The International Journal of Human Resource Management 10:2 April 1999 251-272

What drives enterprise training? Evidence

from Australia

Andrew Smith and Geoff Hayton

Abstract In Australia, as elsewhere, much research in the ® eld of vocational education

and training has focused on the supply side of the training market. Research has been
driven by the perceived need to reform the public provision of training to create a more
highly skilled national workforce upon which enterprises can draw to improve their
competitiveness. Little, however, is known about the demand side. In particular, the
processes of training within the enterprise, while often maligned publicly as being low in
quantity and quality, have remained relatively unexplored. This paper reports the results
from a two-year study of the determinants of training in a range of Australian private-
sector enterprises. Forty-two case studies of enterprises from ® ve industry sectors were
undertaken and a national survey of 1,760 enterprises. The resulting data set is a unique
record of the training arrangements that exist within contemporary Australian
enterprises.

Keywords Training, training and development, human resource management,

employee development, human resource development.

This paper reports the results from a unique study of the operation of training at the
enterprise level in Australia. In Australia, as elsewhere, much research in the ® eld of
vocational education and training has focused on the supply side of the training market.
Research has been driven by the perceived need to reform the public provision of
training to create a more highly skilled national workforce upon which enterprises can
draw to improve their competitiveness. Little, however, is known about the demand
side. In particular, the processes of training within the enterprise, while often maligned
publicly as being low in quantity and quality, have remained relatively unexplored.
It was in an attempt to illuminate the operation of training within enterprises that the
Of® ce of Training and Further Education in Victoria (OTFE) and the Australian
National Training Authority (ANTA) commissioned the project reported here. Under-
taken by researchers from the Group for Research in Employment and Training
(GREAT) at Charles Sturt University and the Research Centre in Vocational Education
and Training (RCVET) at the University of Technology, Sydney, the research spanned
two years from 1994 to 1996. The project involved both qualitative and quantitative
approaches. Forty-two case studies of private sector enterprises from ® ve industry
sectors were undertaken by a team of researchers from both research centres and a
national survey of 1,760 enterprises.
The resulting data set is a unique record of the training arrangements that exist within
contemporary Australian enterprises. The research was undertaken in two phases.

Andrew Smith, Charles Sturt University, Wagga Wagga, NSW 2678, Australia (tel: 1 61
26933 2484; fax 1 61 26933 2930; e-mail: assmith@csu.edu.au). Geoff Hayton, University
of Technology, Sydney, Australia (tel: 1 61 29330 3497; fax 1 61 29330 3939; e-mail:
G.Hayton@edu.uts.edu.au).

Copyright € Routledge 1999 0958±5192

252 The International Journal of Human Resource Management
Thirty case studies were initially carried out in 1994. This provided the basis for the
national survey which was undertaken in 1995 and a further twelve case studies. The
full results of the research have been published in two separate reports detailing the
results from each phase of the project (Smith et al., 1995; Hayton et al., 1996). This
paper outlines the main ® ndings of the research and brings both the survey and the case
study data together to provide an explanation of the determinants of enterprise
training.

Theories of training
In recent years, countries in the English-speaking world have sought to remedy their
competitive problems through reforms to their training systems (Stevens and Walsh,
1991). Studies by the OECD have shown that countries with well-developed training
systems have been more effective in retaining their competitive position in the global
economy and in minimizing the impact of unemployment than countries that have not
invested in such training (OECD, 1994). More recently, studies in the USA, Britain and
Australia have shown that enterprises in these countries do not invest in training to the
same extent as more successful countries such as Japan and Germany (Bishop, 1994;
Felstead and Green, 1994; Australian Bureau of Statistics, 1994a). However, the theory
of enterprise training is relatively underdeveloped. It is not clear why enterprises train
their employees. Human capital theory stresses the importance of raising individua l
productivity. Theories of human resource management, on the other hand, view training
as part of a strategy to increase employee commitment to the enterprise. This section
will review three groups of theories that have dealt with the role of training in the
enterprise.

Human capital theories

Economists have traditionally accounted for training in terms of the returns to training
investment. Human capital theory has explained the reasons for the provision of
enterprise training in terms of the increase in productivity that accrues to the enterprise
(Becker, 1964; Mincer, 1974; Strober, 1990). Human capital theory has also developed
the concepts of generic and speci® c training, suggesting that enterprises will be more
willing to pay for training speci® c to the enterprise as it binds the employee and cannot
be used by rival enterprises. General training on the other hand will be in short supply
as enterprises fear poaching of trained employees. However the increase in productivity
that investments in training should bring have been dif® cult to observe (Maglen, 1990;
Strober, 1990; Bishop, 1994) and the de® nitional clarity of general and speci® c training
has also been questioned (Maglen, 1990; OECD, 1994) ± most speci® c training seems
to include an amount of general training and vice versa.
Since the mid-1980s, human capital theory has come back into fashion as the direct
links between training and productivity at the enterprise level have become the focus for
economists’ attention. The link has been mediated by the notion of adaptation to
innovation ± particularly technological innovation. This neo-human capital theory
approach states that enterprises train in order to improve the adaptability and ¯ exibility
of their workforces and their responsiveness to innovation (Bartel and Lichtenberg,
1987). Research by the OECD’ s Centre for Educational Innovation and Research
(CERI) in the mid-1980s drew the links between training, work organization, new
technology and new styles of employee relations (OECD/CERI, 1986, 1988). The
National Institute for Economic and Social Research in London pioneered a series of
studies, using matched enterprise comparisons between Britain and Germany. These
 Smith and Hayton: Enterprise training in Australia 253
studies examined the impact of training and education on workforce productivity (Daly
et al., 1985; Steedman and Wagner, 1987, 1989) concluding that the more effective
training system of German employers improved the overall skill levels of the German
workforce and enabled German enterprises to achieve higher levels of productivity and
quality in a range of industries. This approach, however, is limited by the dif® culties
involved in separating the variables that can impact on productivity at the enterprise
level and eliminating their effect so that the impact of training can be accurately
assessed (Cutler, 1992).

