Why slashing your training budget during an economic downturn may not be the best decision, and how some electrical engineering and contracting firms are resisting the urge to cut spending and ramp up training efforts instead
Despite the slowdown in construction caused by the U.S. economic recession, Jackson, Mich.-based engineering, consulting, and construction management firm Commonwealth Associates is in the second year of a two-year expansion of its training and professional development program. “We're going like gangbusters,” says Dennis DeCosta, P.E., president of Commonwealth Associates. “We've identified a core group of skills that we want to build into our people. The next wave is building in a particular set of technical skills.”
This year, the company's employees will have an average of 80 hours of formal training available to them, which includes license and certification maintenance as well as professional development for each employee at every level of the company. “We're really trying to have a broad-based training and development curriculum that helps all of our employees simply do things better — whether it's an admin learning the latest new software, our accounting department learning an expedited way to automate their side of the business, or project managers leading and directing projects,” DeCosta says.
For Commonwealth Associates, training and development is a long-term investment, one that reaches beyond the current economic situation. “The real payoff is five to 10 years down the road,” DeCosta explains. “Hopefully, that training will allow us to continue to do excellent work in the future and maintain our good reputation so we keep our repeat business.”
Contrary to the Commonwealth Associates' plan, a ramped-up training budget is rare during a time of recession. In a recent survey of 300 mechanical, electrical, facilities, utilities, and plumbing professionals conducted by MEP Jobs, an Urbandale, Iowa-based online job board and resume bank for professionals in the mechanical, electrical, and plumbing industries, 15% percent of respondents said their company's training budget has decreased for 2009, while almost half said their employer does not have a training budget (Fig. 1). “Like many areas of business, training initiatives are seeing budget cuts,” says Jeff Dickey-Chasins, VP of marketing for MEP Jobs.
However, cutting training budgets altogether may not be the most prudent action during a recession. (For tips on training on a tight budget, see Recession Training for the Manufacturing Industry). Layoffs and downsizing often put the remaining employees in new situations with additional responsibilities, and they may not have the know-how or natural ability to succeed, which could put your business in even more danger. “When those internal changes take place, there's a significant risk that the people are being placed into positions that they're not capable of satisfactorily performing,” says Manny Avramidis, senior VP, Global Human Resources, American Management Association (AMA), the New York-based management training and professional development organization. “It's critical that you train the people who are left behind because when this is all said and done, it will be those people who get you through these difficult times.”
Additionally, adding new equipment and services to your firm's list of offerings may be a way to build a competitive edge. “As contractors start dealing with new technologies or exposing new people to new technologies, some training is going to have to continue,” says Bob Baird, VP for training and development for the national IEC program based in Alexandria, Va.
Furthermore, the slowdown in projects may provide the time and opportunity for additional classes and seminars or even a mentoring program now that the schedules of the more experienced workers have eased up a bit. “There's certainly no better time to regroup the troops and train them when they have some time from a slowdown on the business side,” Avramidis says.
Finding time for its most trusted workers to take time off for training is one of the biggest challenges of Commonwealth Associates' intense training program. “We keep our best people pretty busy, so trying to break them loose from projects to do teaching can be difficult,” DeCosta says.
Therefore, taking advantage of a slowdown by offering training is one way to keep your workers busy when there isn't a job site to go to. “It's allowing them time to come to training guilt-free,” says Reina Mora-Blackwelder, executive director of the Florida West Coast chapter of the Independent Electrical Contractors (IEC), Clearwater, Fla. “It's a wonderful opportunity for them to come.”
In tough times, it seems that the firms still allotting time and money to training focus on fundamentals. “During this time, people are usually only trained in their technical skills,” Avramidis says.
Accordingly, required continuing education and license and certification maintenance are at the forefront of most curricula. “I can easily say that with the uncertain economy, people are being cautious,” Baird says. “But there are ongoing state requirements in many locations for continuing education in order for people to maintain their licenses. In those cases, people have to have that training.”
In Connecticut, for example, the state requires all license holders with a Connecticut license to have seven hours of education annually in order to renew their license.
Recently, the Georgia IEC chapter has concentrated its curriculum on specific state requirements, such as license renewal, Soil and Erosion Certification, and OSHA 10 and 30. The state recently adopted the 2008 National Electrical Code (NEC), which went into effect on January 1, so the organization is providing classes on those changes. In addition, the chapter is making a concentrated effort to provide training that may have an effect on its members' bottom lines, preparing classes on the Employee Free Choice Act (EFCA) and on a new lien law, which will go into effect in March.
