On-the-Job Training

On-the-job training is another way in which an employer may invest in

human capital needed for strategic advantage. Such investments may be
made by structuring a job so that employees learn while they work. For
example, employees’ skills may be increased by learning how to perform
new tasks or operate new equipment. Employers may structure jobs so
that these skills may be learned from other employees. They may also give
employees time to learn new procedures or how to operate new equipment
through self-instruction, such as by reading technical manuals, or by
learning new software through self-instruction. Employers may also absorb
the costs of lower productivity while workers lacking relevant skills learn
through interaction with skilled employees or through trial-and-error
processes. Gary Becker has noted that on-the-job training’s impact on
workers’ productivity levels is frequently underrated.30 Likewise, economist
Lester Thurow argues that on-the-job training provides the bulk of skills
used on the job while formal education serves a signaling function of
communicating to employers the trainability of job applicants.31 Economists
calling attention to the importance of on-the-job training point out that a
worker’s productivity is determined by the capital intensity of the job; type
and extent of on-the-job training provided; the Page 21 STRATEGIC HUMAN RESOURCE
MANAGEMENT Section One worker’s ability to learn from the training, which is
signaled by education; and how the jobs are structured, such as their
promotion possibilities and responsibility level.32 The contribution of on-the-
job training to productivity has also been hypothesized to vary according to
occupation as a result of differences in such factors as the rapidity of skill
obsolescence and difficulty of job tasks. The contribution to worker
productivity of on-the-job training has been verified in an empirical analysis
of governmental employees with on-the-job training being measured by
the employees’ years of job experience.33