Training and human resource management

Human resource management theory has viewed training and employee development as
a means of engaging the commitment of employees to the enterprise (Rainbird, 1994;
Heyes and Stuart, 1996). The initial formulation of a theoretical framework for HRM
came from the Harvard Business School in the early 1980s (Beer et al., 1984). In this
model, training appears as one of a number of strategies for managing the human
resource ¯ ow of an enterprise which, together with other HR policies, produce the `4
Cs’ of HR outcomes ± commitment, competence, congruence and cost-effectiveness.
Other models in the `soft’ HRM tradition (Storey, 1989) have continued the tradition of
placing training as a component of other HR policies designed to produce similar, high-
performance outcomes (Walton, 1985; Kochan and Dyer, 1993; Pfeffer, 1994).
However, the evidence for the diffusion of these `soft’ models of HRM is limited and
it is not clear that training is being used in the way predicted by theory to enhance the
commitment of employees to the enterprise (Osterman, 1994; Cappelli, 1995; Locke et
al., 1995; Heyes and Stuart, 1996).
Another strand in HRM theory has focused on the strategic role of human resources.
Following Fombrun’ s initial formulation in 1984 (Fombrun et al., 1984) this strand of
theory has stressed the importance of employee performance. In strategic HRM theory,
training and employee development are one means of enhancing the performance of the
employee. Many of these theories have taken a life-cycle approach to the analysis of the
role of HRM in the enterprise and suggested that different forms of HRM are
appropriate at different stages in the development of the enterprise (Lengnick-Hall and
Lengnick-Hall, 1988; Schuler and Jackson, 1987). However, descriptions of the role of
training in these models is often very cursory. More recently, resource-based theories of
strategic HRM have highlighted the notion of human resources as a `core competence’
for the enterprise (Prahalad and Hamel, 1990; Barney, 1991; Amit and Schoemaker,
1993). If human resources are to be treated as inimitable competencies for the
enterprise, it would seem that training has a critical role to play in developing and
retaining those competencies in the enterprise (Boxall, 1996).
The most thorough investigation of the role of training in the strategy process has
been advanced by Pettigrew and his colleagues. Pettigrew and Hendry at Warwick
University (Hendry and Pettigrew, 1989; Hendry, 1991) examined the role of training
as part of the broader HR strategies of a range of enterprises in the UK and developed
a model which places training as a response to the competitive pressures facing
enterprises. Managers make strategic decisions about the extent to which training will
help the enterprise to achieve its strategic aims. The role of managers in the process of
improving the provision of enterprise training has also been investigated by Finegold,
who (Finegold and Soskice, 1988; Finegold, 1991) has emphasized the role of the
manager in making training decisions, together with the other actors in the decision-
making process ± governments and individuals. The importance of these theories is that
254 The International Journal of Human Resource Management
they introduce the essential element of management choice (Campbell and Warner,
1988). Managers may chose a particular mix of HR policies including training policies
which are designed to ® t an identi® ed set of strategic outcomes for the enterprise.

Training and the high-performance organizatio n

The impact of new technology and of the new working practices associated with the
`high-performance organization’ on skills and its implications for training has been a
focus for recent research. Traditionally, labour process theory has described the
degradation of skills under the impact of new technology (Braverman, 1974; Wilkinson,
1983). On the other hand, post-Fordist theory has taken a more optimistic view of the
skill-enhancing effects of technology (Piore and Sabel, 1984; Kern and Schumann,
1984; Mathews, 1990, 1994). However, recent research has detailed a more complex
picture (Adler, 1992). Studies of skills trajectories in Britain and the USA have
suggested that a process of polarization is at work, with some occupations becoming
more skilled and others less skilled over time (Gallie and White, 1993; Cappelli, 1993).
Moreover, it is not clear that it is technology that is causing these changes rather than
changes in work organization.
A new approach to work organization is also a key aspect of related theories on the
`learning organization’ (Senge, 1990; Watkins and Marsick, 1992; Finger and Burgin,
1996). The ideal learning organization constantly promotes individual and organiza-
tional learning at the workplace, particularly informal learning, so that the organization
is more able to adapt to changing competitive pressures. In practice, it appears that the
moves towards high-performance work practices or learning-organization models seem
to be creating a greater demand for behavioural rather than technical skills and a
corresponding increase in the incidence of training at the enterprise level (d’ Iribarne,
1986; Applebaum and Batt, 1994; Cappelli and Rogovsky, 1994; Osterman, 1995).
Studies of high-performance work practices and strategic HRM have been brought
together in the concept of human resources `bundles’ (MacDuf® e, 1995; Dyer and
Reeves, 1995) which emphasize the importance of implementing a number of HRM
practices together in `bundles’ in order to achieve a performance improvement for the
enterprise. The composition of the bundles varies between studies but training is always
cited as a critical measure within the bundle.
To summarize, a number of factors appear to impact on the enterprise decision to
train employees. These include:
c the improvement of employee performance;
c the improvement of the adaptability and ¯ exibility of the workforce;
c investments in new technology;
c the adoption of new work practices and moves towards the more sophisticated
systems of human resource management;
c changes in business strategy.
These factors formed the basis of the research project described in this paper.

