Profiling the Australian enterprise RTO

Transcription

1 Profiling the Australian enterprise RTO A DEEWR-funded project managed by the Enterprise RTO Association SUMMARY REPORT Incorporated under the ACT Associations Incorporation Act 1991 I ABN: PO Box 6024 Griffith ACT 2603 I Mob: / I

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3 CONTENTS SECTION ITEM PAGE 1-6 Background comments and summary of key findings The number, size and distribution of enterprise RTOs Business drivers for the enterprise RTO The role and responsibilities of the enterprise RTO Current issues of concern for enterprise RTOs The status of the RTO within the enterprise The scope of registration profile of enterprise RTOs The accredited training activity profile of enterprise RTOs Training and development expenditure Funding of accredited and non-accredited training Return on training investment analysis Training and development pathways within enterprise RTOs Enterprise RTO workforce development models On-line delivery of accredited training and assessment - 30 ATTACHMENTS PAGE A. The Enterprise RTO Association (ERTOA) - 31 B. Full listing of current Australian enterprise RTOs - 33 C. Summary of in-depth case study interviews - 39 ERTOA was assisted in the preparation of this report by: Performance First Pty Ltd I PO Box 6024 Griffith ACT 2603 I ABN Web: I customersupport@performancefirst.com.au I Mobile: /

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5 Background notes and summary of key findings 1 Background Enterprise RTOs (ERTOs) are defined by the following characteristics; The core business of the registered enterprise is not the provision of training The enterprise RTO provides accredited training for the employees of the enterprise The enterprise RTO is embedded or integrated within the standard business processes of the enterprise The development of enterprise RTOs within the Australian VET sector is relatively recent. Woolworths for example is recognised as being an early adopter, and was first registered as an RTO in May The findings of this report indicate there are around 250 ERTOs currently operating in Australia. A full listing of these is provided for information in Attachment C to this report. Enterprise RTOs typically operate as quality workforce development enablers embedded within the business functions of their enterprise. Whilst some ERTOs receive Government subsidies to assist them to develop their staff, a significant minority do not. Training effort and subsequent qualification or competency completion is not captured in national VET data collections unless it has been publically funded. Consequently there is a very substantial under reporting of VET effort in ERTOs and of the total Australian VET. The Enterprise RTO Association (ERTOA) was formally incorporated in October 2006 with the purpose of assisting ERTO staff to develop and maintain their skills and to help ensure that ERTO needs were considered in VET policy development. See Attachment B for a more information about ERTOA and a list of current members. Whilst there has been some targeted research around the operations of ERTOs and the use of national qualifications by enterprises, there is little concrete information on the nature and scale of ERTO operations. ERTOA has consistently argued for inclusion of ERTO effort in the national collection of VET effort data. Towards the end of 2009 ERTOA was approached by the Department of Education, Employment and Workplace Relations to conduct research into the characteristics and operations of ERTOs and to document the findings. The research and findings documented in this paper begin to paint a non-anecdotal picture about ERTOs; why and how they operate, and the scale of their operations. The paper also highlights a number of areas where additional research effort would be valuable to ERTOs and to the broader VET industry. 2 Purpose This is essentially a data collection, analysis and reporting project which aims to; Profile the essential characteristics and operations of enterprise RTOs 1 Smith, Erica and Smith, Andy(2009)'Making training core business: Enterprise Registered Training Organisations in Australia',Journal of Vocational Education & Training,61:3, page

6 Identify and document the level and type of workforce skills development and accredited training activities currently conducted by Australian business enterprises Better establish the accredited training activities of Australian business enterprises as a recognised and valued component of the Australian VET sector. The project will assist with the development of a national strategy for ensuring that total VET effort recorded in Australia as part of a National VET Data strategy initiative is inclusive of the significant accredited outcomes from business enterprises registered as RTOs. 3 Approach This project sets out to collect, analyse and report data using the following steps: Review and analyse the current National Training Information System (NTIS) data base to identify the Australia-wide population of enterprise RTOs Survey 100% of the identified enterprise RTO target population to capture data including: Business case reasons for establishment and maintenance of ERTO Main issues of concern with ERTO operation Scope of registration profile Number and profile of qualifications issued and competencies completed Funded effort Non-funded effort Training and development pathways Workforce development models and their relation to accredited pathways Numbers and profile of employees offered accredited pathways Expenditure data on training and development Expenditure data on accredited pathways The survey instrument will be distributed and responses collected using an on-line survey tool. A second survey was deployed to a representative sample of fifty respondents who had indicated a willingness to provide completion data. Conduct eight face-to-face case study interviews with a representative selection of enterprise RTOs. Collate data and findings and prepare a final report. 4 Summary of key findings The research was conducted during the second half of 2009 and involved surveying all of the enterprise RTOs identified on the National Training Information System (NTIS). The report adds significantly to the existing limited research on the nature and value of ERTOs. The report also identifies potential priority areas for additional research. The key findings of the report listed below provide a clearer picture of the characteristics and operations of enterprise RTOs: 2

