Learning Organisation is an Earning Organisation

Any business organisation’s ultimate goal is to achieve profitability (Kotlar et al, 2018) at the end of their financial year. Throughout their financial year, the organization will invest in many avenues related to the business so that, the investment will bear fruit within the targeted time frame. Today’s corporate world bear witness that the investment made towards employee training and their development is as much important as the resources invested towards the infrastructure, procedures and supplies. Organisations in the US have identified this fact and it is reflected in their annual reports how much they have invested in their employees training, a thumping 164.2 Billion USD in 2012 (Beer, Finnstrom and Schrader, 2016), twice as much as the GDP of SriLanka in 2018 (CBSL,2019). Vemic (2007) supports this theory by stating that most organizations invest 3-5% from their budgets for training and development of their employees. That alone emphasize the fact the organisations have realized employee knowledge could be the factor which wins them the competitive advantage.

Nda & Fard (2013) mentions that training and development can be the difference between a good organization and a “great” one. Not only because of the employees’ instant knowledge enhancement but also the impact of that in the longer run. The employee productivity will enhance and along with it, so will the entire organisation’s performance. Stanca (2008) states that increasing 1% of an employee’s participation from a training program can lead to 0.07% increase of productivity of the employee. Depending on the type and method of training, the employee is given a chance to explore his skills in a broader way, therefore to identify new skills which can be utilized to use them for his personal and organizational development (Hamid,2011). Organisational development in return will develop all aspects of the organization including revenue, cost effectiveness and profitability.

The organization I’m employed in is a leading airline of the country. The Aircraft Maintenance Department which I’m attached to, is responsible of maintaining the aircrafts’ technical status in the highest integrity. Apart from providing certification to this airline, It provides certification to various other airlines which travels to Bandaranaike international Airport (BIA), Colombo. The said airline’s fleet is comprised of all Airbus aircrafts including A320’s and A330s. However, the Engineering management decided to go the extra mile and train the aircraft engineers in the other aircraft types. Hence, Aircraft Engineers were provided training on aircraft types such as Boeing B737, B777, B787 and Airbus A320 family NEO and A350. Even though the trainings were costly, the organization managed to utilize that training to attract customer airlines to BIA and claim certification privileges for those airlines. Therefore, the department was able to cover the cost of each training in 03 months of certifying that type of aircrafts and there on was able to generate substantial revenue (Author’s work). Currently, 60% of the airlines arriving to BIA is certified by this airline and they are in the process of acquiring the rest of the airlines too. The project of certifying customer airlines generate a lot of foreign remittance into the organization, hence the country is benefitted too.

Training and development in an organization has not only given more weight in the financial profitability but also give a handful of more advantages. Deckop et al (2016) states that training leads to low employee turnover rate in organisations. Having more experienced employees within the organisation will always be a strong motivation to Line Managers to execute their duties efficiently. Since the experienced employees know what they do and what they are expected to do, the line managers can reduce the time engaged in supervising their subordinates and focus on their managerial duties. Furthermore, it will strengthen the employees’ psychological contract towards the organization and boost their commitment and engagement (Atif et al, 2010).

Along with low staff turnover and increased employee commitment, there are few more benefits to an organization in investing in training and development of the emloyees. Farrukh and Waheed (2015) elaborates that, an organisation which is a learning organization, inherits that competitive advantage over it’s business rivals. It will have the “zing factor” which the other organizations might not have. Since they will be in touch with the latest information related to the scope of their job roles, they will always be a step ahead of their competitors. As per Gupta and Sahoo (2014), to compete in this corporate world, training and development is essential. Since information technology gives the customers all their options on to his palm, they will be more demanding and smarter in their choice of service providers required by them. Hence, the employees of an organization will have to be smart enough and trained to identify this and reach the customers to deliver their product of highest quality, before their competitor does. With continuous improvement of the employees, continues sales will be generated and the organization will reap it’s harvest.

Another benefit the organisation will gain by training and development, is the cost effective and efficient use of resources ( Quratulain et al, 2014).  They suggest that (as cited in Schultz,1961), the competitive advantage is harnessed by well-trained employees spending least time to do the job with minimum physical effort. In cases, where employees are not trained well enough, they will utilise more time and will be more tired in completing the job than those who are. Therefore, resources will be wasted when employees are not trained properly which will be an additional cost to the organisation. I doing so, the quality of the product or service will not be the same as the customer expects, hence the organisation sales will drop significantly. This has a double impact negatively which costs the organisation immensely.