Training reform in Australia

Since 1988, the training system in Australia has been undergoing a series of signi® cant
reforms. In that year the Australian Industrial Relations Commission (then known as the
Australian Conciliation and Arbitration Commission) launched the sweeping review of
the centralized Australian industrial award system that has governed the terms and
conditions of Australian employees since the system came into being in 1904. The
 Smith and Hayton: Enterprise training in Australia 255
review process became known as Award Restructuring (Australian Conciliation and
Arbitration Commission, 1988). At the heart of award restructuring was the Structural
Ef® ciency Principle (SEP) which guided the commission’ s rati® cation of new awards.
The SEP placed training and the creation of career paths for employees at the centre of
the new, restructured awards. Training became a major industrial issue for the ® rst time.
In 1991, the Commission moved towards a more decentralized industrial relations
system with the institution of enterprise bargaining. This allowed enterprises to strike
agreements with their employees that were subsequently rati® ed by the Commission to
ensure that award terms and conditions were not being threatened by the new
bargaining process. Training has been an important element in the new enterprise
agreements, with many of the training initiatives introduced through award restructur-
ing, extended and developed through the enterprise bargaining process (Department of
Industrial Relations, 1993).
At the same time, the then federal Labor government moved to rationalize Australia’ s
largely state-based systems of training through the creation of the new `super-ministry’ ,
the Department of Employment, Education and Training. In conjunction with the State
and Territory governments, the federal government sponsored a number of key reforms
of the training system including the introduction of a training levy on employers ± the
Training Guarantee Scheme ± in 1990 (abolished in 1996), the creation of industry-
based competency standards, the use of competency-based training and a system for the
national recognition of training. Collectively these reforms came to be known as the
National Training Reform Agenda and represented an attempt to establish a more
¯ exible yet uniform system of training through a national as opposed to a state-based
approach.
A third strand in reform has been the restructuring of Australian industry with the
gradual dismantling of tariff protection systems and the deregulation of key areas of the
economy. These developments have exposed many Australian enterprises to the rigours
of international competition and others to a higher level of domestic competition.
Training has been a major part of the response of many Australian enterprises to the
new economic environment, particularly in conjunction with the introduction of quality
improvement processes and new forms of work organization (Australian Bureau of
Statistics, 1994b; Smith et al., 1995). Figures from the Australian Bureau of Statistics
show that between 1989 and 1993, Australian enterprises increased their expenditure on
training from 2.2 per cent of payroll costs to 2.9 per cent (Australian Bureau of
Statistics, 1994a). The increase among private-sector enterprises was even more
dramatic, from 1.7 per cent in 1989 to 2.6 per cent in 1993.

Research ® ndings: case studies

The case-study component of the project identi® ed the training behaviour of forty-two
individual enterprises in ® ve industry sectors: construction (10 cases), electronics
manufacturing (10 cases), food processing (10 cases), retail (6 cases) and ® nance (6
cases). Within the ® ve industry sectors the case studies were chosen in order to achieve
a balance between other criteria such as size, geographic location and workforce
diversity. Local, national and multinational enterprises were sampled. The case-study
protocol involved interviews of a cross-section of employees in the enterprise including
senior and middle managers, operators, union representatives and training specialists.
The issues and questions covered in the interviews were consistent across the case
studies. For each case study the researchers spent two to three days on site, followed by
the checking of draft case-study reports by the enterprise and one or more further visits
256 The International Journal of Human Resource Management
by the researchers. The case-study reports were written to a pre-determined structure
covering a consistent range of issues to allow easier cross-case analysis. The ® ndings
from the cases are presented under three headings:
c the organization and management of training;
c the determinants of training;
c the diversity of training arrangements in enterprises.

The organization and management of training

The main indicators of a systematic approach to training for this research were the use
of formal systems of training-needs analysis, the existence of written training plans and
the use of evaluation to assess the costs and bene® ts of training. None of the case
enterprises used a fully systematic approach to training in the sense of the foregoing
de® nition. A formalized approach to training-needs analysis was the most common
element to be found, with many of the case enterprises beginning to use formal
appraisal systems as the basis for needs analysis, at least among white-collar and
managerial staff. Written training plans were less evident, with only the larger
enterprises in the sample investing in the formalization of the training plan. Evaluation
of training was very underdeveloped in the case enterprises, with none of the cases
going far beyond the traditional, end-of-course evaluation sheet, although there was
evidence that this situation was beginning to change.
The existence of a well-developed training infrastructure ± the existence of specialist
training staff and training facilities ± was clearly linked to the size of the enterprise. The
larger enterprises possessed the resources that could be used to invest in training
support. However, the relationship is not straightforward. Larger enterprises did not
always support extensive training infrastructure. In some cases enterprises had taken the
decision to limit their investment in training infrastructure but replaced it with a
comprehensive policy on training or a conscious devolution of training responsibilities
to line managers. One insurance company described their devolution of training this
way:
As far as possible, training is the responsibility of line management. It is the line
managers who best know the training needs of their own people; they are in the best
position to evaluate the priorities that govern how they should spend their training budget
to match the performance objectives of their area.
In these cases the lack of infrastructure was not necessarily an impediment to training
as long as managers were committed to the implementation of the policies.
Recent changes in the industrial-relations system appeared to have had a bene® cial
effect on training provision in the case enterprises. Award restructuring had led to
training being raised for the ® rst time as an issue for negotiation at the enterprise level.
In many cases award restructuring had led to the development of consultative
committees to steer the process at the enterprise level. The importance of training was
highlighted by the creation of special training sub-committees (`training committees’ )
to implement the new training arrangements. At a broader level, many industries had
approached the task of award restructuring from an industry point of view. This was
particularly true in those industries, such as food processing and electronics manu-
facturing, where the traditional awards covered all enterprises in the industry. In these
cases, award restructuring had led to the development of industry-level training
programmes designed for use by all enterprises within the industry and ensuring that all
training was accredited and portable through the industry. Many of the enterprises in the
 Smith and Hayton: Enterprise training in Australia 257
food processing industry and, to a lesser extent, the ® nance and construction industries
had implemented these generic training programmes for shop-¯ oor employees. The
training manager for a major food-processing enterprise described the effect of award
restructuring on training:
Training was almost non-existent before award restructuring. What little was done was
done in a haphazard way, one operator would train another operator, and that’ s the story.
There was nothing focused speci® cally on training . . . there wasn’ t even a training
department.
The role of the individual emerged as an important factor in training decision making.
The incidence of management-initiated training programmes that aimed to train large
numbers of employees in a particular set of skills tended to be limited to meeting certain
kinds of company-wide training needs (e.g. introducing quality assurance or leadership
training for managers) or in terms of particular groups, generally for shop-¯ oor
employees. However, the scope of these programmes was limited to meeting the
training requirements of enterprises only at the most general level. Beyond these
programmes and particularly at the management level, most enterprises relied primarily
on individuals to ¯ ag their training needs to the organization and to play a signi® cant
part in organizing activities to meet their requirements. Even in the larger enterprises,
where there were often reasonably elaborate systems of management succession
planning in operation, the training that managers received was often as a result of
individual effort rather than management-driven training provision. The store manager
of a large department chain summed up this view of the importance of the individual:
`It depends on the individual. You are in charge of your own destiny and if you feel that
you want to learn and grow in an area, you go and seek that’ .
The case studies highlighted the fact that enterprises were largely ignorant of the
detail of the training reforms of recent years except for the training guarantee. Certainly
the key elements of the National Training Reform Agenda were not well known among
managers. However, ignorance of the training reform agenda did not mean that aspects
of the training reforms had not had an impact in many enterprises. The most obvious of
the training reforms at enterprise level was the training guarantee. In most cases, ® rms
were spending at or above the training guarantee minimum. In very few cases did
managers quote the training guarantee as a major in¯ uence on their decisions to invest
in training. Most of the enterprises in the sample were not using competency standards
to guide their training activities.
There were a number of notable exceptions to this, particularly in the food-processing
industry, where many of the larger enterprises were using standards, and in the ® nance
industry, where all of the case enterprises except one were committed to the
development of competency standards. Nevertheless, the incidence of competency-
based training in the enterprises was very low. The irrelevance of much government
training policy to training within enterprises was summarized by a manager in a major
regional bank:
Most of the people in the ® nance industry see the government training reform agenda as
a bureaucratic exercise that doesn’ t add any value to what we are doing . . . we don’ t
know and don’ t care what the training reform agenda is about. The only people who
showed any interest were the accountants who wanted us to do all the reporting. Training
is such a part of the culture that people just don’ t see it [the training reform agenda] as
relevant.
However, the increasing attention paid to value of training evident in the case
enterprises indicated that the broad messages of training reform were being re¯ ected in
258 The International Journal of Human Resource Management
industry practice. Thus, although recognition of the National Training Reform Agenda
and its constituent parts was generally low among the enterprises in the sample,
nevertheless it appeared that the training reforms of recent years had helped to create a
climate in which training was viewed in a more positive light and in which elements of
the reforms, such as the use of competency standards and the use of competency-based
training, were beginning to develop at the enterprise level.