7 The total number of enterprise RTOs registered in Australia in July 2009 was 256. They represent 5.2% of Australian registered RTOs, but potentially generate at least 20% of annual VET qualification completions across Australia. Enterprise RTOs exist in all State and Territory jurisdictions with just over half of the total being registered in NSW or Victoria. The size of an enterprise has little influence on the decision to seek and maintain RTO registration. Enterprise RTOs include a relatively even spread of small, medium and large business enterprises. The key business drivers identified by enterprise RTOs are the ability to customise training and assessment needs and to provide control and flexibility over their delivery. Enterprise RTOs ranked the ability to access external funds as the least important business driver for seeking and maintaining RTO registration. The role and responsibilities of the enterprise RTO vary widely amongst enterprises. In some instances the RTO is responsible for all training and development in the enterprise; in others it is limited to a specific compliance and quality assurance function. The implementation of the Quality Indicator tools (AQTF 2007) is rated as the most significant current issue of concern for enterprise RTOs. The top three Training Packages in terms of appearance in the scope of registration of enterprise RTOs are Business Services, Transport and Logistics, and Public Safety. The scope of registration for the majority of enterprise RTOs closely reflects their core business, often drawing all of their scope of registration qualifications from only one Training Package. The number of full qualifications awarded by enterprise RTOs in 2008 is estimated at 90,000. Of these 42% were at Certificate II level and 29% at Certificate III level. The total number of competencies completed within enterprise RTOs during 2008 is estimated to be 1.1 million. 62% of enterprise RTOs access some form of external funding (mainly Traineeship Incentives and PPP funding). For the majority of these enterprises the external funding meets less than 25% of their RTO costs. Enterprise RTOs have clearly defined training and development pathways - the target populations for much of the accredited training they provide are new recruits and entrylevel employees. Successful enterprise RTOs implement a similar workforce development model which typically leverages existing business processes and job performance measures to the maximum. The survey findings suggest Australian business enterprises are strongly resistant to the use of on-line training delivery options 76% of enterprise RTOs reported zero use of online delivery. The reasons for this resistance were not canvassed in the survey. 5 Potential areas for additional research The findings of the survey and the follow-up face-to-face interviews have highlighted a number of high potential areas for fertile and useful research directions into the future. These are: 3

8 Establishing a clear RTO definition that could be consistently applied across all ERTOs. It is consistently difficult to get clear data on the role of ERTOs while enterprises define the role, responsibility and operations of their RTO in different ways. Establishing a useful measure of the true cost of operating an ERTO, or indeed on the cost of training to an enterprise. This has proven to be very difficult exercise to date because of the wide variability in the definition of what constitutes training within an enterprise. In the past the ABS has collected training effort and costs in enterprises but this has not been done for some time. There would be benefit in obtaining current figures representing the actual cost of an enterprise running an RTO, as well as current costs of enterprises training their staff. The reported outcomes in this paper regarding the level of qualifications offered in ERTOs, provides opportunities to look at the actual level of workplace skills and the associated AQF level. The emphasis on lower level qualifications may indeed represent the actual work done, but also offers opportunities to raise the skills of workers and increase the up-take of higher level qualifications. This is an explicit outcome identified in the COAG National Agreement for Skills and Workforce Development. This paper highlights the restricted scope of registration of most ERTOs and offers potential to research engagement models with external RTOs to offer additional development beyond that scope. Useful engagement models focusing on improved workplace performance not training programs, are available and could be examined to offer a workable model for engagement between RTOs and enterprises. Return on investment analysis appears to be a little used tool in ERTOs. There would be benefit in looking at ways to assist enterprises to gauge the effectiveness of their investment in training from a business perspective. On-line training is shown to be almost non-existent in ERTOs. business enterprises not using on-line learning? Why are sophisticated Accepting that ERTOs are major contributors to skilling Australian workers and to increasing the qualification level of workers, are there funding models that could support and extend the operation of ERTOs? 4 Contacts for further information Please make use of the following contacts for further information about the content of this report or the Enterprise RTO Association. Mr Anthony Tyrrel Mob: anthony.tyrrel@performancefirst.com.au Mr John Churchill Mob: john.churchill@performancefirst.com.au The Enterprise RTO Association (ERTOA) PO Box 6024 Griffith ACT

