Some companies discover that it's better to make a commitment to training early on -- even if it means settling for less
IT GOT SO BAD THAT DAVID Watts dreaded every ring of his phone. And it was almost always ringing, with Zack's Famous Frozen Yogurt Inc. (#274) adding about 10 stores a month. No problem seemed too small to reach the chief executive's ears. "I just loaded my yogurt-serving machine, and nothing happened," a franchisee would whine. Or the voice on the other end would belong to a Zack's field consultant: "The builder hasn't followed our specifications correctly. What am I supposed to tell the franchisee?"
To Watts, it began to seem as if no one really understood his job or one another. He had always meant to start a formal training program but had put it off because he didn't think the company could afford it. Now, he could procrastinate no longer. He built a $13,000 mock store and began bringing in the troops no more than 10 at a time. "Doing training became imperative to continuing our growth," says Watts. "I just wish I had started it earlier."
His wish is shared by chief executives of many of this year's INC. 500. Employee training, they advise, can't begin soon enough. Unfortunately, it is a declaration most often made in hindsight, long after the problems that training might have solved have gotten out of control. When a company is growing quickly, who has the time -- or the spare cash -- to institute a training program? The natural instinct is for managers to put it off until they can do it right. The better instinct, they say now, is to start a training program early, even if there aren't the resources to do it in a sophisticated way. Making it a priority is the important first step.
"The expense isn't what it costs to train employees," says Philip Wilber, president and CEO of Drug Emporium Inc. (#185). "It's what it costs not to train them. You realize that as you grow."
Very early on, Jack Namer realized the potential cost of neglecting training. His telecommunications company, American Communications Group Inc. (#53), was barely two years old. But Namer noticed that the company's technicians weren't always following the color codes that are supposed to guide them in installing phone systems. They were also crossing wires. A day after a new phone system was installed, Namer would often get an early-morning call from his new customer. "We can't get that damn phone system to work," the customer would grumble. Namer would send a few technicians to fix the problem -- invariably losing them for the day. It was the difference between making money on a job and not, and it happened more than once.
After eating a few jobs, Namer set up a classroom in the back of the company's Fort Lauderdale, Fla., office building. He offered his veteran technicians a deal: turn the inexperienced employees into pros, he said, and I'll pay you time and a half for the effort. Classes, which ran two hours, were held three nights a week. They weren't mandatory, but if you were interested in advancing at the company, they weren't exactly voluntary, either. Some classes were for promising novices, going over things like concealing and stripping wires. Others offered more specialized information on such new products or technologies as fiber-optic cable-splicing equipment. Namer even kicked in $250 a night to have a catered dinner served.
In time, Namer also brought in manufacturers' reps for special classes. Eventually he found himself spending thousands of dollars to send promising workers for specialized training. The results of the entire effort are quite convincing: costly mistakes have virtually disappeared, and employee turnover is down to 4% annually, from a high of 30% just before the training effort began.
Not all employees are interested in spending after hours in a classroom, however, as Robert L. Luddy discovered. A couple of years ago, he tried holding evening classes once a month at Captive-Aire Systems Inc. (#153), a manufacturer of ventilation equipment. "People don't have the best attitude in the world at that time of day," he found. "They showed up, but they didn't develop any enthusiasm. Then I lost my enthusiasm, so we stopped."
But the need for better training didn't end with the classroom's demise. Since Captive-Aire operates on thin margins, efficiency is key, and Luddy could see that too many jobs were running over cost. Part of it was that because installers and salespeople didn't have a grasp of local building codes across the country, they would add unnecessary features. In addition, salespeople and other office employees reported that they needed more technical expertise. What the company could really use, Luddy thought, was a training director.
The problem was money: Luddy figured he simply couldn't afford another full-time salary. And while he considered rotating some of his existing managers through the position, he concluded that they didn't have the time to abandon their line duties. It was only in desperation that he happened upon the idea of teaching the classes himself.
It was strictly a lunchtime operation. Every Monday, he would buy lunch for all 25 of his administrative workers, who sat, ate, and listened. With help from his engineers, he held forth on subjects ranging from customer relations to some of the more technical aspects of ventilation systems. After three months, he felt enough progress had been made to cut the sessions back to once a month. "It has helped us a lot," says Anne Rhoton, a sales coordinator. "We have new credibility with our customers because we can answer their questions."
Today, Luddy reports that less than 5% of his jobs run over cost, down from 15% before the training began. He attributes much of the improvement to his lunchtime classes. At about $150 per session, they amount to a negligible expense for a company with annual sales of $6.5 million. And as for that full-time training slot, Luddy has put it out of his mind. "I learn a lot," he says. "I find I get much closer communication with my employees this way. And they come up with questions that help me refine my own thinking."
Steven Chaffee had to do something. At his Chaffee Industrial Roofing Co. (#399), he had enough business to keep five crews busy, but only enough employees for three. And even with that number, he was stretching things: some of his foremen were promoted after only a few months as laborers, so inexperienced that they were bound to make mistakes. Two, in fact, did -- neglecting such details as protecting half-finished roofs from the rain -- and it has cost Chaffee about $10,000 to put things right. "We needed people so badly that we went too far in putting them in charge," he says.
Finally, there was no alternative but to cut back. Chaffee has recently grouped all his workers in a single crew, under the direction of his only experienced foreman, putting the other recently promoted foremen back to work as laborers. From now on, he declared, nobody would be made a foreman without spending at least a year working on the crew with an experienced boss. And if that meant turning away work until more foremen could be trained, so be it.
At Commonwealth Tool Specialty Inc. (#104), CEO Edward Staley Jr. began to wonder why it was that his "inside" salespeople -- the people who process phone orders, and make recommendations to customers -- always seemed to get up to speed faster than the salespeople in the field. Was it something about their customers? Or something about the kind of people attracted to office work?
It turned out to be neither. In looking into the matter further, Staley soon realized that the inside sales manager was simply better at training his people than Staley was at training the field staff. An obvious improvement suggested itself: have every new salesperson spend at least four months working under the better trainer. In addition, Staley decided to pay for sending each new salesperson to a few courses, studying anything from sales techniques to ceramics applications. With these little efforts at training, he found his problem was solved.
"This company took off with a great team of A players," Staley says. "Now, if we want class-A people, we have to hire class Cs and make them into As."
Staley's interest in training didn't stop with his sales force. Part of the problem, he concluded, stemmed from his own performance -- he needed to be better organized as a manager and more forceful as a leader. Now, he's hired an industrial psychologist to help him become a better CEO. His progress, he reports, is steady if somewhat slower than he would like. But it has made him more convinced than ever of the value of in-house training -- even at the top.