Why Poor Training Increases Labor Cost
Insights – Cost

When pharmaceutical companies overlook the quality of training they provide, they inadvertently set themselves up for increased labor costs. Training programs are often seen as an area to cut costs, but this perspective is misleading and could have the opposite effect. Below, we explore how substandard training practices can inflate both direct and indirect labor costs.

Indirect Costs of Poor Training

Inadequate training practices in cleanroom environments can have far-reaching effects beyond immediate operational challenges and associated costs, commonly known as “direct costs.” Indirect costs, which originate from secondary effects of inadequate training, may not always be visible on financial statements, yet they can significantly impact a company’s bottom line. In the realm of labor costs, administrative expenses often represent the most substantial portion of the bottom line. These costs primarily stem from four prominent areas: recruitment cost, job dissatisfaction cost, HR administration cost, and QA administration cost. Let us unpack each.

Recruitment Cost

The expectations of the workforce, particularly among younger employees, regarding training quality are significantly higher than in the past. This demographic seeks engaging, effective, and technologically advanced training methods. They view quality training not just as a necessity for performing their duties but also as an indicator of the employer’s commitment to their professional development and safety. When training programs fail to meet these expectations, it negatively affects recruitment efforts, making it challenging, lengthy, and costly to attract top talent. The repercussions of this can be long-lasting, leading to a workforce that lacks motivation and engagement, which are critical for innovation and productivity in demanding cleanroom operations.

Job Dissatisfaction Cost

Poor training affects more than just hiring; it profoundly impacts job satisfaction among current employees. Cleanroom operations require attention to detail and strict adherence to protocols. When employees feel unprepared or unsupported due to inadequate training, job dissatisfaction can increase, leading to higher turnover rates. The cost of this turnover extends beyond the direct expenses of hiring and training replacements. It includes the loss of institutional knowledge, reduced morale among remaining staff, and the potential for increased errors and deviations as new employees acclimate. This situation creates a cycle of inefficiency and increased HR administrative costs, highlighting the hidden costs of poor training practices.

HR Administration Costs

Employee turnover brings with it a series of administrative actions that both the Human Resources department and the affected department must undertake. Each instance of employee departure necessitates a multi-faceted approach to recruit and integrate a replacement. This process is inevitably costly as it involves expenses related to advertising the vacant position, conducting interviews to find suitable candidates, onboarding new employees, and training them on their role. The cumulative effect of these activities results in a significant and undesirable increase in Human Resources spending, with each turnover event compounding the financial impact on the organization.

QA Administration Costs

Deviations in production protocols are more than just minor mishaps; they trigger extensive investigations by quality assurance (QA) personnel to pinpoint the source and impact of the discrepancy. Depending on the nature and severity of the deviation, the investigative process can range from relatively straightforward to exceedingly complex, potentially involving a diverse array of professionals from different fields. The required documentation alone is substantial and should not be underestimated. Consequently, a single small error, made in a matter of seconds, can lead to dozens or hundreds of man-hours dedicated to (administrative) work within the QA department.

Direct Costs of Poor Training

In contrast to the indirect costs, the direct costs of training are easier to determine and include the areas that are directly related to training. These can be differentiated between costs for the training itself, such as time, materials and personnel, but also the costs that poor training of personnel has on production.

Training Time Cost

Inadequately designed or implemented employee training initiatives frequently fall short in disseminating critical knowledge in an effective manner. Such ineffectiveness demands supplementary instructional periods to ensure staff members attain the required proficiency level, consequently escalating expenses. Furthermore, an extended duration of training postpones the juncture at which a new recruit is able to contribute productively, thereby exerting an adverse effect on the organization’s economic results.

Training Material Cost

While conventional classroom training tends to be on the inexpensive side materialwise, practical sessions such as mock-up training or training using single-use materials and equipment can substantially escalate training costs. Theoretically, expired materials beyond their end-use date could be used for training — but this would constitute a regulatory infringement to store and collect such materials, and therefore, surely does not occur. Even so, the cost of single-use training materials alone could quickly exceed €10,000 per trainee for initial cleanroom training. Additional qualification trainings and re-trainings further increase this expense. Considering also the costs of training time, lost production opportunities, and salaries, as well as other expenses like the initial setup of mock-ups, we quickly see training costs rising to tens of thousands per trainee for practical, lifelike training with conventional training methods.

Training Staff Cost

One of the immediate consequences of subpar training practices is the need to utilize highly skilled operators as trainers. While it is essential to have experienced professionals lead training sessions, the diversion of these resources from production to training impacts the operational efficiency of the cleanroom. These operators are among the most valuable assets in the cleanroom environment, with their expertise directly contributing to product quality and compliance. When they are tasked with training instead of focusing on their primary production duties, it results in lost productivity. Moreover, while these professionals are excellent at their jobs, they may not have the necessary skills or training to be effective teachers, leading to less efficient knowledge transfer and further exacerbating the training issues.

Productivity Cost

Inadequate training inevitably leads to mistakes and deviations from established procedures. These errors can manifest in many ways, from minor lapses in protocol to significant issues that compromise product safety and efficacy. Each mistake requires investigation, documentation, and, in many cases, rework or disposal of compromised products. These activities not only incur direct costs in terms of time and materials but also delay production schedules, impacting the ability to meet delivery timelines. Furthermore, repeated deviations can lead to regulatory scrutiny, potentially resulting in fines or production halts until compliance is assured. The ripple effects of these issues on labor costs are also profound, as already adressed above.

Conclusion: Poor Training Increases Labor Cost

Investing in high-quality training programs is crucial for maintaining low labor costs and high productivity. Organizations that cut corners on training not only risk higher indirect costs from unattractive employment practices and increased turnover but also face direct financial penalties through slowed production, increased errors, and heightened administrative burdens. Therefore, it is essential for pharmaceutical professionals to understand the far-reaching implications of training on overall labor costs and operational efficiency. Poor training is not a cost-saving measure but a significant financial risk.

Increased Indirect Costs:

  • Recruitment Cost

  • Job Dissatifaction Cost

  • HR Admin Cost

  • QA Admin Cost

Increased Direct Costs:

  • Training Time Cost

  • Training Material Cost

  • Training Staff Cost

  • Productivity Cost

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