Compliance

Beyond Compliance: The Cost of Training

By March 16, 2016 No Comments

By: Jake Yaeger

On September 12, 2008, a commuter train in Los Angeles collided with a freight train head on, with 25 people left dead in the aftermath. The conductor was allegedly text messaging, missing a signal.

On July 6, 2013, a train car containing crude oil in Lac Megantic, Canada rolled backward downhill, derailed and killed 47 people in the ensuing inferno. The cause was that the conductor didn’t put on an additional hand brake.

On May 12, 2015, a commuter train in Pennsylvania derailed, killing eight, the cause being that the conductor took a turn too fast.

After each of these disasters, the Department of Transportation took separate legislative actions dealing with training to prevent these incidents from ever happening again. Each law would apply to every transportation organization dealing with railroads.

Montreal, Maine & Atlantic Railway couldn’t cover the costs associated with the accident at Lac Megantic. They carried a mere $25 million in liability insurance. The costs soared far above $200 million for destruction, with $50 million destined for the families of victims alone. The provincial governments of Canada poured funds into the disaster and recovery efforts as well. Montreal, Maine & Atlantic immediately went out of business, and its former employees found themselves out of work.

The responsibility of compliance is grave. It’s a burden one would hope not to carry, particularly when things go wrong. Consequences for under-training your staff may not carry the same weight as with transportation, but there are major downsides in every industry.

Striking the proper balance of time spent on training is a vital way to show that you care about your employees’ continued improvement and performance with your organization. Letting staff continue to work under-trained creates a negative environment where their actions are hard to account for, work is done inefficiently and incorrectly and there is a missing culture of engagement that allows employees to invest themselves in your company. It’s a commonly cited statistic that just a minimum wage worker costs about $3,000 to replace, but did you know that replacing a salaried worker costs about 1.5 to 3 times that person’s salary?

While the costs associated with training current employees are reported to average $1,200 per individual, the cost of bringing in someone new outmatches that of training alone. Besides, what career path doesn’t include learning and refining skills?

Across the spectrum of organizations, training is often the only protection available when an incident occurs. In pharmaceuticals, that protection comes in when there is a health incident. Companies can verify that their salespeople knew exactly how the FDA approved them to promote their products. However, the verification of this training can be impossible without a learning management system (LMS), since many salespeople work remotely.

Since the 2008 financial crisis, the level of scrutiny coming from regulatory organizations has only increased. In 2015, 70 percent of executives expressed that they would expect to see new standards to keep up with (with 28 percent expecting a higher amount of regulations). The need for automated training verification with an ever-increasing remote staff widens the gap between employee management and the verification of training completion, with companies being wide open to penalties in the middle.

For pharmaceutical corporations in particular, it is difficult to know who has received crucial training on new laws and FDA regulations. That industry places immense responsibility on the salesperson. Even more problematic is that the role of a salesperson is to be more invested in relations with potential clients, and thus trainings can be seen as limitations on time and the ability to sell, pitting the mitigation of liability risk against the inherent ambition of a sales rep. In this case, without an LMS, very large corporations become extremely vulnerable to massive penalties. Training visibility, and thus liability mitigation, remains a systemic problem in pharmaceutical sales, among many other industries.

The value of automated learning can be more obscure as well. In Medford, Massachusetts, a paramedic training instructor falsified records showing that the staff had received continuing education classes. The instructor was initially sentenced to two and a half years in jail, but later avoided the sentence, paying a few thousand dollars per forged registry. The price to public trust is more difficult to weigh.

  • Streamlining training is now the most cost-effective approach to achieving sustainability as a business. Organizations have reported 95 percent completion rates for large staff.
  • Automating schedules for certifications and workflow for trainers and their managers cuts down on margin of error and ensures education. While having a spreadsheet available that shows each of the dates of expiration for staff members helps to keep information easy to edit, there is still the problem of making training information electronic. Having an automated system keeps materials, completions and user trainings easily accessible. Managers and trainers stay in the loop about dates and records about trainings that are due. This is a huge step when you wear many hats in an organization, beyond just continued learning.
  • Immediate access to data allows visibility into training deficits. This means when you want to see your staff’s schedules for training and credential or certification renewal, you won’t have a rude awakening after a long manual calculation. That information will be available via data reporting. If you don’t have certification needs, automated learning will keep you up to speed on which employees being considered for advancement are getting the attention you have promised them.
  • Identifying red flags is mission critical to staying ahead of the curve. Organizations miss out when they cut corners on compliance or staff competency and expect that value to come from staffing alone. Those organizations are not getting the most out of their people when new hires come into the organization, and that organization does not gain their employees’ loyalty, extending the gesture of expected advancement when that new hire arrives. If you’re already taking care of trainings and communicating (through action) the strength of your procedures, then this does not apply to you. However, if your employees see that their trainings are up for completion the day before they are due or after, it will make you appear disorganized and make them feel like they would be more appreciated elsewhere. On the audit side, it would be far worse for you to have one uncredentialed employee in your organization at any moment, and every employee’s training costs could immediately be outweighed by the cost of a fine.

While compliance has typically been seen as a costly hassle for doing business, safety and compliance are quickly becoming seen as non-starter overhead. The investment in the continued education of your staff should not be seen from a standpoint of potential savings, but from the perspective of those your organization holds the responsibility of serving.

 

Jake Yaeger headshot croppedJake Yaeger is a writer and business professional working in enterprise software.  His interests lie at the intersection of software, ideas and the physical application of industry – oftentimes a place where understated misunderstandings are revealed.

Published by Conselium Executive Search, the global leader in compliance search.  Conselium also publishes Corporate Compliance Insights, the Web's premier source for GRC news, opinion, jobs and events.
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