9 7 Number, size and distribution of enterprise RTOs Enterprise RTOs now represent a distinct and significant component of the Australian VET sector. The defining characteristics of the typical enterprise RTO are; Its core business in not training and development, and It provides accredited training and assessment only to its own employees. A search of the National Training Information System (NTIS) data base in July 2009 identified 256 registered RTOs across Australia that could be classified as enterprise RTOs. A full listing of these is provided for information in Attachment C. There are enterprise RTOs registered in all States and Territories of Australia. The distribution of enterprise RTOs is shown in the following chart which gives the number registered in each State and Territory. Just over half of all enterprise RTOs are registered in NSW or Victoria. This is a reflection of both the size of these two states and the location of the majority of enterprise head offices in Sydney or Melbourne. The ACT has relatively high number of registrations on a pro-rata basis reflecting the numerous Australian Government Departments such as Defence, Customs and Centrelink that are currently registered. In September 2009 there were 4,935 registered RTOs across Australian. 2 Of these 5.2% were enterprise RTOs. The following chart shows the number of enterprise RTOs in each State and Territory as a percentage of the total number of registered RTOs within each jurisdiction. There are some significant differences In the ACT and South Australia enterprise RTOs comprise more than 10% of the registered RTOs whilst in Victoria and Queensland the proportion is significantly lower. 2 Data downloaded from National Training Information System ( on 25/09/2009 5

10 The size of the enterprise expressed in terms of the number of employees appears to have little bearing upon the decision to seek and maintain registration. The following chart, based upon survey returns, shows a fairly even distribution of small, medium and large enterprises amongst enterprise RTOs. 8 Business drivers for the enterprise RTO The key characteristic of an enterprise RTO is that training and assessment are not the core business of the enterprise. For example, the core business of Woolworths Ltd is retailing, however, it has taken a business decision to seek and maintain registration as an RTO. Why does an enterprise such as Woolworths take this significant business decision? The survey sought to answer this question by asking respondents to rate the influence of each of the following 'business drivers' on the decision to seek and maintain RTO registration. A three point rating scale was used to collect responses as follows; major influence, minor influence and no influence. These were assigned a score of 5, 1 and 0 respectively. The results are listed in order of importance in the following table according to their averaged score. 6

11 1 An internal RTO can better develop and deliver customised training relevant to the specific business needs of our enterprise 2 An internal RTO provides greater flexibility and control in the delivery of training and assessment to our employees 3 Registration as an RTO sets nationally-recognised quality standards for all training and assessment within the enterprise 4 RTO compliance standards help raise the quality and effectiveness of all training and assessment services within the enterprise. 5 Formal recognition of employee job skills and knowledge by the enterprise is a boost to employee morale and productivity 6 Accredited training and a nationally-recognised qualification are positive factors in the attraction, recruitment and retention of employees. 7 There is no external RTO capable of delivering the specialised training and assessment we require 8 RTO registration improves the public image of the enterprise as a high quality organisation in the eyes of its customers and clients 9 RTO registration helps ensure that effective systems for the collection, storage and reporting of training and job skill data are in place 19 The enterprise RTO acts as a catalyst for better integration and/or rationalisation of all training within the enterprise 11 There is an external compliance/legislative/licensing requirement for accredited training of our employees 12 The cost of using an external RTO to deliver the required training and assessment was considered to be too high 13 RTO registration helps us attract, recruit and retain qualified and experienced training professionals. 14 Registration as an RTO is a pre-requisite to accessing sources of external funding OUTCOME: The maximum possible average score is 5. The first two business drivers listed above had average scores above 4 around 87% of respondents rated these two as major influences. The last three items on the list had average scores below 2 25% or fewer respondents rated these as major influences on their business decision. The remaining nine business drivers were all scored in the mid-range. COMMENTS: The major business drivers to emerge from this analysis were related to the perceived ability of an internal RTO to: Better customise the content of its training and assessment programs, and Provide greater flexibility and control in the delivery of training and assessment. However, these two business drivers do not explicitly support a decision to seek and maintain RTO registration they relate more to a decision to provide training internally rather than seeking an external provider. Respondents identified items #3, #4 and #5 on the above list as the key business drivers 7

