Stream: Learning through unions

How it all adds up for VT

Too many companies think of training as just another cost, but a recent study of workplace learning at VT Shipbuilding reveals it can generate substantial returns.

Everyone involved in workplace learning can tell you about the benefits of promoting literacy, numeracy and computer courses to staff who have often left school with few or no qualifications. Workforce confidence levels increase, relationships between shopfloor and management improve and overall economic performance picks up. But a large proportion of this is a bit too touchy-feely for many managers - the kind of intangible benefit it's difficult to evaluate and harder still to put a monetary value on in the company accounts. Even when productivity is boosted when a workplace learning project gets underway, it's not always easy to show a direct relationship between the two, especially when other initiatives have often been undertaken around the same time.

But VT Shipbuilding, which employs around 1,000 people building warships and other specialist equipment on Portsmouth Naval Base, has recently completed a groundbreaking evaluation of its lifelong learning programme, which amply demonstrates just how far the benefits outweigh the costs.

It all began in 2004, when the company indicated it wanted to introduce the new semi-supervisory position of charge hand at the shipyard as part of a package of new ways of working.

VT was keen on greater flexibility after relocating from its former site in Southampton to a state-of-the art facility in Portsmouth at a cost of £50 million two years earlier.

Leading hands were already taking on a degree of technical office work as part of their job, but the company saw the new charge hands spending even more time looking after hours and budgets. But before anyone could work effectively in the new role, the Confederation of Shipbuilding Unions argued shopfloor workers would need a core programme of essential skills.

The unions were already promoting essential skills courses after opening a workplace learning centre with financial support from the Union Learning Fund* and signing Learning and Adult Training Agreements with the managing director in 2002. Management agreed with the new training plan, and backed a joint bid with local provider Eastleigh College to the Trade Union Fund South East (TUFSE) for financial backing for a training programme open to both leading hands and charge hands (see Learn as you weld sidebar on page 20). Under the initiative, learners would work towards the National Tests in Literacy and Numeracy at Levels 1 and 2 as well as an ICT* course accredited by the Open College Network.

Sixty leading hands and charge hands from all trade groups were chosen for the initial programme, which included 30 hours essential skills and 30 hours ICT learning one day a week over ten weeks between February and August 2005. Management and unions were both equally keen on formally evaluating the scheme, using the

Crunching the numbers

The Phillips Return On Investment (ROI) Methodology converts every improvement attributed to a training programme to a monetary value which is then used to calculate the return on investment.

It's both rigorous and dataintensive: only improvements made within 12 months of the end of the training are normally taken into account; all benefits are examined for other possible influences; and the effects of training are isolated before calculating monetary value.

In the VT case, the major elements of expenditure in the programme were the costs of paid release for learners (just over £49,000), the tutor's salary (£29,000) and the project management (£12,000). Including equipment, materials, administration and other costs, the total outlay came to just over £109,000.

Using the data collected on the business impact of the programme, the evaluation revealed an estimated saving of over £262,750, which worked out at just over £153,000 taking into account total expenditure.That means the return on the investment expressed as a percentage was a little over 140 per cent.The figures are even more impressive when the TUFSE funding of £30,500 is factored into the calculations.

With costs reduced to £79,000 and return on the investment increased to almost £184,000, the percentage ROI figure becomes almost 233 per cent.

You can find out more information on the Philips ROI Methodology: www.roiinstituteonline.com/about_ROIMethodology.asp

Briefing document (800 words) issued 8 May 2007

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