CB_Insights_052814

Businesses increasingly require employees to have strong literacy, numeracy and essential skills. But almost half of Canadians are ill-equipped to be their best at their jobs. Companies continue to devote little money to supporting and training them. This is a strategic oversight by companies like yours. New research shows that, when executed well, workplace literacy, essential-skills training and other initiatives can actually make you money.

One study, which looked at Canada’s hotel industry, found a 25% average return on investment for training programs, with some participating companies reporting returns as high as 300%. The research, conducted by Social Research and Demonstration Corp. (SRDC) for the federal government’s Employee and Social Development Canada, looked at direct benefits to business, particularly in improved oral communication and customer service. It found far-reaching benefits. “What’s surprising,” says David Gyarmati, research director at SRDC, “is that even adequately skilled people saw performance gains they wouldn’t have otherwise had.”

There are additional indirect benefits to businesses that undertake training in workplace literacy and essential skills (WLES): more customer satisfaction, productivity gains and fewer production mistakes. WLES underpins other, more complex skills, so if you organize formal or informal higher levels of training—such as quality-assurance systems or computer use—you could be missing out on the full value of those programs if your employees don’t have foundational literacy and numeracy skills.

What are workplace literacy and essential skills? Literacy and essential skills are the foundation for all learning, and involves not only reading but interpreting information in all forms.

What’s the problem here? According to the OECD, about 13% of workers are under-qualified for their jobs, significantly affecting productivity at your firm. Low literacy and essential skills is a compounding problem because low-skilled adults benefit less from other training that sits atop basic skills—and their skills remain weak or deteriorate over time. “Differences in the average use of reading skills explain around 30% of the variation in labour productivity across countries,” states the OECD study Skills Outlook 2013. In Canada, the opportunity to improve is immense—the number of people with inadequate literacy skills has increased to almost one in two the past decade. If you are facing challenges with WLES in your workplace, you are not alone, but you can profit from available resources.

Growth in the size of the national labour force—expected to increase by as much as four million people by 2031—won’t solve the problem. By that time, one worker in three may be foreign born, and many others will be 55 years or older. Both groups have special WLES needs. Skills proficiency falls off steadily for those in their 30s and older.

Why should you invest in WLES? Whether training is formal, extensive and delivered in a classroom, or modest, brief and embedded in the workplace, results have been impressive. In the SRDC study, the performance of 1,500 hotel-industry workers who received 20 hours of WLES training, was measured against workers who didn’t receive training. Where employers paid the entire cost of WLES training—$2,300 per employee, plus the cost of covering missed shifts—they enjoyed an average return on investment of about 27%. That includes both revenue gains of more than $2,000, and savings from improved productivity adding up to about $1,900. Employers saw increased customer satisfaction, room occupancy and food-and-beverage sales.

The study demonstrated impressive returns on investment and showed how to maximize benefits. Essential-skills training undertaken by engaged employers and employees, made just 20 hours of training effective for most participating businesses. “You can get short-term gain from modest intervention,” says Gyarmati.

While the SRDC findings translate most easily to companies in the service sector, bottom-line benefits from WLES training have been observed in other sectors too. A project by BuildForce Canada found that if employers spent $132.90 per newly engaged apprentice on essential-skills training, the return was $26.34 for every dollar invested, based on at least 80% of apprentices completing their employment requirements. (Results vary depending on the number of apprentices who finish their work periods.) One study suggested apprenticeship programs across a number of trades are more successful when tied to essential-skills training.

Are there other benefits? Rather than increasing the risk of losing skilled employees to competitors, research shows that WLES makes employees more likely to stay. A Wendy’s restaurant in Fredericton, N.B., credited WLES training for reducing staff turnover to between 65% and 80%, down from between 125% and 150% two year earlier, saving the franchisee $5,000 annually in new staff training. The SRDC study confirms that employees who had undergone WLES training were more likely to stay with their current employer, even a year later. And they continued to perform at a higher level than untrained peers; WLES-trained staff were 35% more likely to meet or exceed industry standards, could work with less supervision and made fewer errors.

In an increasingly competitive global marketplace, essential-skills training is not nice-to-have, it’s a must-have. “Employers don’t just want their employees to do the same job faster, they want them to do a different job due to changing technology, materials and structures,” says Nancy Jackson, a recently retired associate professor in Adult Education at the Ontario Institute for Studies in Education. “The majority of workplaces are now running quality assurance, whether it’s a hospital or a hotel or manufacturing operation, and they’re all done on paper or computer. You can argue that you don’t have to be able to read or write to clean a hotel room, but you do have to be able to read and write in order to document that work.”

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