Unlisted & Unlimited: Profiting from training needs analysis

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IT IS not unusual for a potential employer to dismiss someone on the grounds that he or she does not have the required skill set. But often, as the Human Resources Development Fund (HRDF) has found out, the employers themselves do not have a clear idea of what they are looking for.

“We found that most of the time, it seems that the employers themselves don’t know what skills they require,” says its CEO CM Vignaesvaran.

This includes both technical know-how and soft skills. Vignaesvaran says that sometimes, it is not even the employee’s technical knowledge that needs to be beefed up, but things like presentation skills.

Larger corporations handle this through training. But small and medium enterprises (SMEs) with no proper HR personnel, for the main part, find it challenging to identify and address these issues.

That is why the HRDF, which was set up to help subsidise training for organisations, decided to launch a training needs analysis (TNA) programme, a fully subsidised consultancy service, to assist eligible SMEs to implement structured training programmes at the enterprise level.

There are two options under this programme — TNA training and TNA schemes. In the first, the SME employees themselves will be trained in how to do the required analysis. In the second, the HRDF will appoint consultants to conduct the analysis for the SMEs. The consultants will look at the company’s present capabilities and job descriptions, and assess the skills gap. They will then recommend the required training to bridge that gap.

This programme is only available to SMEs registered under the HRDF. To qualify, those in the manufacturing sector need to have 150 workers or less, while those in the services sector must have 50 workers or less. These companies must also possess a levy balance of at least RM15,000.

What is a levy balance? It is mandatory for every company registered under the HRDF to pay a levy. This money will accumulate in the company’s account with the HRDF. So the levy balance is basically the company’s account balance. The money goes to fund the company’s training needs and is boosted by an allocation from the government.

The cost of the TNA usually comes up to around RM25,000 to RM30,000 per company. So employers would be wise to take advantage of this programme.

Those who are keen can find the application form on the HRDF’s website. The minimum number of participants for a training session is 15, and employers will receive confirmation at least a week before the training begins.

Vignaesvaran says the HR person in most SMEs are not equipped to identify skill gaps; they simply focus on the transactional rather than the strategic part of the job. He also says such a programme can assist SMEs to identify current and future training needs on a systematic basis.

This will help them prepare suitable training plans for their employees. If they train their employees in TNA, then the employee in charge of human capital development can work better to enhance the company. This will lead to higher productivity.

In fact, when interested employers fill the form to show their interest in the programme, they have to commit to carrying out the recommendations within eight weeks of receiving the final results from the consultants. That way, the HRDF is assured that it is not wasting its time or money.

Vignaesvaran explains that SMEs don’t usually hire HR professionals to manage this function. Instead, they opt to have one person who does a variety of tasks, despite the fact that they might have only been trained to do a few aspects of the job.

That is why the HRDF felt that it was necessary to provide HR certification courses. These courses are free and are aimed at increasing the skills, competencies and knowledge of SMEs in HR under the SME Training Partner (SMETAP) scheme.

Under this scheme, SME employers registered with the HRDF are encouraged to send their workers for the HR upskilling, certification and functional programmes. This programme is also available for individuals and non-registered companies.

SMEs need to look out for training brochures that the HRDF circulates from time to time. Then it is a matter of filling up the registration form to enrol for the programme. The form must be submitted to the HRDF by email or fax at least a week before the programme commences.

The maximum fees that can be claimed for public courses conducted locally are RM1,300 per trainee per day. Last year alone, the HRDF trained about 10,000 people in HR.

Another programme is the SME On the Job Training (OJT). Participants acquire skills by observing and learning from a skilled worker or supervisor as he carries out the job functions. The programme was introduced to allow organisations to minimise the disruptions that occur when they send workers for external training.

For OJT, employers are required to plan and structure the training. The in-house OJT should be delivered by the company’s own employee to the trainee. Reimbursement of financial assistance will be RM5 per trainee per hour. The OJT can run from 7 to 300 hours.

In 2014, the HRDF allocated RM13 million for a scheme called Future Workers Training (FWT). The scheme enables employers to obtain financial assistance in areas of skills training and increase the knowledge of their future workers under the pre-employment training programme.

The maximum duration of the programme is two months. During pre-employment training, trainees may be given an allowance of up to RM500 a month.

The objective of this scheme is to train their future workers with the required skills and competences before they enter employment as permanent workers. This can benefit employers when hiring talent, especially when they are unsure whether the talent is suitable for them or not.

Last year, the government allocated RM9.5 million for SME training incentives. These annual incentives are allocated to SMEs registered with the HRDF. As at November 2014, more than 12,000 SMEs had registered.

It is up to the companies to decide how to use their allocation.  “We don’t dictate the programmes. The SMEs decide for themselves. And once they have decided, we facilitate them,” Vignaesvaran says.

But of course, the companies must abide by certain guidelines. Firstly, they must fall under the scope of coverage of the 63 sub-sectors under the HRDF Act, 2001. It used to be 44 sub-sectors but it was expanded to include 19 new sub-sectors in June last year.

These sub-sectors fall under three main sectors — manufacturing, services, and mining and quarrying. And they have to abide by the minimum number of employees. For instance, those in the services sector should not have fewer than 10 employees to qualify to apply for training assistance.

Section 14(1) of the HRDF Act 2001 stipulates that every employer of companies that qualify should pay a HRDF levy of 1% of the monthly wages of every employee.

 “We collect that 1% and later they can utilise the money for training. The government also provides additional monetary incentives for training,” says Vignaesvaran.

The only way for employers to get their money back is by sending their employees for training and then claiming it back from the HRDF.  It is a way to force employers to train their staff.

Therefore, it is only right that companies get a say in what they want. The HRDF makes an effort to constantly engage with employers. Vignaesvaran says a lot of the schemes or programmes the HRDF has come up with are based on discussions with the employers.

When he first came to the HRDF, the maximum it allowed employers to claim for training was RM3,500 per day. After attending a discussion in Penang, the employers that were involved in light-emitting diode (LED) technology pointed out that technical training was expensive and that the RM3,500 per day barely covered it. Based on this feedback, the HRDF increased the daily allocation to RM6,000 per day for in-house training.

While employers can decide on the training they want, they must be able to demonstrate that it will directly benefit their business operations. “Those that pay the HRDF levy are forced to train [their employees]. If they don’t utilise the money, it will be wasted.  When they train their employees, it leads to higher productivity,” Vignaesvaran points out.

“Nevertheless, the mentality of Malaysian employers must change. They must take training as an investment in the future of the company. When you ask people to go for training, they will come back with better solutions or bring back something that can improve productivity. When productivity increases, profits increase,” he concludes.

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This article first appeared in Unlisted & Unlimited, The Edge Malaysia Weekly, on March 9 - 15, 2015.