Firms Boost Training To Match Competitors

COMPANY-BASED TRAINING

IN his nine years with Xerox Corporation, technician Peter Brown has seen copy machines change dramatically.

"These machines are much more complicated," he says as he examines a model 5100, which users operate by touching the screen of an on-board computer.

In May Mr. Brown spent three weeks in Xerox's Leesburg, Va., training center learning how to repair the new machine.

Xerox spends $250 million or more each year on training, an amount equal to 4 percent of its payroll. But while a few companies have developed top-flight training programs, many companies give their workers little training or ineffective training, experts say.

American companies spend an average of 1.4 percent of payroll on formal training, according to the American Society of Training and Development (ASTD), which represents training professionals.

"You should always spend at least 5 percent of your gross salary on training," advises Hermann Schmidt, executive director of Germany's Federal Institute for Vocational Training, who addressed executives and educators at a recent conference in the United States. IBM Corporation is one of the few US companies that spends that much.

The ASTD estimates that unless US businesses boost their education efforts, some 50 million workers who need training during this decade will not receive it. Citing needs for basic skills, technical skills, and training in customer service and management, the organization launched a program in 1990 to boost corporate spending from an annual level of $30 billion to $44 billion, or 2 percent of payroll.

Increased competition is clearly pushing some companies to emphasize work skills. Polaroid Corporation and others are developing pay scales based on what workers learn.

For Xerox, which has long invested in its people, Japanese competition added intensity to the program. In the 1970s and early '80s, "Xerox nearly lost an industry that it created," says company spokesman Jeff Simik. But in 1983, the year Brown joined the company, Xerox started a "leadership through quality" program that helped get its business back on track.

Brown receives regular training in customer service and quality as well as training to upgrade his technical skills.

"They want you to think like it's your business," he says.

The company is marketing its training expertise to outsiders, in addition to using it for its own employees, says Gary Aslin, director of the Leesburg center. Xerox has provided courses in areas such as quality and sales to some of its suppliers and distributors, as well as to clients in the commercial printing industry, he says. The Virginia public school system is another customer.

The center can provide a week of training plus room, board, and other amenities for just $1,500, Mr. Aslin says.

But the Leesburg center only makes sense if employees require a week or more of training. Brown has been to Leesburg only twice since 1983, but he also gets occasional classes from instructors at a regional training center near Boston and from interactive video courses.

Aetna Life & Casualty, which has its own 300-bed training facility in Hartford, Conn., is trying to push more of its education into the workplace, where employees can immediately apply what they learn. "It's hard to duplicate an individual's work environment in a sterile situation," says Peter Elliott, an instructor with the insurance company.

While large companies like Xerox and Aetna often have their own in-house training programs, firms also turn to outside suppliers such as consulting firms and community colleges.

David Johnston, managing director of Kepner-Tregoe, has seen his firm's training consultancy reach $40 million a year, twice what it was eight years ago. The firm helps companies develop problem-solving skills.

Ten years ago, a prevalent attitude on shop floors was "you leave your brain at the door when you come in," Mr. Johnston says. "I don't think people believe that any more."

But he says the quality programs that have sprung up in recent years often fall short of their potential because they do not teach employees how to analyze problems effectively and how to communicate suggestions to superiors. With such skills, the payoff is significant, Johnston says.

"Everybody's ... talking about pushing down decisionmaking" into all levels in their companies, says Steve Bookbinder, a principal with Towers Perrin, a human resources consulting firm headquartered in New York.

Towers Perrin surveys find a big rise, for example, in creation of self-managed work teams. Reorganizing work in this way requires a significant training effort, and can put supervisors through a difficult transition. This new model of organization casts them as "advisers" or "coaches."

"Leaders don't know how good they are until they're gone," says Bill Byrne, a businessman who espouses this view in his recent book, "Habits of Wealth."

"The firms that achieve great things between now and the year 2000 will be those firms that understand and invest in the value of people," Mr. Byrne says.