Maintenance Training Substantiation & Training Budgeting for Facility & Plant Management

BY JIM SCHUSTER, CEO MARTIN TECHNICAL

Abstract

When times get difficult, training budgets are often a target for cutting back, but what financial impact will cutting maintenance training really have on your organization? How will your workers feel about having their working at heights course canceled? Will there be any accidents caused by a lack of training? How many hours of training should a maintenance team be receiving each year and how do you set a budget for this training? These are common and challenging questions for facility and plant management. Of course, as an effect of cutting training, businesses can always implement tools, like Platform Architecture, to maintain their operations and make sure everything runs smoothly and efficiently.

This paper will explore the reasons to justify training and retraining for maintenance personnel, benchmarks for the amount of annual training, and how to set a training budget based compared to organizations in the US.

Introduction

The president of Motorola once told his management team that all employees would be required to complete no less than 40 hours of training each year. A high-level manager raised his hand and asked, “But what if we train them and they leave our company?” To that, the president replied…

“What if we don’t train them and they stay?”

For many managers, this often-referenced statement quickly crystallizes the importance of training their workforce. Without the need of any scientific backing, a manager can quickly run this scenario through their head and come up with the vast differences between working with a team that is constantly improving versus one that is destined to never improve and make the same mistakes over and over. They may not realise the need for those members of their team to articulate properly, as one example, and when presented with the option to click here for some tips on dealing with nerves when public speaking may consider it not necessary, when it could in fact make a massive difference to their employees’ lives and efficiency.

Despite the obvious need for training, many companies and organizations still struggle with committing to properly train their teams. In every job, being properly trained can help the company become more profitable or run more efficiently, but nowhere is this more pronounced than in training for the skilled workforce, which includes facility and plant maintenance technicians. Industry maintenance is highly important for the smooth running of operations, they also need to make sure they source their industrial products from the best companies that deal with these in a professional way.

Training Needs Substantiation

Properly trained personnel are the heart of safe and reliable plant maintenance and operations. But with rising operating and maintenance costs and continuing demands for cost reduction, facility and plant management can find difficult to substantiate the need to maintain or increasing their training budgets. While reducing training can quickly lower the budget, the full ramifications of the reduced training need to be considered.

Cost

There are a dozens of major studies from multiple industries that have determined that human error is a major contribution to equipment downtime. With electrical distribution equipment, it is projected that 70% – 80% of unplanned shutdowns is due to human errors.(1) While some human errors are just unintended “mistakes”, many of the human errors can be traced directly back to the lack of knowledge or proper training. A continued decrease in training will lead to increasing equipment breakdown resulting in both downtime costs and more workforce required to repair the equipment. These costs are normally significantly more than the investment in the cost of training.

Conversely, while an investment in training is an up front cost, it reduces the unknown and unplanned costs of downtime, ultimately saving money. To increase the effectiveness of plant training programs, available resources should be applied to areas that can most quickly curb plant operations and maintenance costs.

Most companies find it worthwhile to collect and maintain data that help justify the costs of training programs. Information on reducing human errors, repair or maintenance time for certain tasks and outage durations can easily justify substantial investments in personnel training.

Those companies & organizations that monitor their training results have found direct links to performance in their business and spend 31% more on training per employee than the average company or organization.(2)

Safety + Cost

Safety should be at the core of every maintenance management program and the best way to ensure a safe work environment is through continuous training. In order to make sure that your employees do get their continuous training (particularly when it regards things like safety), it might be beneficial for your business to make use of things like a PEO company. You can find out more information about PEO companies here (retire at 21 PEO companies).

A lack of knowledge about safety requirements can lead to injuries, death as well as big financial losses. On average, in the United States, nearly 11,000 workers are treated in emergency departments each day, and approximately 200 of these workers are hospitalized.(3) When these accidents happen, the financial considerations can include regulatory fines, medical bills, insurance premium rate increases, equipment or facility downtime, equipment replacement, worker loss and third party legal suites. According to a National Safety Council report in 2000, the average cost of an industrial accident involving a death was $940,000 and the average cost of an accident involving a disabling injury was $28,000. While these are averages, many of the accidents in industrial settings can be much higher. The Electric Power Research Institute estimated the
total of direct and indirect costs of a major electrical accident at $17.4 million in 2003 dollars.

Aging Workforce Crisis

For most organizations, people are considered to be the greatest asset because of what they know. In some industries, up to 40% of the skilled workforce is set to retire in the next ten years(4), taking with them their skills and knowledge. In the maintenance industry, the loss of personnel and information combined with an aging infrastructure has been identified as an impending crisis known as the “maintenance crisis”.

In an online poll conducted by ASTD between December, 2005 and January, 2006, 96 percent of the 396 respondents said they had a skills gap within their organizations or expected one within a year. This gap is expected to greatly increase in the coming years as a large population of Baby Boomers retiring.

This exodus of a large population of skilled maintenance workers is presenting a challenge for the US to maintain its plants and facilities. Organizations must not only be able to attract a new workforce, but they must also be able to quickly transfer the knowledge of the older workforce to the newer.