The determinants of training

Analysis of the information from the case studies led to the identi® cation of several
factors which drove training in the enterprise. Several of these training drivers were
clearly identi® ed in the case studies and included:
c workplace change;
c new technology and product innovation;
c quality initiatives (e.g. customer service, TQM).
Although many of the training drivers occurred repeatedly across enterprises, there was
great diversity in training practices, even for enterprises in the same industry with a
similar set of training drivers. Large enterprises reportedly spent much more on training
than small enterprises. The diversity in training across the case-study enterprises was
attributed to several moderating factors within the enterprise. The moderating factors
® lter the effect of the training drivers, in¯ uencing the nature and extent of training
activity. The main moderating factors identi® ed in our research included:
c size of organization;
c industry sector;
c occupational structure;
c training infrastructure;
c senior management commitment to training;
c industrial relations.
The last two of these moderating factors are predicted by theories of training and HRM.
However, the range of factors found in the study is far wider than those covered in these
theories. The impact of the training drivers and training moderators and the way in
which they in¯ uence the nature and extent of training provision in the enterprise are
considered more fully in the `Discussion’ section below.

The diversity of training arrangements

The principal ® nding from the case enterprises was the enormous diversity of training
arrangements observed. Enterprises in the same industry, serving similar markets and
employing similar numbers of employees, would often be quite different in their
approach to training. For example, two large food-processing enterprises both invested
heavily in training. However, one had implemented the industry-level training
programme devised for the food-processing industry, while the other had taken a highly
enterprise-speci® c approach and implemented a unique system of training for its shop-
¯ oor employees. The diversity of training arrangements was speci® ed on three main
dimensions.

Formal versus informal training Informal training may be de® ned as training which
is unplanned, not documented and largely unstructured. Informal training was used by
all the case enterprises. It was common to ® nd informal training being used for
 Smith and Hayton: Enterprise training in Australia 259
induction and customer service training. In contrast, formal training usually (but not
necessarily) occurs in an off-the-job setting such as a training room near the workplace
or at an educational institution. Formal training was provided by most of the larger case
enterprises. Little information on the nature and extent of informal training was
revealed in the case studies. However, larger enterprises appeared to value informal
training as much as smaller enterprises. They realize that informal training has the
advantage of focusing on workplace issues and priorities at relatively low cost. As one
trades supervisor in a large retail store put it:
The way I learned most of my product knowledge was to go and ® nd it for myself.
Suppliers’ sessions can be very good . . . but if you’ re actually trying to serve a customer
you tend to learn more about it and it gives you an insight into what other products are
available.

External versus internal training Internal training was provided by almost all of the
medium and large-size ® rms, but by only some of the small ® rms. Internal training may
involve the cost of providing training infrastructure (e.g. a training room and a training
specialist on staff), as well as the cost of developing, organizing and conducting internal
training programmes. The most common form of internal training was induction and
often consisted of a mix of formal and on-the-job training. External training occurred in
every case study. For certain skilled occupations in all industries, external training was
crucial to the supply of technical skills to the enterprise. This was most marked in
construction, where trade skills required by a high proportion of workers in both
commercial construction and housing were mostly acquired through technical college
programmes and associated on-the-job training.

Technical skills versus behavioural skills training Technical skills training took
place in all the case enterprises. This varied from training to operate new machines in
the manufacturing cases to new product training for sales staff in retail and ® nance.
However, the emphasis on technical training was beginning to diminish as enterprises
focused on the growing importance of behavioural skills. Behavioural skills refer
particularly to interpersonal and communication skills in the enterprise. An increasing
emphasis on behavioural skills was noted in all the industry sectors. As the divisional
director of one insurance enterprise expressed it:
Within the company, certainly there is a swing away from technical training. Probably up
until ® ve years ago it was more focused on insurance but then we started to turn towards
things like negotiation skills and presentation skills. So there was a strong swing away
from the traditional technical training.
The greater emphasis on behavioural skills appeared to be related in the case enterprises
to two factors. The ® rst was workplace change. Innovation in work organization, in its
most usual form, involves the introduction of teamwork with associated changes in job
design and work¯ ow. The second factor was the implementation of quality assurance
strategies, also leading to training outcomes emphasizing behavioural skills. The TQM
form of this strategy being pursued by many of the case enterprises had an emphasis on
high levels of behavioural skills required by all members of the workforce.

Research ® ndings: survey

The national survey of enterprises in Australia obtained a sample of 1,760 enterprises
covering all industries in the private sector. The sampling strata were:
260 The International Journal of Human Resource Management
c industry size;
c location (state/territory);
c worksite size.

