Is employee training always profitable? Experts answer

Economists believe that vocational training benefits employees, companies, and even society at large. However, the nature of training courses and company organization greatly affects company performance.

In a report published by the French newspaper Les Echos, writer Guillaume de Calhignon asked whether training expenses should be considered investments.

Economists have been asking this question since the 1960s, when Nobel Laureate Gary Baker drafted his theory of human capital.

Simply put, this theory considers that when a student continues his studies for another year, it is because he hopes to obtain a higher salary once he enters work. Consequently, he invests this in his "human capital", so things will go as if it is a matter of investment, and the student expects financial returns in the long run.

Who will benefit from the training?
The writer mentioned that when a company invests in training its employees, the question arises about the extent to which these expenses benefit the employers, employees, and society. At this level, no conclusive answer exists.

For some, employee training benefits companies themselves. Accordingly, according to a study conducted by three researchers, Patrick Hubert, Bruno Crepon and Philip Zamora, published in 2009, the 11-hour training effort for each employee in the company leads to a productivity increase of about 1% compared to a company that does not spend any amount on training .

Everything depends on the nature of the training courses
The writer states, however, that things are not that simple. According to Alexander Linyi, a lecturer at the French University of Lille, "There is no automatic relationship between investments in training and the profits that the company makes, as this relates to the nature of training and the organization of the company."

First, some courses are a simple updating of skills, while others make multi-talented employees. In fact, the company's productivity only benefits from this in the second case.

Second, the company is only a group of individuals, so the way it is organized is also important.

And "studies indicate that training is only one aspect of increasing productivity," according to Alexander Liny, according to the French newspaper report.

"The acquisition of skills has greater implications when accompanied by investments in new technologies and organizational changes," says Linyi. Consequently, the link between training and company performance has not yet been verified.

And he considers that "it seems important to be able to distinguish between the goals of training, as some are investments, when it comes to dealing with technological changes or training for new jobs at a time when others can be considered expenditures, when training courses are only simple updates of skills." At the discretion of the economist.

Community benefits
The author stated that what is certain is that the community can benefit from these investments, "as training has indirect impacts outside the company.

Thus, in-company training can help increase the likelihood of finding a job, and thus reduce the amount that unemployment insurance pays (in countries that operate with this system).