Training: good investment, not an expense | Daily News


So, you want to start-up and develop a small business – Part 35

Training: good investment, not an expense


Training is generally recognized as the most efficient and least expensive answer to employee improvement. Unfortunately, however, training remains close to the bottom of too many small-business owners’ priority lists. Too often, small-business owners view training as an expense rather than as an investment that comes back in the form of increased productivity.

I have heard too many small-business owners complain about the cost of training, especially when that training results in the employee moving on to greener pastures - and taking her knowledge with her. Although such occurrences definitely do take place, part of the reason that employees move on is because they don’t get the opportunity to receive the training they need.

Training comes in many forms and from various sources. Unlike many large companies which generate much of their training from in-house sources, small-business training usually comes from the outside. Here are your major training options:

Consultants and coaches: Although consultants and coaches have the most potential as trainers, they’re also the most expensive.

Agents/Distributors: They can be an excellent resource for training, and they’re less costly than consultants. Some of them even provide free training on their products or services.

Seminars: Seminars can be expensive in both money and time, and their potential value is difficult to predict. Good seminars are great bargains; bad ones are outlandish scams. The seminars with the best potential (and usually the least expensive) are those put on by your trade association at its annual trade shows.

Schooling: This category includes weekend courses in universities and institutes. Although schooling is probably more dependable than seminars, the value is also difficult to predict. The benefit of the course depends largely on the quality of the instructors.

Books/videos/audios: Books and others are of great value. Read or watch between projects, put them down when you please, and refer to it always. Keep it forever or pass it on to a friend or another employee. If you extract and implement one good idea, no matter how small, the money you spent is quickly repaid, many times over.

The Internet: More and more training classes are appearing on the Internet - some are for pay and some are free of charge. Be sure to investigate the agenda of the course sponsor. Is the sponsoring organization is trying to sell you something, or is it interested in improving your business?

Motivating: Pay and performance issues

A typical employee is motivated by several things (in this particular order):

(1) Recognition or appreciation, (2) Interesting work, (3) Remuneration, (4) Awareness of what’s going on in the company, (5) Good working conditions, (6) Job security and (7) Feeling that management cares about the employee

Meanwhile, the typical entrepreneur is motivated by one or more of the following (in no particular order): Creativity or growth,money earned, power gained, freedomavailable and survival

It is clear that what motivates an employer, is, in most cases, quite different from what motivates employees. So, if entrepreneur expects his employees to perform as he wants them to, he must figure out how to motivate them differently than he motivates yourself.

To be a successful employer, you must adjust the way in which you envision the motivational process. The revised biblical Golden Rule applies: “Do unto your employees as they would have done unto themselves.”

Let us discuss further about the tools that play a primary role in the motivational process: remuneration, goal-setting, performance expectations, and performance reviews.

Designing a remuneration plan

Remuneration is an important item on any employee’s list of key motivators. Therefore, let us dig deeper into the types of remuneration which can be provided and the best plans which can be created for the company and employees.

You can compensate employees in a number of proven ways:

Hourly:This method works for Honda and Wal-Mart and thousands of European and US companies, but in Sri Lanka, it is not popular.

Salaries: Salaries represent security to their recipients, and security is number six on the employee motivation list.

Commission: Always the best remuneration method for the hungry, hard-charging, sales types. Security isn’t important to these folks; money, open ends, and opportunity are.

Pay-for-performance: An increasingly popular alternative to the traditional salaried remuneration plans. Also called gain-sharing or success-sharing, pay-for-performance usually involves a relatively small base salary with all other remuneration based on either individual or team performance (or a combination of both).

Specific pay-for-performance plans are as varied and creative as the small businesses that use them, and they always require an efficient measuring system to back them up.

Hybrids: A mix of annual salary, pay-for-performance, annual bonuses, share-option plans, and whatever else you can devise. (Share-option is a benefit in the form of an option given by a company to an employee to buy a share in the company at a discount or at a stated fixed price.)

Entrepreneur must create a plan that works for his business.

The subject of remuneration is one of those eye-of-the-beholder kinds of issues. The entrepreneur must view hisremuneration plan as a motivational tool, then he won’t be creating and managing an expense account; he’ll be developing an instrument to increase his employees’ performance.

The best employees are the ones who believe they’re valued and treated fairly. The best measurable method of that valuation is what they take home as their pay and perks. If the employees believe their take-home pay are consistent with the value they deliver to thebusiness, the entrepreneur won’t have to motivate them much because they’ll motivate themselves.


The following list outlines our advice for devising a remuneration plan that will work for your business:

Design your remuneration plan before you hire your first employee. Doing so ensures that you have a defined plan in place so you don’t set precedents for your first employee that you’ll later have to reset.

Make sure that your employees thoroughly understand whatever method you use to compensate them. Paying for performance may make all kinds of motivational sense, but it works only if the employee understands what performance formula you’re using and how she can impact the results.

Make sure that you can measure whatever needs measuring before you agree to pay for it. Measurement is always easier said than done.

Be consistent within employee groups. For example, with your salespeople, have one remuneration method and be consistent within that group.

Remember that benefits are an important part of the (what Americans call) “compensation package”- important to your employees’ security and to entrepreneur’s bottom line.

Keep the time between bonus payments as short as possible. Rewards, financial and otherwise, lose their impact when stretched out too long. The timing on when to give bonuses varies, but for most employees, in most cases, quarterly bonuses are the most effective. For some (high-impact managers), semi-annual or annual bonuses work better, since top management’s accountability is typically more long term in nature. Avoid monthly bonuses; the administration is too much of a burden.


The goal-setting comes with its own acronym - SMART - and here’s how it works:

S = Specific. Goals must be clear, direct, and definable.

M = Measurable and meaningful. Goals must be measurable, in the sense that both employer and employee can assess whether the goal is achieved. And, of course, goals must be meaningful to both parties.

A = Appropriate. Goals should be appropriate. It should balance with the employee’s experience, training, potential, and responsibilities.

R = Realistic. Goals should challenge but be achievable. Eighty percent of the goal should be relatively easy to meet; 20 percent should be a stretch.

T = Time limit. Goals should be achievable within a specified time frame.


The two biggest mistakes business owners make when setting goals for themselves, their businesses, and their employees are creating goals that aren’t measurable and including a nonspecific time frame for the goals. Consider the following examples:

The following list outlines how you and your employees can set and achieve SMART goals:

Never set goals without first planning how to reach them. For instance, wanting to increase sales by 15 percent isn’t enough; you must have a game plan for how to do so.

Don’t wait until the end of the goal-setting period to do the measuring. Check progress informally as the mood strikes and formally at defined time intervals between now and the end of the goal-setting period.

Allow for the unexpected. Changing goals midstream is acceptable if the reasons are right. Because the success of a small business is in part due to being able to make changes faster than its larger competitors, you should always build the likelihood of change into your goal-setting procedures.

Make a public announcement within the as soon as your business or your employees have achieved goals. Let the celebration begin, let it be spontaneous, and let it be loud.

Effective goal-setting should be a communal, bottoms- up process. The more involved your employees are in establishing their goals, the more committed they’ll be to achieving them.

Ask each employee to prepare her goals first, and then review them together, hone them together, and be sure to write them down, giving one copy to the employee and adding a second to her personnel file. Documenting goals makes the goal-setting process official and minimizes potential mis-understandings when performance-review time comes around.

(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a business consultant, freelance newspaper columnist and a writer.)

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