The target sample of 1,750 enterprises was distributed across the industry sectors as
follows. Two-hundred enterprises in each of the ® ve industry sectors covered by the
case studies ± construction, machinery and equipment manufacturing,1 food processing,
retail and ® nance ± totalling 1,000 enterprises and 750 enterprises from the remaining
industry classi® cations. Within each of the industry sectors an equal number of small,
medium and large enterprises were sampled.2 The interviews were carried out using the
computer-assisted telephone interviewing technique (CATI) and were based on a
structured questionnaire designed to test the main ® ndings from the case studies in
Phase One of the project. The thirty-seven questions covered the following principal
topics:

c the main characteristics of the enterprise;

c the factors that might affect training provision, e.g. investment in new technology,
workplace change, quality improvement initiatives;
c the nature and extent of training provision in the enterprise.

Most of the 347 questions yielded nominal or ordinal level data. The data from the
survey were analysed using a log-linear technique to demonstrate the relationship
between the characteristics of the enterprise and the factors that might affect the nature
and extent of training provision in the enterprise. To provide a basis for the analysis,
two sets of composite variables or indices were developed by the research team: the
dependent variables of six `indices of training activity’ measuring the quantity and
nature of training activity in the enterprise (see Table 1) and the independent variables
of twelve `enterprise factors’ which, from the case studies, appeared to be related to
training activity (Table 2). While the analysis was able to identify relationships between
enterprise factors and training practices, the analysis did not attempt to distinguish the
two types of enterprise factors: training drivers and training moderators.

Table 1 Indices of training activity: derived variables

Variable Derivation

Volume of training The extent of training activity based on proportion of

employees receiving training in last year and proportion of
payroll expended on training
Diversity of training The range in the types of training supported
Training reform The extent to which training has been in¯ uenced by national
engagement training reforms
Reliance on external The extent to which training is undertaken externally
training
Formalization The degree to which training is formalized and regulated
Individualization The individual’ s in¯ uence on training decisions: whether
training is identi® ed and negotiated by individuals
 Smith and Hayton: Enterprise training in Australia 261
Table 2 Enterprise factors: derived variables

Variable Derivation

Industry Industry sector based on Australian standard classi® cations

Size of organization Two variables: number of employees at worksite; and number
of employees in enterprise
Australian ownership Australian or multinational enterprise
Permanency of staff The proportion of the workforce who are full-time permanent
employees
Occupational structure The proportion of the workforce who are managers and
professionals
Workplace change Change in the range of tasks performed and incidence of
structural changes in last three years
New product or Major investment in last three years and whether new products
process technology or services have been developed
Change in Change in level of competition for products or services in last
competitiveness of three years
environment
Industrial award The extent of coverage of employees by industry-wide
coverage industrial awards
Training included in Training is a key element in the industrial award covering the
industrial award enterprise’ s employees
Quality management Whether worksite is quality accredited and has adopted or is
adopting TQM
Training in business Whether training is included in the business plan of the
plan enterprise

Effect of the factors on training activity

For each of the six indices of training activity, the analysis revealed which of the twelve
factors were associated with variation in training, and the relative strength of the
association. The survey results by themselves cannot con® rm a causal link between the
factors and training, but the combination of case study and survey identi® cation of
relationships gives support to the notion of causal links between identi® ed factors and
training activity. Before discussing these results in detail, it will be useful to obtain an
overview of the relative strength of the factors by averaging across the six indices of
training activity. The result of this overview is provided in Table 3, which shows the
average coef® cient of correlation of the factors across the log-linear models for the six
training indices.
The analysis showed that all except three of the twelve factors were related to
training activity. For most of the factors there is a clear relationship to all of the
measures of training, independent of the effect of the other factors. The ® rst four factors
listed in Table 3 account for much of the variation in the extent and nature of training
activity. The factor with the greatest impact on training activity is the size of the
enterprise. It is the most in¯ uential factor for all six measures of training activity.
Workplace change emerged as a much more in¯ uential factor overall than `new
technology’ . Theorists both in the neo-human capital tradition and of the high-
262 The International Journal of Human Resource Management
Table 3 In¯ uence of the factors on training overall

Factor Average coef® cient

(across the six training indices)

Size of organization .62

Industry sector .39
Workplace change .36
Training in business plan .22
Occupational structure .10
Quality management .09
Training in industrial awards .09
Coverage by industrial awards .08
New technology .06
Change in competitiveness of environment ns*
Enterprise ownership ns*
Permanency of staff ns*
Notes
*ns indicates that the variable has a coef® cient not signi® cantly above zero for a least two of the
six training indices.

performance organization have emphasized the impact of new technology on the skill
requirements of enterprises (OECD/CERI, 1986; Adler, 1992). Later research has
shown that the impact of new technology is mixed, depending on occupational structure
and the ways in which new technology is introduced (Gallie and White, 1993). The
introduction of new forms of work organization has been seen as the critical factor in
determining skill requirements (Osterman, 1995) and the ® ndings from the survey
support this view.
The survey allowed us to test the link between the enterprise factors and training
directly, rather than the perceptions of those links which is at the heart of the case-study
component of the project. Nine of the twelve enterprise factors were found to be
associated with extent and nature of training. As we have seen, the relationship between
some of the enterprise factors and training is very strong, and accounts for much of the
variation in training practices discovered in the research. The survey analysis also
allowed the determination of the relative strength of association between the enterprise
factors and training variables. While the survey did not distinguish directly between
training drivers and training moderators, it does support the relationships predicted by
the model presented in the next section.

