Impact
WHAT IMPACT DOES TRAINING HAVE ON EMPLOYEE COMMITMENT AND EMPLOYEE TURNOVER?
SCOTT BRUM
University of Rhode Island
Training is of growing importance to companies seeking to gain an advantage among competitors. There is significant debate among professionals and scholars as to the affect that training has on both employee and organizational goals. One school of thought argues that training leads to an increase in turnover while the other states that training is a tool to that can lead to higher levels of employee retention (Colarelli & Montei, 1996; Becker, 1993). Regardless of where one falls within this debate, most professionals agree that employee training is a complex human resource practice that can significantly impact a company’s success. The training industry as a whole has shown significant growth through the years. Statistics indicate that investment in training is continuing to grow as more and more companies realize its importance. In 1995, $7.7 billion was spent on the wages and salaries of in-house company trainers and $2.8 billion was spent on tuition reimbursement (Frazis, Gittleman, Horrigan, Joyce, 1998). The American Society for Training and Development found that in 2004, the average annual training expenditure per employee was $955, which is an increase of $135 per employee from the previous year. The number of formal learning hours per employee also rose from 26 hours in 2003, to 32 hours in 2004 (atsd.com, 2005). As the investment in various training programs continue to rise, it becomes even more imperative for employers to understand the impact that training has on their organization. Training can have a considerable influence on company finances as there are several potential training costs that companies may incur. One type of training related cost is direct cost. This may include instructor salary, materials, and follow-up supervision. A second type of training related cost is indirect cost. These costs are related to worker output and
SCOTT BRUM
University of Rhode Island
Training is of growing importance to companies seeking to gain an advantage among competitors. There is significant debate among professionals and scholars as to the affect that training has on both employee and organizational goals. One school of thought argues that training leads to an increase in turnover while the other states that training is a tool to that can lead to higher levels of employee retention (Colarelli & Montei, 1996; Becker, 1993). Regardless of where one falls within this debate, most professionals agree that employee training is a complex human resource practice that can significantly impact a company’s success. The training industry as a whole has shown significant growth through the years. Statistics indicate that investment in training is continuing to grow as more and more companies realize its importance. In 1995, $7.7 billion was spent on the wages and salaries of in-house company trainers and $2.8 billion was spent on tuition reimbursement (Frazis, Gittleman, Horrigan, Joyce, 1998). The American Society for Training and Development found that in 2004, the average annual training expenditure per employee was $955, which is an increase of $135 per employee from the previous year. The number of formal learning hours per employee also rose from 26 hours in 2003, to 32 hours in 2004 (atsd.com, 2005). As the investment in various training programs continue to rise, it becomes even more imperative for employers to understand the impact that training has on their organization. Training can have a considerable influence on company finances as there are several potential training costs that companies may incur. One type of training related cost is direct cost. This may include instructor salary, materials, and follow-up supervision. A second type of training related cost is indirect cost. These costs are related to worker output and
