Across Asia, companies are putting more emphasis on training and developing staff to boost profits and stay competitive. Many of Hong Kong's most successful companies are sending their most talented managers to class to help them do their jobs more effectively and help the companies cope with fast-changing markets, technological innovation and shifting business practices.

Research by human resource consultant Watson Wyatt shows that 62 per cent of companies have, on average, an annual training budget of around 3 per cent of total staff payroll. Moreover, companies budgeting more for staff training tended to earn higher profits.

"More companies now recognise the importance of training, but it is still a vulnerable item to budget cuts in time of difficulties," said Eddie Ng, chairman of the Chamber's Human Resources Committee. "Data shows that it is the weaker companies that see training as an expense, while the top performing companies see it as an investment."

This is backed up by an American Society for Training and Development (ASTD) study, which provides clear evidence that investments in workforce training has a direct impact on a company's performance. Firms that invested on average HK$10,000 per employee in training experienced 24 per cent higher gross-profit margins, and 218 per cent higher income per employee than firms in the bottom quarter that invested on average HK$1,000 per employee.

The Watson Wyatt survey showed a similar result. Over a five year period, out of 500 publicly traded companies in the Asia Pacific, the more that was invested in staff training, the greater was their shareholder value. Based on a human capital index (HCI) companies investing the least in staff training actually saw their shareholder value decrease (-3 per cent). A medium score on the HCI from 26-75 resulted in a 38 per cent increase in shareholder value, while the top quarter saw a staggering 107 per cent increase in shareholder value.

John Lang, chief executive, The Jardine Engineering Corporation, Ltd, said staff training has played a central role in helping the company grow throughout its 80 year history. "On average, I'd say we invest about 5 per cent of our profits in training, and that is not just helping our engineers to upgrade their skills, but also on training up staff for leadership roles," he said.

But it is not just employers that benefit from having brighter staff. Many employees, too, now recognise the importance of constantly upgrading their skills and view staff training as their ticket to a more rewarding and successful career.

A report by the Society for Human Resource Management, "Recruiting and Retaining Employees: Using Training and Education in the War for Talent," shows that training and development has risen to the top as the most important benefits organisations must offer to attract and retain talented employees.

Companies surveyed all provided more training to employees than other firms, and as a result each of the companies experienced lower turnover rates and higher employee satisfaction than other companies.

Considering it can cost companies tens of thousands of dollars to replace just one mid-level manager, training is being used as an important tool for hiring and retaining these valuable employees.

As a result, "Companies can get a more skilled and adaptive workforce, more satisfied customers, and are better able to retain their talent," Mr Ng said.

Many companies allocate in-house training budgets for lower ranking staff with senior managers often being the instructors. Rita Hui, Human Sources manager for Smartone, said 80 per cent of training for its staff was conducted in-house.

The advantages of in-house training -- or learning as she calls it -- is that senior managers are passing on relevant information that staff can instantly relate to and put into practice.

"There are some very good training courses and instructors out there, but of course it is not much use unless staff can implement immediately what is being taught," she said.

On average, companies allocate six to seven training days annually to each staff. Even when training programmes are held out of office hours, staff are very enthusiastic and in general would like to take more courses, rather than less, Ms Hui said.

When it comes to enlisting outside trainers, however, the cost can be prohibitive for some companies, especially SMEs. Emma Ho, director for Human Resources at the Chamber, organises on average 15 training courses per month at the Chamber. The cost of a course can range from a few hundred dollars to over HK$10,000 for a senior executive level course. She added that the Chamber aims to offer members better value training courses with quality assurance, and that is the reason why many members have benefitted from taking the courses.

"We carefully monitor all our training courses and make adjustments based on participants' feedback," she said. "This is the same for generic courses as well as tailor-made ones."

Hong Kong has no shortage of trainers, with an endless list of consultants, training institutes and organisations advertising their courses in the media. Like Ms Ho, Eddie Ng also believes quality is critical in delivering value and driving Hong Kong's workforce up the knowledge ladder.

To avoid hitting a ceiling, he suggests the government should take note of recent efforts by China and Singapore. "There, governments have done a lot to attract world-renowned training institutes, like INSEAD in Singapore. Hong Kong needs to do the same," he said. "Also, existing training organisations in Hong Kong, like HKPC, VTC, etc, need to constantly renew themselves to keep pace with the rapid changes in the market."

Many large corporations have well-defined and well-designed schemes to nurture talent within the company. At JEC, job applicants are evaluated not only on their academic and technical knowledge, but also on their ability to focus, thinking and communication skills, and personal effectiveness, said Patty Ip, director of Human Resources for the company.

Watson Wyatt's survey showed companies generally allocate most of their training expenditure (32 per cent) for managerial level staff. This also has the largest return on training investment, at 85 per cent. But what happens if an employee picked for bigger and better things goes through skills building programmes and then decides to jump ship?

"If they want to leave the company and think they can move on to better opportunities, then we would say to them 'good luck!'," said Ms Ip.

Ms Hui at Smartone echoes her com-ments. "In some cases staff are poached from our competitors, often by slightly higher pay. If that is the case, then I think these employees would leave sooner or later anyway, so there is really not much point in worrying about it."

At the end of the day, the gains companies enjoy through having better-trained staff far exceed the loss of a small percentage leaving.

"Companies spending more on training would have around 57 per cent higher earnings per employee," Mr Ng said. "We all admire leading edge companies but what we sometimes fail to realize is that they spend around 4 per cent of their payroll on training compared to just under 1.5 per cent of 'getting-by' companies. That means 85.9 per cent of their employees are well trained, compared to 68.7 per cent of the average. So you have far more better trained staff working smarter, working more efficiently and making the company more money."