What was Tom Henderson doing immediately before he started his research? When calculating the cost of in-house training, many s

F: With me today is Tom Henderson from ECN University. Welcome! Tom.
M: Thank yon.
F: Tom, you recently did a large research study on training in small business concerns. What made you focus on small business concerns? After all, most of your experience has been with the huge multinational, DCF. And in fact you eventually ran their training. department, didn’t you?
M: Well, you are partly right. You see, when I joined the university a year ago they wanted me to start a training program for small businesses. I’d just sold my own small business, Which I’d started when I left DCF. The 8 years I ran my own business which taught me more about training than all my years with DCF. But I felt I couldn’t base a training program on my experience alone. So I decided to do research first.
F: And how much training did you find in most small companies? Can they afford to do much training?
M: Well, firstly small businesses are often accused of not doing enough training. But that is the opinion of big businesses of course. It’s true that the government is encouraging small firms to increase their training budgets. They’re trying to introduce financial assistance for this. But I have to say I find lots of training going on. The real problem is that most small businesses don’t always know how much training they’re providing or how much it’s actually costing them.
F: But surely businesses have budgets and training records.
M: Unfortunately most small companies don’t set aside a specific training budget. It’s not that they don’t want to spend the money but that they operate differently. You see, things change very quickly in small firms and it’s impossible to predict the training needs. An employee can be moved to a new project very suddenly and then training has to be organized within days. And most small businesses prefer to use their experienced staff to do any training on the job.
F: Did you manage to work out the costs of training?
M: Well, it took time to work out the indirect costs. You see, most small business managers don’t include these costs in their calculations. Most of them keep records of obvious expenses, for example, many expenses like external courses, travel, training manual, and videos, etc. But not many firms have specific training accounts and they don’t include the time managers spend on training, waste of materials, loss of productivity and so on. I spent hours with company accountants trying to see where these hidden costs were.
F: How much are small firms spending on training?
M: More than half of the businesses I surveyed spent at least 1% of their annual salary bill on training. And some of these spent up to 5% of their payroll. In fact smaller firms are investing on average over 10% more in training per employee than larger firms.
F: How good is that training?
M: As I said, small firms usually get an experienced employee to show new staff how to do that job. This can be useful if the person is carefully selected and well-trained himself. But it’s not really enough. The trainee needs to do the job with the experienced employee on hand for guidance and feedback. This gives trainees much better skills than any packaged courses.
F: And has your study helped you plan new courses for small businesses?
M: Definitely. I now understand what they want and how they want it delivered. I now know that small firms were only investing in training if it immediately helped their enterprise. But most formal training focuses on long-term business needs. Most small businesses can’t plan far ahead. They want direct results from training in skills they need now. New technologies and IT skills are identified as a priority by all the firms I surveyed.
F: What is the first course the university offers to small businesses?
M: Up till now most of short courses for companies in general have dealt with helping businesses grow. These aren’t really appropriate for small companies as growth can he very risky for them. They obviously need to grow but they’re afraid of fast growth. I’m going to start with courses on IT and software the small companies are likely to require because of the business growth to come later.  And they’ll need to be changed to be more relevant to small businesses.
F: Well, I wish you every success with the course.