“We're really trying to stay close to what's important to operating their business,” says Niel Dawson, executive director for IEC's Atlanta and Georgia chapters. “Now is the time to hone your workers' skills if you want them to be more productive. Margins are tighter than ever, and there's more competition, meaning your workers have to be more productive than ever. You need to keep that productivity up.”
Out of pocket
According to Dawson, the recession has had more of a depressing effect on higher-end training, such as foremen and management training, than on general workforce training. “On the higher end, you have fewer people to draw from — it's not as tactically oriented,” he explains. “The cost to bring in a trainer for that level of training is usually $6,000 for the day. If I only get 20 people, then you divide 20 into $6,000 and that's $300, which hasn't paid for the travel of the trainer or any of our overhead. Sometimes, we will run a class at cost, but that still means the class has to be $300 — and that's pricey.”
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In addition to the class fee, the companies also pay workers their hourly rate while at training and suffer the loss of productivity. “You have to factor those three things into the cost of any training,” Dawson continues.
In comparison, a typical 4-hr class on the low end costs around $65. “We really keep an eye on price points,” Dawson says. “If you start to go over $300, people are going to start thinking twice about sending a person to that training.”
But not all training courses are employer-paid. In response to tighter competition, many workers are paying for their own training out-of-pocket. Additional results of the MEP Jobs' survey indicate that 55% of respondents funded their last professional certification training and testing costs on their own. This rate is much higher for electrical workers, with 75% paying out-of-pocket for their own professional certification training and testing costs, according to Dickey-Chasins. “Most people in the market are looking around and asking, ‘How can I stay competitive as an employee?’” he says. “One of the ways to do that is to build up your certifications and experience.”
Beyond requirements, many companies will be forced to train their workforce in new skills, both technical and managerial. Downsizing will require some workers to take on added responsibilities or perform new tasks. At AMA, a recent uptick in students has come from employees with newfound responsibilities caused by the structural reorganization of their companies. “Their organizations have tweaked things a little bit behind the scenes, which means they have to learn how to budget, how to supervise, how to manage projects, and how to negotiate,” Avramidis says. “They may even have to learn how to launch a career in sales or marketing.”
In these cases, the expense for formal training may be a great investment against the lows of the recession, creating a leaner, stronger organization. “They're coming to us not to brush up on their skills but to learn new skills and return back to their workplace capable of doing the job they've been asked to do versus trying to figure it out on their own and increasing their risk of doing something very wrong,” Avramidis says. “Formal training for these positions can be better, faster, and sometimes even cheaper than trying to learn something on your own. The value that you get in spending a couple of dollars far exceeds the expense.”
Optimistically, some firms have acquired new equipment to offer additional services to their customers, making it necessary for employees to be trained on the new equipment and processes. IEC member contractors in Florida have requested classes in different skills and niches. According to Mora-Blackwelder, many residential contractors have created service departments to add work. “The residential guys have really been enhancing and building up their service departments,” she says.
Remarkably, many master electricians and business owners in that area have also asked for classes on green technologies and retrofitting for energy efficiency. In the MEP Jobs survey, 30.4% of respondents plan on taking a training course in green technology, and 27.3% of respondents will take a course in solar installation or service (click here to see Fig. 2). “These guys are in their 50s and set in their ways,” Mora-Blackwelder explains. “It's harder for them to want to embrace something new, but I'm finding that they are. When there isn't going to be new construction, there are lots of opportunities for refurbishing or retrofitting, and so they're asking for this type of training.”
Similarly, some IEC members in Connecticut have requested classes on photovoltaic (PV) technology. “We had a dinner meeting the other night with PV as the topic, and the attendance was really good,” says Lisa Hutner, executive director of IEC New England, Hartford, Conn., and Connecticut State Apprenticeship Council memberHartford, Conn. “We're going to have a full-day program on this topic. They have the time now to do something like this. Before, they were too busy to learn something new or research it. But now they have a little extra time.”
Although Bloomington, Ill.-based engineering and architectural firm Farnsworth Group has not had to downsize or reduce permanent staff, there was concern about being able to hire back its summer interns, so it purchased new equipment to provide additional services to its clients. “With the added work from the new equipment, we thought we might be able to keep our people busy, plus be able to rehire our summer interns again,” says Richard Suhadolc, P.E., engineering manager/chief electrical engineer at the firm.