12 for seeking and maintaining RTO registration (each of these has an average score above 3.0). These three business drivers relate to quality assurance standards, employee morale and productivity. In 2 of the 8 case studies undertaken to support the survey HR managers emphasized the importance of the RTO in recruitment and retention of staff. In the International Hotel Chain the manager commented: Training is seen as an important benefit in working with us. We have a good reputation for training and pathways for development, supported by the RTO The RTO manager for the Fast Food Chain commented The RTO and the pathways it provides has a positive impact on our brand as an employer. It is a strong retention tool that employees can progress from Cert II to Cert II and so on in the company The range of business drivers with average scores between 2.0 and 3.0 on the above list would provide useful supporting evidence for inclusion in a business case to establish or maintain an ERTO, but are not regarded as key business drivers by survey respondents. Note that the coexistence of items #7 and #11 would mandate the registration of the enterprise as an RTO. Several respondents reported this scenario. Less than half (42%) of respondents indicated that the need to meet an external compliance/legislative/licensing requirement was a major influence in the move to provide employees with accredited training. However, the cost of accessing these services from an external provider was not rated as a significant influence in the business decision to source these services internally. The least significant influence was registration as an RTO as a pre-requisite to accessing sources of external funding more than 80% of respondents rated this as being of minor or no influence on the business decision. This is an interesting finding given the response reported below at section 9 indicating that a high percentage of ERTOs receive some form of external funding assistance. 8

13 9 The role and responsibilities of the RTO within the enterprise This survey question seeks to identify and define the specific role and responsibilities of the RTO within the business enterprise. Whilst the RTO is typically located within the HR operations of the enterprise, there appears to be a wide variety of expectations amongst enterprises as to what the RTO will do, and the resources it will require to meet those expectations. The following survey question canvassed this issue. QUESTION 5: Which of the following statements BEST describes the broad range of training and assessment activities undertaken by the RTO within your enterprise? OUTCOME: The largest group of respondents (43%) indicated that their RTO is responsible for ALL training and assessment within the enterprise (accredited and non-accredited) whilst 30% indicated that their RTO is only responsible for accredited training and assessment. Other The RTO is only responsible for quality assurance and similar activities related to compliance with the AQTF 2007 Standards (i.e. it has no direct role in the delivery of training and assessment) The RTO is responsible for ALL training and assessment activities within the enterprise (i.e. accredited AND non-accredited) The RTO is only responsible for assessment of competency within the enterprise (i.e. the 'business units' look after training activities) The RTO is only responsible for accredited training and assessment within the enterprise Smaller percentages of respondents identified a more restricted and closely defined role and responsibility for the RTO in some cases the role was restricted to the provision of a quality assurance framework for the business-focused training and job performance measurement processes provided and managed by the business units of the enterprise. Almost all of the high performing enterprise RTOs are included in this group of respondents. The roles and responsibilities described as Others by respondents appear to be minor variations of those associated with the other four statements. COMMENTS: The responses to this survey question highlight the wide range of approaches enterprises take in defining the role and responsibilities of their RTO. Caution should be applied in the use of these responses as they may indicate a variety of definitions 9