Discussion
In this section we bring the ® ndings from the survey and the case studies together
through the construction of a model that attempts to explain the relationship between
the important elements highlighted by the research. The model is illustrated in Figure 1.
The basic logic of the model is focused on the distinction between training drivers and
training moderators and the way in which they interact to produce the diversity of
training arrangements observed in the case enterprises and recorded in the survey.
Training drivers are those factors that immediately give rise to a demand for training
within the enterprise. The operation of one or more of these drivers will produce an
impetus to train. This is similar in concept to Hendry and Pettigrew’ s description of the
`triggers’ which cause training (Pettigrew et al., 1989; Hendry, 1991). However, the
creation of a training impetus within an enterprise does not explain the vast variety of
 Smith and Hayton: Enterprise training in Australia 263

Figure 1 Model of enterprise training

training arrangements that emerge from enterprises that appear to be operating under
the in¯ uence of the same training drivers. The diversity of the training arrangements
that eventually emerge from the impetus is explained in our model by another set of
factors ± the training moderators. These factors moderate the training impetus and
determine the ® nal character of the training which is carried out in each enterprise.
Because the combination of training moderators tends to be unique to the circumstances
of each, individual enterprise, the operation of only a relatively small number of
training drivers can produce an almost in® nite variation in the training arrangements
that ® nally emerge.
The operation of the model starts outside the enterprise with the competitive pressure
that is exerted by the business environment. As Pettigrew and his colleagues noted and
as recent Australian research has shown (ABS, 1994a; Fraser, 1996), competition of
itself is not a driver of training. However, it is the force that ultimately compels the
enterprise to take actions which result in the creation of a demand for training. It is
signi® cant to note that, in their discussion about the importance of training in their
enterprises, senior managers in the case enterprises would often begin their explanations
by referring to the growth in competition which their enterprise faced.
The enterprise’ s strategic response to competitive pressure may not take the form of
a planned and deliberate strategy. Many strategies were emergent, a result of actions
taken over a period of time by the enterprise to adjust to its competitive environment
(Mintzberg, 1994). The relationship between training and business strategy, however,
was not straightforward. While the survey showed that 75 per cent of the enterprises
had a business plan and that a further 75 per cent of these respondents claimed that the
business plan contained provision for training, the case studies revealed a more complex
situation. For many of these enterprises, the growth in competition was a recent
phenomenon (as tariff barriers were dismantled and the Australian economy deregu-
lated) and was only beginning to focus management attention on the need for strategy.
Training was not regarded as a strategic issue in itself but as a requirement to help
support the changes that emerging strategies brought.

Drivers of training
It was the changes that were introduced as part of the strategic response to the new
competition that were the real drivers of the training effort. These training drivers were
264 The International Journal of Human Resource Management
remarkably simple and recurred consistently throughout the research. The ® rst of these
drivers was workplace change.

Workplace change Workplace change consistently emerged as a driver of training in

the case enterprises and, in the survey, workplace change was strongly correlated to
both the volume and the diversity of training as the CERI research predicted (OECD/
CERI, 1986, 1988) and as Cappelli and others have shown (Cappelli, 1993; Osterman,
1995; MacDuf® e and Kochan, 1995). The extent and pace of workplace change varied
between enterprises and between industries. The type of training provided to support
workplace change also varied considerably. Thus, in the food-processing industry,
enterprises were using the industry-level training programme devised under the award
restructuring process, the Certi® cate in Food Processing, to support the introduction of
multiskilling and teamwork at a very broad level. In the retail industry, however, one
large retailer was using on-the-job coaching to support a massive reduction in
management levels and the introduction of semi-autonomous teams on the shop-¯ oor.
In the ® nance industry, a new, regional bank used formal, off-the-job training
programmes to support a radical re-orientation in culture towards greater customer
service. As Osterman and others have noted (Cappelli and Rogovsky, 1994; Osterman,
1995), in most cases workplace change demanded training in behavioural skills.

Quality improvement A particular form of workplace change that emerged as a

consistently signi® cant driver of enterprise training was quality improvement. However,
the interpretation of quality improvement differed signi® cantly across industries and
between enterprises. In the manufacturing enterprises, quality assurance was linked to
accreditation under the International Standards Organization (ISO) standards and/or the
implementation of TQM processes. The way in which quality accreditation was driving
training provision in the case enterprises is illustrated by the remarks of a store manager
of a large supermarket chain:
We should be looking at what training needs there are and we haven’ t done that in an
organized way yet and we certainly have to do that in a couple of months to meet our
requirements for AS 3901 [Australian equivalent of the ISO series of standards]. We have
to have a skills register and have it documented and that will then show up who’ s got
what skills and, therefore, other people who don’ t have so many skills.
In retail and ® nance, quality improvemement rarely involved formal quality
programmes such as these but was focused on improving customer service. Although
quality emerged as a powerful driver of training in the case enterprises, it was only
weakly correlated with the training indices in the survey. This discrepancy may be
explained by the fact that, although concern for quality improvement may be high and
lead to training activity, the volume and diversity of such training may be quite low.
Training for quality and customer service was focused on shop-¯ oor employees and
delivered on-the-job. This makes training for quality short, sharp and cheap for
enterprises ± one reason why it is so popular with managers who perceive a high
potential return from a relatively modest training outlay. Thus, although quality is a
universal training driver, it will often have only a limited impact on the overall level of
training provision in the enterprise.

New technology Most of the enterprises in the sample were involved in the
introduction of various forms of new product and process technology, although the
extent of technological innovation was greater in the manufacturing and ® nance sectors
 Smith and Hayton: Enterprise training in Australia 265
than in construction or retail. In manufacturing, it is important to distinguish between
product and process technology for the purposes of their impact on training provision.
New products are frequently introduced into an existing production or construction
framework. Thus the training implications are usually relatively routine. New processes,
however, may involve quite fundamental changes to the way in which work is carried
out and, therefore, may involve more extensive training in the enterprise. Generally the
training implications of investing in new technologies in the case enterprises were
relatively straightforward. New product technologies often involved on-the-job training
for employees who would be producing the new product. Training for new process
technology was more extensive. In most cases training for new process technology was
supplied by the vendor of the equipment. As the manager of a bakery plant put it, `We
don’ t just lob a $160,000 piece of equipment on the ¯ oor and walk away. The training
ethic is now going right back to the manufacturers.’ Enterprises would look to the
vendor for the training of key personnel, often a mix of engineers and shop-¯ oor
employees, who would then, in turn, be responsible for the training of other staff
involved in the new process. In the services sector, technological change was widely
regarded as a means of improving customer service, e.g. by improving access to
banking services through ATMs or payment for goods through EFTPOS. Both retail
and ® nance enterprises used induction programmes to familiarize staff with the relevant
technology.

