Company‐based determinants of training and the impact of training on company performance. Results from an international HRM survey
| Pages | 311-331 |
| Published date | 13 February 2007 |
| DOI | https://doi.org/10.1108/00483480710726163 |
| Date | 13 February 2007 |
| Author | Bo Hansson |
| Subject Matter | HR & organizational behaviour |
Company-based determinants of
training and the impact of training
on company performance
Results from an international HRM survey
Bo Hansson
School of Business, Ma
¨lardalen University, Va
¨stera
˚s, Sweden
Abstract
Purpose – The purpose of this study is to use an international dataset to examine what determines
employee training from an organisational perspective, and to what extent training investments
enhance company performance.
Design/methodology/approach – Data from 5,824 private-sector organisations are used to
examine determinants of training and the connection between training and profitability. OLS
regressions and Probit estimates are used in the statistical analyses.
Findings – The results indicate that the provision of company training is largely determined by
firm-specific factors, such as human resource management (HRM) practices. The results further show
that two widely used measures of training – incidence and intensity – are largely determined by
different factors. Staff turnover (mobility) does not appear to be a decisive factor in explaining the
provision of training on a national or company level, although it is associated with lower profitability
to some extent. However, the single most important factor associated with profitability is how much is
invested in training (intensity), suggesting that the economic benefits of training outweigh the cost of
staff turnover.
Originality/value – This study contributes to the existing training literature by offering extensive
access to internal measures of training, profitability, HRM practices, workforce characteristics and
staff turnover for companies in 26 countries worldwide.
Keywords Training, Determinants, Profit, Jobs, Humanresource management
Paper type Research paper
Introduction
In a society that has become increasingly dependent on knowledge and skills, it seems
clear that company-based training makes a substantial contribution to overall
investment in human capital stock. Considerable sums are spent on company training
each year. In the sample of firms investigated in the present study, approximately 3 per
cent of wage bills is spent on training and close to 45 per cent of employees are trained
annually. The importance of company training is also manifested in the large number
of published reports on the subject (for an overview of research findings see, for
instance, Boselie et al. (2001); Bartel (2000); Hansson et al. (2004)). Two major sources of
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0048-3486.htm
The author thanks Ulf Johanson, Karl-Heinz Leitner and Tina Lindeberg for their assistance.
Thanks are also due to participants at the 2002 Vocational Education and Training Conference in
Thessalonica, Greece for their comments on an earlier draft of this paper. Any remaining errors
are the author’s responsibility.
Company-based
determinants of
training
311
Received 18 December 2004
Revised 26 August 2005
Accepted 31 March 2006
Personnel Review
Vol. 36 No. 2, 2007
pp. 311-331
qEmerald Group Publishing Limited
0048-3486
DOI 10.1108/00483480710726163
our understanding of company training are research in human resource management
(HRM) and the field of labour economics.
If one is to draw up a general picture of research in company training, labour
economics is more oriented towards individual effects, whereas HRM research largely
focuses on company and organisational effects. Studies in labour economics usually
have good access to individual-based measures but, in general, find it relatively
difficult to access company measures related to training. Despite difficulties in
connecting training information with company data, some studies have been ab le to
take a closer look at the nature of company training and its effects on firms. More
recent research in this area suggests that companies invest in training their employees
regardless of whether the training is specific to the firm or more general in nature
(useful to other firms); see, for instance, Veum (1995), Loewenstein and Spletzer (199 8,
1999), Barron et al. (1999) and Autor (2001).
These results contradict the notion that the individual pays for general training and
the company for training specific to the firm (Becker, 1962). Because most company
training is general in nature, the main focus in labour economics has been on the
individual and not the firm[1]. However, two recent studies that have examined the
effects of general company training also indicate substantial productivity gains for
firms from this type of training (Barrett and O’Connell, 2001; Dearden et al., 2000). The
results of these two studies suggest that firms gain more from general than specific
training. Given the empirical evidence that companies pay for and benefit from general
training, interest in company-based research has increased considerably in recent
years.
HRM literature, on the other hand, has good access to company-based measures (e.g.
HRM practices and performance measures). The drawback in this line of research is
that training is generally measured as part of a broader set of HRM practices[2]. The
specific effects of training are in most cases not distinguishable from other HRM
practices. There are, of course, exceptions. For example, studies by Kalleberg and
Moody (1994), Delaney and Huselid (1996), and Harel and Tzafrir (1999) suggest that
training has a positive impact on perceived organisational performance, while a study
by d’Arcimoles (1997) indicates that training is associated with effects on both
productivity and profitability (for an overview of various HRM practices and their
impact on performance, see Boselie et al. (2001)). HRM research has mostly focused on
capturing the effects of training, while less effort has been devoted to examining which
factors influence the decision to train employees (determinants of training). Research in
labour economics, on the other hand, has devoted more attention to factors that affect
decisions on training employees, although the focus has largely been on
individual-based measures.
The purpose of this study is to examine which factors determine training from an
organisational perspective, and to explore the effects of training by studying the
connection between training and profitability. The investigation is based on the Cranet
international HRM survey, with data from more than 5,000 private organisations in 26
countries.
The Cranet survey
The Cranet network was established in 1989 by five founding countries (UK, Germany,
France, Sweden and Spain). It is co-ordinated by the Centre for European Human
PR
36,2
312
To continue reading
Request your trial