14 of just what the RTO is in different organisations. The in-depth case studies conducted to support the survey responses, indicate that the responses to this question most likely relate to just how the enterprise defines the RTO. For example in the International Hotel Chain the RTO is defined as the learning and development section of the enterprise. The RTO manager is the L and D manager for the hotel chain and has full responsibility for all learning and development across the chain and all its business sections, including senior manager development and coaching. By contrast the Insurance Enterprise interviewed in the case studies has a small specifically tasked RTO concerned with RTO specific issues such as registration and compliance, quality assurance, issuing of qualifications and record keeping. In this case the RTO has no responsibility for developing or delivering training; tasks handled by the business units. 10 Current issues of concern for enterprise RTOs Respondents were asked to rate your current level of concern for each of the following accredited training and RTO-related issues. A three point rating scale was used as follows; major concern, minor concern and not a concern. These were assigned a score of 5, 1 and 0 respectively. The results are listed in order of importance in the following table according to their averaged score. 1 Implementing the AQTF Quality Indicator collection surveys within our business environment Developing and managing effective professional development programs for our RTO team members Selecting and documenting evidence for RTO re-registration audit Knowing the best way to find and apply for external funding opportunities Inconsistent policy and procedures (e.g. funding eligibility, audit requirements) amongst the various State/Territory jurisdictions 6 Mapping/aligning our existing business processes to relevant National Training Package units of competency 7 Implementing revised training packages across States with different requirements and rules Validating our business-focused assessment processes Finding an auditor who really understands our business-focused training and assessment strategies 10 Understanding the AQTF 2007 compliance requirements and interpreting them in our business environment Finding a learning management system that really meets our training needs Identifying and using 'industry benchmarks' for establishing appropriate performance indicators for our RTO (i.e. How well are we performing?) 13 Developing effective strategies to 'promote and market' the value of the RTO amongst our employees and business managers

15 14 Identifying and using 'industry benchmarks' for establishing the appropriate level of resourcing for our RTO Developing effective business cases for training and development initiatives Developing and managing an 'internal charging regime' for RTO training and assessment services within our enterprise 17 Experiencing difficulties and delays in receiving responses from your State or Territory registration authority 18 Developing an enterprise RTO model for the provision of 'fee-for-service' training and assessment for internal and/or external 'clients' OUTCOME: The results to this section indicate that whilst there are minority sub-groups of ERTOs with similar shared concerns there is really no one major outstanding issue, other than implementation of the Quality Indicators. The top issues of concern tend to relate to external non-business focused issues. COMMENTS: ERTOA has consistently expressed concerns with the implementation of the AQTF 2007 Quality Indicators. The results of this question again highlight the Quality Indicators as a major irritation to ERTO operations. In a separate ERTOA position paper on VET regulation several ERTOA members commented on the implementation of the Quality Indicators: 3 We are a large iconic Australian company employing 34,000 Australians. The QIs will increase the cost of training and development in our organisation through duplication of data, re-working of processes and increased strain on IT resources for no additional benefit. This is not sustainable in the longer term and will not be tolerated by the business. In a similar vein the RTO manager in a national retail business comments that additional regulatory complexity will put their commitment to the NTF at risk. The additional work we now need to do to meet the National Quality Indicators will be the straw that breaks the camel s back. Operating across States and meeting all their complex regulations is hard enough. If we have to employ additional staff to comply with this extra QI requirement then management will again question why we are an RTO. 3 A VET regulatory system that facilitates workforce development in Australia s business enterprises, ERTOA See details at: 11

16 11 The status of the RTO within the enterprise There has been some recent anecdotal evidence leading to questions about the commitment of enterprises to accredited training and the longer term viability of enterprise RTOs themselves. A number of enterprise RTOs have informally reported through the Enterprise RTO Association examples of constant battles with managers to justify their existence and to demonstrate their value and the benefits they bring to the enterprise. This survey question is designed to test the validity of the anecdotal evidence and to provide a current and qualitative measure of the viability of enterprise RTOs. QUESTION 4: Which of the following statements BEST describes the current status of RTO operations within your enterprise? OUTCOME: A significant majority of respondents (79%) indicated that their enterprise either had a strong commitment to their RTO or generally agreed that it added value to the enterprise. Key to RTO current status codes A B C D E F The enterprise has a strong commitment to accredited training and the long term future of the RTO is assured Senior managers and business units generally agree that the RTO adds value to the enterprise and support its continued operations There is some disagreement about the value of the RTO but there is no immediate threat to its continued operations There is a general feeling among senior managers and business units that the RTO does not add value to the enterprise and its continued operations need to be reviewed and justified Senior managers and business units regard the RTO as a complex non-core activity and its future is uncertain The enterprise intends to discontinue its registration as an RTO when its current period of registration ends. A small number (less than 10%) reported the viability of the RTO was under some form of direct threat and that its longer term future was considered to be uncertain. These included enterprise RTOs from small, medium and large enterprises indicating that the size of the enterprise in not a significant factor here. 12