An examination of your current maintenance workforce should be assessed to include the retirement rate of the workers. In the coming years, finding a skilled maintenance technician to hire will become a very difficult task as well as more expensive. The best strategy for today is to identify and train young workers now to be competent by the time the older worker retires.

Retraining Needs Substantiation

Industry & Technology Advancements

Training a veteran maintenance technician can seem like a waste of time and money, but the reality is that even the most experienced maintenance technician can improve their value with frequent training.

The rapid advancement of technology and computers in particular have greatly influenced the tools and equipment used in plants and facilities. As this transformation continues, it’s important that your workers are properly trained to understand and take advantage of these technologies.

Like technology, rules, standards and best practices continue to change. Knowing how to comply with the latest regulations or how to apply modern processes and practices is critical to keep not only a safe workplace, but also a competitive one.

Remembering What You Forgot

For those who received training and did not immediately put it to use or practiced what they had learned, the memory retention rate will vary from 5% to 50%, dependent on how the information was learned.(5) While there are many tasks that maintenance technicians perform over and over, there are also many tasks that they perform only on occasion, with long lapses of time in between. Memory recall based on one training session will be difficult for most, so repeated training on even the most basic of topics can help improve worker efficiency and safety.

Underperforming Employees

Even with subpar performance with employees, many organizations have had learn the hard way that it’s usually cheaper to retain and retrain than to fire and rehire. An investment in providing additional training or retraining underperforming employees can often make a substantial improvements.

Establishing Training Budgets

For those that are committed to training, the next question becomes, “how much training should I budget for”?

In the past few years, employees average 31.9 to 36.3 hours of formal training while top producing companies spend an average of 40 hours of training per employee per year with only 11% of that training for mandatory compliance training.(6) It should be noted that these figures cover all employees in an organization and not just the maintenance staff. The difference in average training hours between jobs can be dramatic. For certain skilled labor specialists, the training can reach 80 – 120 hours a year.

It is estimated that corporate America spends more than 2.5% of payroll on training. Using small business payroll solutions might help the HR department of organizations get a comprehensive overview of the payroll situation for their business. It is also estimated that companies who are “training investment leaders” spend as much as 4.1% of payroll on training programs (6). Based on this, a good tool for setting a budget for those that want to be “better than average” is about 2.5% – 4% of the maintenance staff’s salary. For a $40,000 salaried employee, this would equate to $1,000 – $1,600 in annual training budget. Despite tight budgets in an economic downturn, the average annual learning expenditure per employee for all companies surveyed grew from $1,068 in 2008 to $1,081 in 2009-an increase of 1.2 percent (6). This is a lot to work out manually when drawing up an employee’s payroll and can lead to mistakes that frustrate your staff. To prevent these errors from occurring when calculating the payroll with added on training programs and other events, use PEO services from companies like The PEO People. Along with payroll, all the other annoying, time-consuming stuff can be managed by these PEO systems.

With this in mind, managing your payroll as effectively as possible is crucial. No matter what type of business you own, from marketing agencies to contracting companies or tech startups, there is one common challenge that everyone faces and that is handling the payroll. Although lots of business owners decide to handle the payroll process on their own, if not properly handled this can lead to harsh consequences and even have a negative impact on training budgets. Moreover, to avoid these risks some businesses make the decision to outsource their payroll to companies like CloudPay that specialize in payroll processing. Furthermore, outsourcing payroll systems can be particularly helpful for global businesses with employees in multiple countries. You can learn more about outsourcing your payroll here: https://www.cloudpay.net/resources/understanding-payroll-in-the-united-kingdom-what-global-companies-need-to-know-about-uk-payroll.

Depending on how the training dollars were spent,$1,000 – $1,600 can be enough for about 30 – 40 hours of training in a year per employee. A typical 2-day maintenance training program will cost around $1,000, which eats up a lot of the budget, but with on-site training, online training and some other options, the per person cost for training is a lot less. A typical 2-day on site training program for maintenance technicians will cost $6K – $7K, but if there are 20 people in the class, the cost per person would only be $300 – $400. Online training is effective for soft skills and compliance training in particular, although not all compliance training can be or should be done online. Manufacturers and vendors offer less expensive training. This type of training is good for learning a particular product or piece of equipment and is most effective after the basic or general skills have been attained. Community colleges also offer some low cost training options that can be taken advantaged of. The downside to some of this training can be the time to complete the training and often less practical and more theoretical approach.

1 Electrical Construction & Maintenance (EC&M) magazine, 2004, A Practical Guide for Electrical Reliability
2 ASTD American Society for Training & Development – ASTD 2007 State of the Industry Report
3 Centers for Disease Control and Prevention, MMWR, April 2005
4 Delloite 2005 Skills Gap Report
5 National Training Laboratory Institute, The Journal for Applied Behavioral Science
6 ASTD American Society for Training & Development – ASTD 2010 State of the Industry Report