It is evident that training and development is the key to corporate challenges in today’s economy (Castellanos and Salinero,2011). As discussed in this post earlier, when the organisation’s employees are well trained, they add value to the company in 2 ways. One, by generating more revenue and two, by reducing costs significantly. This implies how important the organisations’ investment to training and development and the learning organisation will be the type of organisation which will have the competitive advantage over it’s competitors in the corporate world. Hence, we come to the conclusion, “Learning Organisation is an Earning Organisation”.

References

Atif, A., Rehman, I., U., Nasir, A., Safwan, N. (2010) Employee Retention Relationship to Training and Development, African Journal of Business Management, 5(7), pp. 2679-2685 [Online]. Available at <http://www.academicjournals.org/app/webroot/article/article1380797339_Anis%20et%20al.pdf>. [Accessed on 02 Septemberr 2019].

Beer, M., Finnstrom, M. and Schrader, D. (2016) The Great Training Robbery. Harvard Business School Working Paper, No. 16-121 [online]. Available at: http://www.hbs.edu/faculty/Publication%20Files/16-121_bc0f03ce-27de-4479-a90e-9d78b8da7b67.pdf [Accessed on 02 September 2019].

Castellanos,  M., R., M., Salinero, Y. (2011). Training as a source of competitive advantage: Performance impact and the role of firm strategy, the Spanish case. The International Journal of Human Resource Management, 22(3), pp. 574-594.

Central Bank of Sri Lanka (2019) Annual Report 2018 [Online]. Colombo: Central Bank of Sri Lanka: Available at: < https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/publications/annual_report/2018/en/1_Preliminary.pdf>.[ Accessed on 01 September 2019 ]

Colombo, E., Stanca, L. (2008) The Effect of training on Productivity: Evidence from a Large Panel of Firms, Research Gate [Online]. Available at < https://www.researchgate.net/publication/5174573_The_Impact_of_Training_on_Productivity_Evidence_from_a_Large_Panel_of_Firms> . [Accessed on 31 August 2019].

Deckop, J., R., Konrad, A., M., Perlmutter, F., D., Freely, J., L. (2006) The Effect of Human Resource Management Practices on the Retention Of Former Welfare Clients, Human Resource Management, 45(4), pp. 539-559.

Farrukh, M., Waheed, M., A. (2015) Learning Organisation and Competitive Advantage – An Integrated Approach, Journal of Asian Business Strategy, 5(4), pp. 73-79

Gupta, R., K., Sahoo, C., K. (2014) Role of Training towards Competitive Advantage: A qualitative Approach, Indian Journal of Training and Development, 44(1), pp.32-40.

Hamid, S. (2011) A study of Effectiveness of Training and Development Prorammes of UPSTDC, India – An Analysis, South Asian Journal of Tourism and Heritage, 4(1), pp. 73-82 [Online]. Available at <http://www.sajth.com/old/vol4issue1/I%20Sheeba%20Hamid.pdf>. [Accessed on 01 September 2019].

Kotler, J., De Massis, A., Wright, M., Frattini, F. (2018) Organizational Goals: Antecedents, Formation Processes and Implications for firm Behaviour and Performance, International Journal of Management Reviews, 20(1), pp. S3-S18

Nda, M., M., Fard, R., Y. (2013) The Impact of Employee Training and Development on Employee Productivity, Global Journal of Commerce and Management Perspective, 2(6), pp. 91-93

Quratulain, Rashid, Y., Rafique, U., Chughtai, M., A. (2014) Gaining Competitive Advantage through Training, its Effect on Business Results and the Role of Firm Strategy: A Study on IT Projects of Punjab Pakistan, Journal of Basic and Applied Scientific Research, 4(5), pp. 70-76

Vemic, J. (2007) “Employee Training And Development And The Learning Organization”. Facta Universitatis Series, Economics And Organization,  4(2), pp. 209 – 216 [Online], Available at  <http://facta.junis.ni.ac.rs/eao/eao200702/eao200702-13.pdf> . [Accessed on 30 August 2019].