Training as Cost Control

I have often heard the phrase, "If you think training is expensive, try ignorance." I found out recently that it was attributed, at least in some form, to Peter Drucker--known also as the Father of Modern Management. It was Drucker who first insisted in the 1950's that workers should be considered assets, not liabilities or costs. He stated in the 1970's, long before others, that the "knowledge worker" would trump raw material in the New Economy1.

If there is one central theme that will ring through fleets and most other businesses this year, it's cost, cost, cost. Yet cost-cutting is often associated with reducing head count, rather than getting the most out of the employees you have. And similarly, training is often looked upon as a cost, rather than an asset or benefit. And while The Center for Effective Performance says training is only 10 to 20 percent of the overall employee performance equation, can fleets or any business afford to lose 10 to 20 percent efficiency in this tight economy?

To look more closely at the cost factor when it comes to maintenance and repairs, we'll look at two (of many) factors: the cost of rework and overall diagnostic time.

First of all, let's take a scenario where 16 percent of the repairs your fleet makes do not completely fix the problem the first time. We'll look at a fairly large fleet with several technicians that make an average of 150 repairs per month:

16% (0.16) x 150 = 24 repairs that need rework

Let's now assume that while the initial repair costs $400 in parts and labor, the rework costs another $250. That's $6,000 in additional cost, which doesn't even factor in the unplanned overtime that is often required to do rework.

Let's now envision a situation where training can improve diagnostic skills and critical thinking to the point of reducing your maintenance staff's comeback rate to 10 percent, or 15 repairs. It doesn't seem like a big drop--just nine fewer vehicles needing rework--but that would provide a savings of $2,250 (9 x $250 = $2,250) every month. If the cost of training and related travel for your staff was $6,000, you'd have that back in less than three months' time!

We can also look at total diagnostic time. Let's assume your internal labor rate is $35. If your average technician spends one hour troubleshooting before starting repairs, and the average number of "diagnostic events" for your entire staff is 200 per month:

$35 x 200 events = $7,000 in diagnostic cost

Now consider how the proper training can convert some "seat of the pants" diagnostics to logical troubleshooting techniques, to the point of reducing diagnostic time by 20 percent. The average diagnostic event would be down to 48 minutes. By saving just 12 minutes, or 20 percent per event, the cost of diagnosis would be reduced by $1,400 per month (0.20 x $7,000 = $1,400). Furthermore, your fleet availability will increase, which helps the revenue side of the equation in addition to cost.

It is essential, of course, to get the right training from a reputable source for the above changes to take place. Training that does not transfer the knowledge and skills necessary to properly troubleshoot vehicle concerns will be more of a cost than a benefit.

Drucker also said, "Great wisdom is meaningless if not applied to action and behavior." The best training plans must always include a follow-up phase where the training is systematically put to use on the job.

1 Byrne, John A. "The Man Who Invented Management." Business Week, November 28, 2005.