17 COMMENTS: This result confirms the status of the enterprise RTO as a viable, value-adding component of enterprise business operations. A large majority of enterprises express strong positive views of the value of their RTO and the accredited training and assessment services it is able to provide. The key characteristics that mark the differences between successful (viable) enterprise RTOs and those with an uncertain future were examined in detail in the round of in-depth interviews that supported the survey. 4 A number of common traits can be discerned amongst those enterprise RTOs with uncertain futures. These include; An apparent focus upon meeting the completion requirements of the qualification rather than the specific business needs of the enterprise An organisational set-up in which the RTO is treated as an stand-alone entity rather than another business function A failure to leverage existing business functions to support the RTO operation. For example, the use of work place assessors to assess competency against specific Training Package performance criteria without reference to job performance measures such as productivity and product quality, and not providing supervisors and managers with an effective and active role in the assessment of employee skills against business requirements. 4 See summary in Attachment A of this report. 13

18 12 Scope of registration profile of enterprise RTOs Scope of registration data for each of the identified enterprise RTOs was downloaded from the National Training Information System (NTIS). The total number of qualifications at all levels listed on the scope of registration for all enterprise RTOs was 2672 drawn from 77 different Training Packages. This data was further analysed to determine the number of times qualifications from each Training package appeared. The top twelve Training Packages in terms of inclusion in the scope of registration of enterprise RTOs are shown in the following chart. OUTCOME: Qualifications from the Business Services Training Package appeared 391 times in the current scope of registration details of all enterprise RTOs - making it the most widely used Training Package amongst this group of VET providers. Other widely used packages include Transport and Logistics (TLI), Public Safety (PUA). Key to training package codes BSB - Business Services SIR - Retail Services TLI - Transport and Logistics SIT - Tourism, Hospitality and Events PUA - Public Safety BCC - Civil Construction Industry PSP - Public Sector MNM - Metalliferous Mining HLT - Health CSC - Correctional Service CHC - Community Services TAA - Training and Assessment The remaining 65 Training Packages appearing on the scope of registration of enterprise RTOs are likely to be used for the provision of training to relatively small numbers of specialist employees. Examples here include ICA05 Information and Communications, MEA07 Aero skills and LGA04 Local Government. Note that this profile of Training Packages is based upon the number of entries on the NTIS scope of registration and not the actual number of employees undertaking and completing qualification from those Training packages in a given year. For example, qualifications from the Retail Services (SIR) Training Package are offered by a relatively small number of enterprise RTOs; however, the number of employees undertaking these qualifications is relatively large. The same is true of qualifications from the Financial Services Training Package used by financial institutions. COMMENTS: These results confirm the view that ERTOs are specialist training and development providers in their areas of expertise (i.e. the core business of the enterprise). Completion data gathered in other ERTOA member surveys suggests large numbers 14

19 of completions in a relatively small range of qualifications. This is in contrast to most TAFE and many private providers who will carry a large scope of registration in order to have a wide suite of programs to offer their customers. ERTOs should be regarded by the broader VET community and policy makers as major stakeholders in this limited range of qualifications. They should be consulted in all Training Package development and review in these areas to ensure: Relevance of contents Training Packages include and keep pace with new technology, and Appropriate skill sets are identified. The scope of registration details for each enterprise RTO were downloaded and analysed to determine the number of different Training Packages from which each enterprise drew the competencies and qualifications it provided for its employees. The results of the analysis are shown in the following chart. OUTCOME: Just over half of enterprise RTOs draw their scope of registration qualifications from only one Training Package. The selected Training Package invariably reflected the core business of the enterprise as performed by new recruits or front-line operational employees. Where the enterprise RTO drew qualifications from two Training Packages (26% of respondents), the second package was associated with either the Certificate IV in Training and Assessment qualification and/or generic qualifications from the Business Services Training Package such as Frontline Management or Project Management Enterprise RTOs offering qualifications from multiple Training Packages were typified by the Military Services (Army 16 Packages; Navy 28 Packages and Air Force 17 Packages) and larger, diverse government departments such as SA Correctional Services (13 Packages) and NSW Dept of Primary Industries (13 Packages). The majority of large business enterprise registered as RTOs offer qualifications from only one or two Training packages. COMMENTS: It is clear from the survey data that enterprise RTOs specialise in the implementation of specific Training Packages that support their core business. They should be included in all reviews of these Packages to ensure the Training Packages relevance to their enterprises workforce development needs. The data downloaded from NTIS also included the level of each qualification listed on the scope of registration of enterprise RTOs. The following chart shows the distribution by AQF level of all 2762 of these qualifications. OUTCOME: The majority (57%) of qualifications provided by enterprise RTOs are at the Certificate III or Certificate IV level.. 15