References: Acemoglu, D., and Pischke, J. 1999. Beyond Becker: Training in imperfect labor markets. The Economic Journal, 109: 112-114. American Society for Training and Development: ATSD State of the Industry Report, Executive Summary http://www.astd.org/astd/research/research_r eports Arthur, J. B. 1994. Effects of human resource systems on manufacturing performance and turnover. The Academy of Manufacturing Performance, 37(3): 670-687. Barrett, A., & O’Connell, P. J. 2001. Does training generally work? The returns to incompany training. Industrial and Labor Relations Review, 54(3): 647-662. Bartlett, K. 2001. The relationship between training and organizational commitment: A study in the health care field. Human Resource Development Quarterly, 12(4): 335-352. Becker, G. S. 1993. Human capital: A theoretical and empirical analysis with special reference to education (3rd ed.). Chicago, IL: University of Chicago Press. Becker, H. S. 1960. Notes on the concept of commitment. The American Journal of Sociology, 66(1): 32-40. Brum – Training and Employee Commitment 12 Blau, G. J., & Boal, K. B. 1987. Conceptualizing how job involvement and organizational commitment affect turnover and absenteeism. The Academy of Management Review, 12(2): 288-300. Burke, R. J. 1995. Benefits of formal training courses within a professional services firm. The Journal of Management Development, 14(3): 3-13. Colarelli, S. M., & Montei, M. S. 1996. Some contextual influences on training utilization. The Journal of Applied Behavioral Science, 32(3): 306-322. Eck, A. 1993. Job-related education and training: their impact on earnings. Monthly Labor Review, 116(10): 21-38. Frazis, H., Gittleman, M., Horrigan, M., & Joyce, M. 1998. Results from the 1995 Survey of Employer Provided Training. Monthly Labor Review, 121(6): 3-13. Frazis, H. J., and Speltzer, J. R. 2005. Worker training:What we’ve learned from the NLSY79. Monthly Labor Review, 128(2): 48-58. Glance, N.S., Hogg, T., and Huberman, B.A. 1997. Training and turnover in the evolution of organizations. Organization Science, 8(1): 84-96. Green, F., Felsted, A., Mayhew, K., & Pack, A. 2000. The impact of training on labour mobility: Individual and firm-level evidence from Britain. British Journal of Industrial Relations, 38(2): 261-275. Groen, J. A. 2006. Occupation-specific human capital and local labour markets. Oxford Economic Papers, 58: 722-741. Heyes, J., & Stuart, M. 1996. Does training matter? Employee experiences and attitudes. Human Resource Management Journal, 6(3): 7-21. Kaufman, B., & Hotchkiss, J. 2006. Economics of Labor Markets (7th ed.). Mason, OH: Thomson South-Western. Krueger, A., and Rouse, C. 1998. The effect of workplace education on earnings, turnover, and job performance. Journal of Labor Economics, 16(1): 61-94. Lincoln, J. R., & Kalleberg, A. L. 1996. Commitment, quits, and work organization in Japanese and U.S. plants. Industrial and Labor Relations Review, 50(1): 39-59. Liou, K. T., & Nyhan, R. C. 1994. Dimensions of organizational commitment in the public sector: An empirical assessment. Public Administration Quarterly, 18(1): 99-113. Loewenstein, M. A., & Speltzer, J. R. 1999. General and specific training: Evidence and implication. The Journal of Human Resources, 34(4): 710-733. Lynch, L. M. 1991. The role of off-the-job vs. on-the-job training for the mobility of women workers. American Economic Review, 81(2): 151-156. Lynch, L. M., & Black, S. E. 1998. Beyond the incidence of employer-provided training. Industrial and Labor Relations Review, 52(1): 64-81. Owan, H. 2004. Promotion, turnover, earnings, and firm-sponsored training. Journal of Labor Economics, 22(4): 955-978. Owens, P. L. 2006. One more reason not to cut your training budget: The relationship between training and organizational outcomes. Public Personnel Management, 35(2): 163-171. Scholl, R. W. 1981. Differentiating organizational commitment from expectancy as a motivating force. Academy of Management Review, 6(4): 589-599. Scholl, R.W. (2003) http://www.uri.edu/research/lrc/scholl/Notes /Commitment_Control.html accessed January 2007. Steers, R. M. 1977. Antecedents and outcomes of organizational commitment. Administrative Science Quarterly, 22(1): 46-56. Schmidt Labor Research Center Seminar Research Series 13 Tannenbaum, S. I., Mathieu, J. E., Salas, E., & Cannon-Bowers, J. A. 1991. Meeting trainees’ expectations: The influence of training fulfillment on the development of commitment, self-efficacy, and motivation. Journal of Applied Psychology, 76(6): 759769. Walton, R. E. 1985. From control to commitment in the workplace. Harvard Business Review, 63(2): 77-84.