Wednesday, August 07, 2013

Properly Trained Workforce Strategic Advantages


EDMONTON, AB, Aug. 3, 2013/ Troy Media/ – Intuitively most managers know that training is important. They just don’t want to pay for it. In fact, training budgets are an issue that we often hear about from managers with overly focused operational objectives. They are motivated to find and deploy workers onto job sites as quickly as possible without considering the potential impact of quality training.

The business model concept illustrates the relationship between strategy, operations and value. Long-term strategy identifies a company’s customers, products and services. Operational goals are required to achieve strategic goals and address issues such as people, capabilities, corporate culture and processes. Ultimately a company with effective operations driven by a sound strategy will be able to achieve value in the marketplace. Executives then need to monitor and adjust strategy and operations to maximize value (Read How to Design a Winning Business Model)

Service companies in the oil and gas industry compete based on their ability to find people to work in difficult conditions, to offer accident free services, and to bill at competitive rates with predictable results. The most successful service companies recognize that trained workers are the key to achieving these strategic goals. Hiring new untrained workers on a daily basis and putting them to work as soon as possible is an operational requirement in this industry; however, training and retaining knowledgeable, loyal employees has many more advantages that directly impact a service company’s competitiveness.

While employees receive safety training because it is required by law, formal training to achieve efficiency and effectiveness is often not undertaken because of the perceived added expense and time requirements.

This is short-sighted: in the long run workers who know how to be safe, efficient and effective add more value to a company than workers who don’t. In other words, training adds strategic value even though the cost benefit might not be apparent to the operations people.

I had an interesting conversation with a safety manager recently about how he is often viewed on job sites as the “bad guy” enforcing safety procedures and ensuring everyone gets proper training. His role is perceived as detrimental because, for operational managers, there is no immediate gain by the additional time and expense burden imposed on their operations. My safety manager friend noted, however, that when an accident occurs he suddenly becomes the most important guy on the site.

An insufficient trained workforce can be very costly to a company for a variety of reasons. First, accidents are expensive. In the service rig industry, each incident has an average cost of $100,000. And that doesn’t include the many other intangible costs that can impact a company, including loss in productivity, feelings of mistrust, loss of confidence, loss of loyalty etc.

But based on actual field data, companies that have instituted formal training have experienced accident reduction rates of over 40 per cent. And the benefits of this training extend well beyond safety. Healthy, happy and loyal employees create the business edge that companies need to be competitive. This translates into a direct strategic advantage.

Training for semi-skilled workers, however, should go beyond safety issues and focus on efficiency and effectiveness. New workers on a job site are unfamiliar with procedures, terminology and the work processes of their coworkers. While many managers consider on-the-job training adequate, the fact is that workers lacking knowledge contribute to inefficient operations and they are the most likely workers to quit. Industry average turnover for rig workers is over 50 per cent while companies with effective training programs experience turnover rates below 10 per cent. This retention rate translates into a huge cost savings, which is not immediately appreciated by operations managers.

All companies employing semi-skilled and skilled workers need to pay more attention to the strategic advantages that are achieved when employees are safe, efficient and effective in their jobs. Trained workers produce better product, in shorter periods of time with less down time than untrained workers. The short-term loss in productivity and billable hours required for training is more than offset by the huge strategic advantage of exceeding industry average production rates, maintaining loyal staff and eliminating down time.

Bruce Matichuk is the CEO of Coole Immersive Inc., an Alberta-based training products company serving the oil and gas industry.

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