The effects of training on the financial performance of South African companies : a conceptual training framework

Abstract

In a South African first, training to retrench has become not only a reflection of the economic climate, with the government offering a strategy for retention through its Training Layoff Scheme, introduced in 2009, but also a method by which government can offer employers incentives to engage in skills training initiatives. The concepts of layoff and retrenchment become merged and training is identified as the focus to survive and move on from the economic downturn of 2008/9. This puts training squarely ‘on the boardroom table’, necessarily interweaving it with a company’s business plan, while bringing the ability to measure training and its effects into the equation. In the very competitive international arena of business and trade in which South Africa operates, the only means to growth and productivity, both acceptable and sustainable, lies in development and training of the country’s workforce. Moreover, a review of literature supports this study’s focus, namely the effect of training on the financial performance of SA companies. An examination of existing literature, comprised of books, magazines, newspapers, journal articles, published and unpublished theses, amongst other material, is also the method employed to obtain a clearer picture of the reality that is training today, while clarifying the view on financial performance and whether it is impacted by training or not. To this end, a Conceptual Training Framework has been adapted for this study and proposed as basis for a holistic training framework, which ought to be developed to align business with actual practice. This was done because, at present, the framework is biased, reflecting only the traditional view of training and development, and ignoring the training for retrenchment balance, in a South African context, with other measures in place elsewhere in the world that are, likewise, not considered. The appraisal of literature shows the majority of authors and researchers in agreement that a positive relationship does indeed exist between training and both financial and non-financial firm performance. However, since the 2008/9

economic downturn and subsequent introduction of the TLS, managed by the CCMA (Commission for Conciliation, Mediation and Arbitration), the effect of training has not been researched, insofar as the financial performance of SA companies is concerned. It is recommended that case studies be undertaken at identified, pre-selected companies to study this ‘new’ role assigned to training in practice, to establish the change and its effects on firm performance, potentially redefining business strategies that could benefit the economy.