Training Translates To Higher Returns
Training is not just a cost of doing business. A recent study finds it can boost the bottom line. And agency execs say it helps with employee retention. What's not to like?
By Kate Gibson
In times of economic upheaval, many companies looking to shore up their bottom line lay off workers and slash programs viewed as expendable - such as employee education and training.
One notable exception may well be the highly regulated collections industry, where a lack of training can translate into government-enforcement actions, consumer lawsuits, and fines. Beyond those sticks, the carrot for maintaining a well-trained staff includes knowledgeable, more satisfied collectors, who become better revenue producers, and a healthier bottom line.
Still, investment in employee development varies wildly among agencies, financial institutions, and other entities involved in credit risk and debt collections (story, page 60). "It is a great mix - there are small agencies that spend a lot and large agencies that spend nothing," says Patricia Boyland, director of education for the Minneapolis-based American Collectors Association Inc. "As with any industry, some have a stronger belief in training than others," Boyland adds.
The latter approach may be near-sighted, according to the ACA and research recently released by the American Society for Training & Development, an Alexandria, Va.-based association for workplace learning and performance professionals. The ASTD study found that publicly traded companies that spent an average $1,595 per worker in training saw 24% higher gross profit margins. "The new economy is not based on productions systems. It is a knowledge economy, and for companies to get competitive they have to invest in their human capital," says Mark Van Buren, the ASTD's director of research.
"Learning should be recognized as an activity with bottom line impact," says Harry West, a product manager with vendor Saba Software Inc., a Redwood Shores, Calif.-based provider of electronic learning solutions. "Financial services firms need to deploy Web-based learning to keep customer-facing employees up to speed on product updates and other information....In today's economy, successful organizations need to hire and retain people who are ready to learn on an ongoing basis."
Few Budget Specifics
"Very few people running companies want to admit that employees are a cost," says academic-turned-consultant Laurie Bassi, a former Georgetown University professor who now presides over a two-person consulting firm, Human Capital Dynamics, in Chevy Chase, Md. However, in a distressed climate, the price of funding employee training programs is perhaps more visible than any eventual rewards, which may take weeks, months, or years to realize. Part of the trouble is that firms generally do not have a good idea of what they are spending on worker training and education, Bassi says. However, when profits take a dive "all they can see is the cost - which makes it [employee development] expendable," she adds.
Another major stumbling block is the fear that trained employees will take their expanded skills elsewhere, or in Bassi's words: "pack up and get a higher wage across the street." That concern is particularly prevalent in a tight labor market and in industries - including collections - that endure high employee turnover rates. "That is the argument: 'I'm not going to train anybody who may not stay around,'" Boyland says.
"We observe the opposite," says Bassi, who maintains that employees able to learn and develop on the job are more apt to remain.
Incentive to Stay
Those results hold in the collections industry, according to Boyland. "People tend to stay with an organization where there is a valid training program," she says, noting that in recent years, there has been a great rise in the number of agencies hiring in-house trainers.
Some agency executives agree. "Training is critical from day one and has to be ongoing," says Mike Burroughs, senior vice president of operations for C.B. Accounts Inc., Peoria, Ill. His firm has full-time training managers in its Peoria and Schaumburg, Ill., facilities. "When they stop learning, collectors move on to new agencies, or become ineffective," Burroughs says.
Beyond employee retention, training is a tool to get new clients, says Boyland, who adds the ACA is stepping up its training seminars and certification efforts in response to members' demands. "Some agencies when they are recruiting look for [ACA] certified collectors - they view it as a competitive edge," she says. To that end, the ACA is expanding its training vehicles to include CD-ROMs, video seminars, and eventually, Web-based products. In July, the ACA released a new video program to help in-house agency trainers, with the video expected to be sold through the ACA's online store. Volunteer instructors certified by the ACA teach nearly 20 different seminars by working with 44 local ACA units throughout the country. Beyond instruction on the latest interpretation of the Fair Debt Collection Practices Act, or FDCPA, the ACA instructors cover a variety of topics for third-party and first-party collections, including when and when not to ask for payment in full, professional telephone techniques, sales, and skip tracing.
"Everybody needs training," he adds. "Even in your accounting department you are also dealing with the FDCPA." Training, he points out, "is an ongoing issue. We have training scheduled every month. We find our weakest link and focus on that. It may be skip tracing or not working the smaller balance accounts."
C.B. Accounts Inc. conducts a minimum of two weeks training in the initial orientation period, and ongoing training is conducted regularly, says Burroughs, an 18-year veteran with the agency. Every new hire's initial, in-house training covers the FDCPA and state law training and testing, sexual harassment training, employee policy and confidentiality training, basic collector training, advance collector training, skip-tracing training, live recorded collections telephone call training and analysis, and computer training on the actual system in a classroom environment. "It is a large investment and will usually separate those who will survive the industry past the first 30 days," Burroughs says. Beforehand, the agency devotes substantial time and money to finding and screening prospective employees. Says Burroughs: "If it is accomplished right, turnover is reduced and clients are satisfied with your performance."
From Burroughs prospective, it makes more sense to cut employees than training. "Usually the labor itself is cut when times get hard or when business is down," he says. "In spite of the tightening economy, or perhaps because of it, when companies cut head count to reduce costs, learning management and the retention of knowledge become paramount to remaining competitive," adds Saba product manager West.
As for payback from their investment, both Burroughs and Williams boast strong track records, at least by industry standards, in employee retention. "Our turnover rate is so low that last year we added 20 [new collectors] and lost two, while this year we have added 19 and lost one," says Williams.
Burroughs reports similarly results. "I have three of my original six collectors still working for me 18 years later as part of my management team, and they are still learning and being trained daily," says Burroughs. "It never ends!"