Moderators of training
The training moderators are the factors that emerged in the research that were strongly
associated with enterprise training but which do not automatically produce a demand
for training. Instead, the training moderators in¯ uence the type of training arrangements
that the enterprise eventually puts in place. The model of enterprise training identi® es
six training moderators:
c enterprise size;
c industry traditions of training;
c occupational structure;
c industrial relations;
c management attitudes;
c government training policy.

Enterprise size The effect of the size of the enterprise on training provision was as
marked in this study as in other recent Australian research (ABS, 1994a, 1994b; Fraser,
1996). Enterprise size was very strongly associated with both the volume and diversity
of training. The case studies provided a useful commentary on the reasons for the
importance of size. Size is a proxy for a variety of other factors that impact on the
ability of the enterprise to provide training:
c Resources. The larger the enterprise, the greater the economies of scale that can be
achieved in training and the greater the ability of the enterprise to provide internal,
formal training and to support this training with high investments in training
infrastructure.
c The nature of the workforce. Larger enterprises have more skilled and professional
employees who require higher levels of training. In Australia, the percentage of jobs
requiring post-school quali® cations in enterprises of fewer than twenty employees is
18 per cent. For enterprises with more than 100 employees this ® gure rises to 32 per
266 The International Journal of Human Resource Management
cent (ABS, 1994c). Thus the demand for training is greater in proportional terms in
larger enterprises.
c Networking. The case enterprises revealed that small enterprises have particular
problems in accessing training providers whereas larger enterprises, particularly
those employing training specialists, often have well-developed relationships with a
network of training providers and with the training authorities.

Industry traditions of training The industry sector in which the enterprise operates
was strongly correlated with all the indices of training in the survey and was revealed
very clearly in the case enterprises as a major in¯ uence on the type of training that was
to be found in any individual enterprise. Industries clearly have their own traditions of
training that have developed over long periods of time. Training in the construction
industry, for example, is focused tightly on the apprenticeship system and apprentice
training is to be found in all the enterprises in this sector. As the general manager of one
small house-building enterprise put it, `We take on apprentices here because it is our
industry responsibility’ .
Similarly, the ® nance industry has a tradition of expecting employees to undertake
® nance and banking quali® cations in their own time if they wish to progress and the
industry has developed close links with the providers of this form of external,
accredited training. More recently, certain industries have established industry-level
training arrangements, partly in response to developments in the industrial relations
system. The clearest example of this in the research was the Certi® cate in Food
Processing developed by the food-processing industry training bodies. However, there
were similar developments taking place in the electronics, construction and ® nance
industries.

Occupational structure Occupational structure refers to the mix of occupational

groups found in the enterprise’ s workforce. Occupational structure is closely linked to
initial vocational training. Different occupations clearly require different quali® cations
in terms of duration, content and level of post-school quali® cations. There is much
evidence in Australia to show that workers with initial post-school quali® cations are
more likely to receive subsequent, formal training than those without (ABS, 1994c;
McKenzie and Long, 1995). Seventy-eight per cent of managers and professionals in
Australia have a post-school quali® cation ± higher than any other occupational group
(Karpin, 1995). Those enterprises with higher numbers of managers and professionals
in their workforces will tend to provide more training and often this training will be
formal and off-job in nature. The survey data con® rm this analysis.

Industrial relations Industrial relations ± de® ned in the survey as the number of
employees covered by an industrial award and the presence of training provisions in
awards or agreements ± was correlated with all six of the training indices. However, the
associations were not very strong. This ® nding re¯ ects the results from the case studies,
that industrial relations has a strong in¯ uence on the climate for training although it is
not, in itself, a driver of enterprise training. Thus, industrial relations processes,
particularly award restructuring and enterprise bargaining, have emphasized the
importance of training for the operation of the new, restructured awards, without
specifying the form that the training should take. In some industries, as we saw above,
these processes have led to the implementation of new, wide-ranging, industry-based
training programmes. The ® ndings from both the survey and the case enterprises
 Smith and Hayton: Enterprise training in Australia 267
con® rm the importance of industrial relations in creating an organizational climate
which is conducive to the improvement of enterprise training.

Management attitudes As Finegold and others have noted, management attitudes are
very important in training decision making (Finegold and Soskice, 1988; Finegold,
1991; Karpin, 1995). However, management attitudes may be fragmented within the
enterprise. There were many examples in the case enterprises of senior managers who
pledged their commitment to the training of their employees. Thus the general manager
of a major electronics enterprise was clear about the strategic importance of building
skills:
This is the vision of the plant . . . build up the skills set . . . if, three years down the track,
we can say we have a group of people here with unique skills, nobody can replace us in
the market. Training has to serve this strategic purpose.
However, attitudes were often quite different at the middle and junior management
levels. Managers at the operational level often preferred training that was short, sharp
and focused and, since many of the decisions regarding the implementation of training
are taken at this level, operational managers will have a signi® cant in¯ uence on the
form that the training takes.

Government training policy As we noted earlier, few of the case enterprises were
engaged with the National Training Reform Agenda and the impact of the training
guarantee appeared to very limited in the enterprises we studied. However, other
elements of government training policy were having an effect on enterprise training
decision making. Thus the availability of grants for innovative training programmes had
persuaded some enterprises to make substantial investments in training infrastructure.
The work of the government-sponsored Industry Training Bodies had been particularly
effective in persuading some industries to move to more industry-wide training
arrangements. The development of national competency standards had also had an
effect in some enterprises, guiding the development of training programmes designed to
meet these standards. Thus, like industrial relations developments, government training
policy creates a framework within which certain forms and approaches to training are
more likely to occur.

Training arrangements
The outcomes of the processes of interaction between drivers and moderators are the
training arrangements that are ® nally put in place. The diversity of the arrangements in
terms of the dimensions of training activity ± formal versus informal, external versus
internal, technical versus behavioural, generic versus speci® c ± as well as the overall
levels of expenditure on training and the distribution of that training between
occupational groups in the workforce, is the product of the unique interactions between
drivers and moderators that take place within each enterprise.