20 COMMENTS: This spread supports the view that the scope of most ERTOs represents the core business of the enterprise and that these core skills are at the Certificate III and IV level. There are obvious opportunities for external RTOs to target enterprise staff with Diploma and higher level qualifications as a method of increasing the higher level skills in the Australian workforce. In the supporting case studies the Fast Food business and Hotel Chain offered pathways to higher level qualifications internally (they have Diplomas qualifications on their scope) whereas the Federal Government Agency and the Health Insurance enterprise utilized external providers for higher level developmental opportunities. The following chart examines the level of qualification profile for each of the twelve major Training Packages identified earlier in this section. The chart shows the % of qualifications at Certificate III level or below for each package. Key to training package codes: BCC - Civil Construction Industry MNM - Metalliferous Mining SIT - Tourism, Hospitality and Events TLI - Transport and Logistics SIR - Retail Services CSC - Correctional Service PUA - Public Safety CHC - Community Services HLT - Health Services BSB - Business Services PSP - Public Sector TAA - Training and Assessment OUTCOME: The results indicate that all (100%) of the qualifications provided by enterprise RTOs for the Civil Construction Industry (BCC) Training Package are at Certificate III or below. Other Training Packages with a concentration of lower level qualifications include 16

21 Metalliferous Mining (MNM), Tourism, Hospitality and Events (SIT), Transport and Logistics (TLI) and Retail Services (SIR). The major Training Packages generating qualifications at Certificate IV or above in enterprise RTOs are Business Services (BSB) and Public Sector (PSP). COMMENTS: The results indicate that there is considerable potential to offer ERTOs opportunities to raise the skills levels and qualification levels of their staff. Whilst the results may indicate an accurate alignment between work levels and qualification levels, there would be benefit in testing this assumption with additional research. The potential to raise skills levels, and hence qualification held by staff, would be considerable. There would also appear to be opportunities for external RTOs to provide offerings to enterprises in non-core enterprise areas as a way of improving workforce capability and skill level, at the same time as raising qualification levels. Again this could be an area for additional research. 13 The accredited training activity profile of enterprise RTOs This section of the survey was designed to collect data about the quantity of accredited training activity being provided by enterprise RTOs. This set of data to be collected for calendar year 2008 included; Number of qualifications awarded for each qualification on the scope of registration, and Number of completions for each competency assessed. This represents a very large amount of data that most enterprise RTOs had already collated and reported as part of the mandatory national Quality Indicator (QI) returns. The QI database is managed by NCVER, however, the data is not currently available to third parties due to the strict privacy controls applied by the National Quality Council. In view of this each enterprise RTO was asked the following question as part of the survey: Is your enterprise willing to provide a copy of its 2008 completions report to the project team? Note: All data provided will be handled on a 'commercial-in-confidence' basis and there will be no identification of individual enterprise RTOs in the project s published report. The following responses were received for this survey question: YES 41% NO 29% I would like to know more about this request before responding 30% Nearly one third (29%) of the surveyed enterprise RTOs were unwilling to release the requested qualification and competency completion data for the purposes of this project and another 30% sought more information before agreeing. There appeared to be two broad reasons for this reluctance; the first arose from a sense of exasperation at being asked to supply the same detailed data that had already been supplied in response to a previous request from another government department. The second, but much less prevalent reason, related to perceived commercial-in-confidence issues and lack of confidence as to the purpose of the request. A follow-up survey was prepared which sought a simpler data set of amalgamated data on a totally anonymous basis from a representative sample group of fifty enterprise RTOs. The sample group reported a total of 17,583 qualification completions distributed across the various AQF levels as shown in the following table. 17

