customer interface
training, strategic training, professional training, and regulatory
compliance training.
Training providers range from in-house trainers, equipment
vendors, large customer companies, and consultants, to community
colleges and universities, industry trade associations, and training
consortia. The training needs of individual employees may be met
through proprietary schools or adult basic education programs as
well. These diverse training providers remain relatively
segregated, with little cross communication across the provider
categories.
Much of the current training system is geared to providing
services to individuals, and not companies. This focus needs to be
shifted if technical training is to have a meaningful impact on the
productivity of small and mid-sized companies.
FINANCIAL INFRASTRUCTURE
By and large, training services are provided to those who can
pay, and those who can pay are primarily large businesses. However,
there are a number of strategies small companies with small training
budgets can use to reduce their costs for training.
Small and mid-sized businesses can form collaborative networks
with employers with similar training needs and share training costs.
They can apply for grants from government training agencies and
obtain assistance from the technology programs that are trying to
integrate training into their technology assistance efforts. And,
by accessing community colleges and participating in school-to-work
programs, small and mid-sized businesses can have some of their
training costs subsidized by the public sector.
Much greater attention needs to be given to developing
mechanisms to allow and encourage small and mid-sized businesses to
share training costs by collaborating with the public sector.
INTEGRATION
There are stellar examples of technical training being
productively integrated with workforce literacy, work restructuring,
and labor-management relations programs. However, the vast majority
of technical training service providers operate separately and
distinctly from service providers in the other fields.
The division between technical training and workforce literacy
is blurred in functional context workforce literacy programs and in
integrated literacy and skill training programs. In the large
majority of cases, though, workforce literacy programs and technical
training programs are developed and delivered by different service
providers with little or no connection to each other.
Technical training can also be integrated into comprehensive
work restructuring programs involving the redesign of both work
processes and employer-employee relationships. In such instances,
technical training is used to provide employees with the skills
needed to operate productively within the new systems.
Because there is some overlap in the institutions that provide
technical training services and workforce literacy, work
restructuring, and labor-management relations services (e.g.,
community colleges and universities), there is great potential for
breaking down the barriers between disciplines and providing
comprehensive services to small and mid-sized businesses.
EXTERNAL ENVIRONMENT
The Clinton Administration has shown great interest in
determining an effective means for increasing employers' investments
in training. Initial discussions focused on the use of tax credits
or tax levies (such as France's mandate that employers spend 1.7
percent of payroll on training). Currently, employers spend 1.02
percent of payroll on training, with companies considered training
leaders spending 3 to 10 percent of payroll. The administration is
now considering a strategy to encourage employers to voluntarily
increase their training investments.
Both the Clinton Administration and state policy makers have
taken a keen interest in measuring the returns to training. The
Department of Labor's Office of the American Workplace is funding
several projects on performance measurement. Motorola, commonly
acknowledged as one of the leaders in corporate training, reports
that every $1 it spends on training yields $30 in productivity gains
over a three year period. However, the research on the "pay-off" of
training is meager at best; it dwindles to nearly nothing when the
focus is exclusively on small and mid-sized businesses.
Another area of interest is in establishing common definitions
and measures for training and training outcomes. There is an inter-
agency effort underway to create core data elements and common
definitions for employment and training programs. A report should
be forthcoming in a few months. The National Institute for Literacy
has a project to develop national performance standards for literacy
programs. There will also be an initiative to develop performance
standards in conjunction with the new welfare reform legislation.
The Goals 2000: Educate America Act calls for the development of
both academic standards and industry/occupational skill standards.
ASTD has created a Benchmarking Forum composed of training leaders
attempting to benchmark their training practices and processes.
A number of the federal initiatives, most notably the School-
to-Work Opportunities Act and the Goals 2000 legislation,
demonstrate the federal government's keen interest and commitment to
work-based training strategies that involve collaboration between
the public and private sectors. A number of demonstration programs
were funded, and their experiences were used to inform the
development of the national legislation.
CRITICAL ISSUES
1. What categories of training should the Collaborative focus on
in order to most effectively enhance the economic competitiveness
of small and mid-sized businesses?
2. The paper makes the point that the current delivery systems for
technical training are focused at the individual level, not the
firm level. While the firm focus allows for a greater alignment
with company-specific objectives, it may not be cost effective
for small and mid-sized businesses. How can the Collaborative
help service providers meet the company-specific training needs
of small and mid-sized businesses in a cost effective manner?
3. How can the tie be strengthened between employee-initiated
training and workplace demands?
4. How can the Collaborative build on the institutional overlap
among technical training service providers and workforce
literacy, work restructuring, and labor-management relations
service providers, to promote the development and delivery of
integrated services for small and mid-sized businesses?
5. Modern competitive performance standards require quality,
efficiency, variety, customization, convenience, customer
service, speed, and continuous innovation (Carnevale). These
are standards that businesses apply when making a training
investment. How can these standards be met given the limited
training resources of small and mid-sized businesses?
5. The business community is not supportive of either training tax
levies or tax credits as a means to encourage increased private
sector investment in training. How can the Collaborative
encourage private sector investment in training?
Louise Bertsche
National Alliance of Business
Matthew Coffey
National Tooling and Machining Association
.