On average, the eight technicians and 10 engineers at the company receive 120 hours of training a year. This year, in addition to required license maintenance, much of that time will be focused on learning how to use the new equipment, which includes an infrared (IR) camera, power analysis equipment, programmable logic controller (PLC), and software services. “We're increasing our 2009 training budget because of this new equipment so we can provide more services to capture more of the market share in the electrical field,” Suhadolc says. “Our board of directors decided it was finally time to implement some of this with the added business.”
An unintended side effect of the recession is that the slowdown in construction it caused may actually stave off the employee shortage the industry was close to facing in the next few years. However, even with 50% cuts in their 401(k)s, the baby boom generation will still begin to retire in large numbers within the next few years. This has many firms concerned about succession planning. “The question is ‘How do they pass their knowledge on?’” asks Avramidis.
An inexpensive way to impart legacy knowledge from experienced workers to new employees is to set up an informal mentoring or coaching program. “There's a simple way of doing it by saying ‘Okay, the junior people will report to the senior people, and we'll hope it all works out,” Avramidis says.
But there may be significant challenges to that program. Occasionally, senior employees don't want to part with their knowledge because they feel threatened they may be pushed into earlier retirement. In addition, the generation gap accounts for differences in learning styles (See Whose Online Is It Anyway?). “Sometimes, the senior people simply don't understand how the younger generation learns versus how they learned when they were coming up through the ranks,” explains Avramidis.
Consequently, a more formal plan for internal knowledge management, including inter-generational knowledge transfer, may have more success. Many organizations, including AMA, offer a succession blueprint for businesses that comprise 50 or more employees. “There are formal programs on how the younger person learns through the senior person — and how the senior person can best teach and try to overcome the generational differences. For the senior employees, these help assuage the uncertainty about their own career and what it means if they impart all their knowledge on someone who's earning half their salary,” Avramidis says.
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On top of the increased formal training Commonwealth Associates is offering its employees, the company has started a mentoring program designed to impart the knowledge of its veteran workers to its new recruits. “That's probably one of the most effective forms of training,” DeCosta says.
Until recently, there was very little recruitment in the firm's energy delivery market sector. “In this business you either have gray hairs and 30 years of experience or you've got less than five years,” DeCosta says. “There's a big gap in the middle where we lost a whole generation. That's one of the reasons why training is so important to us because as an industry, we've not been doing it for 20 years. Now it's catch-up time. We've got to start building our people and focusing on their development. For us, it's a matter of bringing new people into the business and teaching them how Commonwealth does things and teaching core technical skills, too.”
Honing fundamentals, learning new skills, and retaining legacy knowledge are all part of deciding on the extent of cuts to your training budget. Focusing on what will keep you afloat in the present should be balanced against what will help you flourish once the recession ends. “You have to keep an eye on when this will end so you can position your organization to be well-equipped with the right skills and knowledge to take advantage of the upturn when it does come,” Avramidis says.
Sidebar: Recession Training for the Manufacturing Industry
In his article, “Recession Survival Tips for Manufacturing Industry,” author Don Fitchett advises the manufacturing industry that even in a recession, when budgets are tight, training is still important to secure the future of the industry, particularly as it deals with the retirement of the baby boom generation. Following are some of his solutions for stretching a training budget during tough times:
Check with your local Private Industry Commission or employment office about receiving federal reimbursement under the Workforce Investment Act of 1998, which is typically managed and authorized by each state. Reimbursement often ranges between 60% to 100%.
Send one or two to a workshop/seminar as part of a train-the-trainers program.
Consider an online training course.
For budgets less than $1,000, consider purchasing simulation training software.
To read the full text of the article, including more training tips, visit the Business Industrial Network's (BIN) Web site at http://www.bin95.com/Training_Recession.htm.
Source: Business Industrial Network
Sidebar: Whose Online Is It Anyway?
The U.S. Department of Labor recently recognized online training in apprenticeship programs as part of an ongoing effort to provide training opportunities that are more accessible, affordable, and available to more people. The incorporation of Web-based learning, including satellite broadcasts, may also be a way of enticing younger workers to take up the training.
Although many of the online apprenticeship courses are in the development stages, currently there are many required continuing education classes available online, particularly those without hands-on or more technical components. However, according to a recent survey of 300 mechanical, electrical, facilities, utilities, and plumbing professionals conducted by MEP Jobs, an Urbandale, Iowa-based online job board and resume bank, 41.4% of respondents indicated their company will spend its training budget dollars on classroom training, whereas only 19.4% report their company will spend its training budget dollars on Web-based training. “Obviously, you have to have some hands-on training for some of these things; there's just no way around it,” says Jeff Dickey-Chasins, VP of marketing for MEP Jobs.