Conclusion
This paper has reported the results of a two-year study of training in Australian
enterprises. The study is unique in that it involved the collection of qualitative and
quantitative data on enterprise training across the private sector of the Australian
economy. Forty-two enterprises were studied in depth and 1,760 enterprises responded
to the questionnaire. No comparable study has been attempted that has focused
268 The International Journal of Human Resource Management
exclusively on training at the enterprise level. The study identi® ed a range of factors
that in¯ uence enterprise training and uncovered a surprisingly wide diversity of training
activities in Australian enterprises. However, the factors that appear to in¯ uence
training directly at the enterprise level are relatively few and straightforward, with the
most in¯ uential factors being enterprise size, industry sector and workplace change. The
focus for the analysis has been to explain how such a diversity of training arrangements
can result from the operation of so few factors.
The ® ndings of this research also have a number of implications for the theory of
enterprise training. First, it is apparent, as other commentators have suggested, that
human capital theory is de® cient in its treatment of training at the enterprise level
(Curtain, 1987; Bishop, 1994). The distinction between general and speci® c training
was not found to be of much explanatory power in the study. Contrary to the predictions
of human capital theory, most employers were willingly paying for the provision of
general training for their employees despite the fact that this training would appear to
make employees more attractive on the labour market. In fact, much of the training
observed in the case studies comprised an inextricable mix of both the general and the
® rm-speci® c. This was particularly true in the industry-level training programmes that
had emerged in the food, ® nance and construction industries and which combined
industry-speci® c training with a high proportion of very general, transferable training.
In these industries, enterprises were encouraging all employees to undergo these
programmes which represented a considerable investment in the general training of all
their employees. Moreover, neo-human capital explanations of the role of enterprise
training in terms of improving workforce adaptability to technological innovation were
undermined by the evidence from this study. The observable shift, borne out in both the
survey and the case studies, to an emphasis on behavioural skills rather than traditional
technical skills training, highlighted the fact that enterprises were seeking to develop
adaptability to changes in work organization rather than technology. As Osterman and
others (Osterman, 1995; Cappelli and Rogovsky, 1994) have shown, the introduction of
new technology generated a need only for short, simple training measures that were
frequently outsourced to vendor organizations. The study shows that it was the need to
implement new forms of work organization and other structural changes in the
workplace that provided the much stronger impetus for enterprises in the study to
increase their training activity.
However, the increase in training activity noted in our research did not support the
notion, described by Heyes and Stuart (1996), that training is an integral element in the
diffusion of `soft’ models of human resource management. There was little evidence
from either the survey or the case studies that enterprises were seeking to increase the
commitment of employees to the organization through training. On the contrary, the
prevailing notion among managers, especially at the middle and junior levels in
enterprises, was that training should be short, sharp and highly relevant to speci® c
problems faced by the business, such as the introduction of quality assurance
programmes or the implementation of teamwork.
Despite the general nature of much of this training noted above, enterprises did not
view training as a long-term investment in the development of employee commitment.
However, an appreciation of the long-term signi® cance of training was developing,
particularly at senior management levels in the many of the enterprises studied in the
research. At this level the short-term attitudes towards training noted by Finegold
(1991) appeared to be giving way to the notion that training was an important element
in building `skills sets’ within enterprises that could provide the basis for sustainable
competitive advantage in the future. Although the notion of core competence was not
 Smith and Hayton: Enterprise training in Australia 269
directly referred to by any informants in the research, there was clear evidence that,
among senior managers in the larger enterprises, the notion of using training to support
long-term strategy based on the development of unique sets of skills was gaining
ground.
However, this does not imply that the direct connection between training and
business strategy suggested by Pettigrew and Hendry (Hendry and Pettigrew, 1990;
Hendry, 1991) was supported by the ® ndings of the research. Pettigrew and Hendry’ s
model of increases in training activity triggered by the needs of business strategy and
stabilized by the internal management philosophy of the enterprise did not explain the
complexities of training arrangements revealed by this study. The process of strategy
formulation was only in its infancy in most of the enterprises investigated and the direct
connections between strategy and training were, to all intents and purposes, non-
existent. As our model of enterprise training suggests, training activity was triggered by
more operational concerns such as the introduction of new forms of work organization
or new technology, rather than more strategic concerns, and was signi® cantly
in¯ uenced by a range of moderating factors that were often unique to each enterprise.
This low level of strategy formulation in the enterprises may also help to explain the
lack of `bundling’ of training with other human resource initiatives observed in the case
studies in the manner suggested by MacDuf® e (1995). Rather, it appeared that training
was seen as an activity separate from other human resource activities and not dependent
on the diffusion of any particular model of human resource management for its
effectiveness.
Similarly, as Raper has discovered in Britain (Raper et al., 1997), little empirical
evidence for the development of the learning organization was uncovered by this study.
An increase in training activity and a gradually developing awareness for the need for
continuous learning among employees did not appear to have resulted in the emergence
of organizations that were focused on the provision of lifelong learning opportunitie s
for all their employees. Very few of the case-study enterprises even used the rhetoric of
the learning organization. Training and learning were viewed in highly instrumental
terms in most of the enterprises rather than as a means of developing a re¯ exive
orientation towards the activities of the organization advocated by proponents of the
learning organization.
However, the study has illustrated the diversity of training arrangements to be found
at the enterprise level and the complexity of causation that underpins them. Our process
has been to model the way in which the factors identi® ed in the research interact within
the enterprise to produce the training arrangements that we observed. Broadly this has
involved the distinction between those factors that produce a training demand or
impetus ± training drivers ± and those factors that have a powerful in¯ uence on the form
of training that takes place but do not give rise to a demand for training in their own
right ± training moderators. It is the unique interactions between these two sets of
factors and the relationship of the enterprise to its competitive environment that ® nally
account for the unique sets of training arrangements that occur within enterprises.

Notes
1 Machinery and equipment manufacturing was used as a proxy for electronics manufacturing as
the small numbers of electronics manufacturing enterprises precluded the possibility of drawing
a correct sample in this category.
2 The size categories used were those used by the Australian Bureau of Statistics: small is fewer
than twenty employees, medium is twenty to forty-nine employees and large is over ® fty
employees. Using unequal numbers of enterprises from the small, medium and large categories
270 The International Journal of Human Resource Management
meant that the sample was not representative of the economy as a whole. A fully representativ e
sample would have been dominated by small enterprises, which is by far the largest categor y
in the Australian economy. However, using equal numbers from each category allowed us to
compare training provision more effectively between enterprises in each category .

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