22 Qualification level Number issued by sample group in 2008 Estimated total number issued by all enterprise RTOs in 2008 % by level of qualification Certificate I % Certificate II % Certificate III % Certificate IV % Diploma % Advanced Diploma % Totals % The total number of qualification completions reported by the sample group was used to extrapolate an estimate for the total number of qualifications completed for all enterprise RTOs in The estimated total is just over 90,000. The distribution of these across the various AQF level is shown in the following chart. The majority (71%) of qualifications completed by employees of enterprise RTOs in 2008 were at the Certificate II and Certificate III levels. Around one in four completed qualifications was at Certificate IV level or higher. Certificate I and Advanced Diploma level qualifications are virtually unused by enterprise RTOs. The follow-up survey also asked respondents to provide the total number of competencies completed during Based upon the survey returns, employees in enterprise RTOs completed just over one million competencies during that year. Total competency completions for sample group in 2008 Estimated total competency completions for all enterprise RTOs in 2008 Competencies completed 201,668 1,008,340 18

23 14 Training and development expenditure Quantitative measures of the actual training and development expenditure of Australian businesses have proven to be notoriously difficult to determine because of the wide variety of strategies used for the delivery of training within the enterprise and the absence of a consistent approach to the allocation of training budgets and the recording and reporting of training expenditure. In many enterprises the training budget has been completely absorbed into the operational budgets of business units and cannot be reliably quantified. The survey posed a number of questions about the level of training and development expenditure of enterprise RTOs. QUESTION 11: Does your enterprise allocate a specific overall annual budget to support all of its training and development operations? OUTCOME: A significant majority of respondents (79%) indicated that their enterprise allocated a specific annual training and development budget. However, the responses also indicate that one in five enterprises do not allocate a specific annual training and development budget. COMMENTS: This is a surprisingly high figure for what are essentially business enterprises where a positive business bottom line and return on investment are essential for business viability. The most common reason given for the lack of a specific budget is that this type of expenditure is rolled into the normal operational budget of the individual business units and is not monitored or recorded under a specific expenditure code at the corporate level. In other words the central training and development unit has little information about, and no control, over a significant proportion of the training expenditure of the enterprise. The availability of data about the total training expenditure with the enterprise was addressed in the following question QUESTION 12: What is your best estimate of the total annual $ expenditure on all types of training and development within your enterprise? OUTCOME: 72% of respondents responded; I am unable to provide an estimate because this information is not available. 19

24 28% 72% However, thirty six respondents provided a specific best estimate figure for the total annual training and development budget for their enterprise. The reported amounts varied widely ranging from $75,000 to $40M and totaled almost $180 million for the thirty six enterprises. COMMENTS: Whilst at Q11 a high percentage of enterprises indicated they allocate a specific budget for training and development, this is often not visible or accessible to the RTO as the training sits within the operational sections of the business. This expenditure is often absorbed into general operational expenditure not reported centrally. A small minority regards these figures as commercial in confidence and prefer not provide the figures. The annual expenditure figures that were reported were adjusted to take account of the size of the enterprise reporting the figure - by dividing the annual expenditure figure by the reported total number of employees of the enterprise. This gave an estimate of the $ expended per employee per annum for each enterprise. Once again the estimates varied widely ranging from around $100 per employee to $5,333 per employee. The averaged figure for all responses was a little over $1,550 per employee per annum. There appeared to be no obvious correlation between the industry type and the reported expenditure per employee although there was a broad trend for infrastructure, heavy manufacturing and emergency service enterprises to be above the average expenditure. This last comprehensive national survey on levels of direct expenditure on employee training by Australian employers provided data for the financial year. This survey was conducted by the Australian Bureau of Statistics This survey reported a wide range of annual expenditure per employee the highest reported figures were for mining ($1,643), finance and insurance ($1,323), electricity, gas and water Supply ($1,279) and communication services ($1,279) and the lowest levels reported were for retail trade ($127), accommodation, cafes and restaurants ($147). Net direct training expenditure per employee for all industries in averaged $ The current total workforce of all enterprise RTOs, based upon the survey returns, is estimated at around 1.4 million employees. Combining this figure with an average expenditure per employee of $1,550 allows an indicative estimate of the total annual expenditure of all enterprise RTOs on training and development to be made. This estimate is $2.1 billion All enterprise RTOs were asked to respond to two questions about budget allocations and expenditure specifically related to RTO activities. The following responses were received. 5 Employer Training Expenditure and Practices, Australia, Australian Bureau of Statistics Publication Catalogue #

25 QUESTION 13: Does your enterprise allocate a specific annual budget to support its RTO operations? OUTCOME: A majority of respondents (63%) indicated that their enterprise does allocate a specific annual budget for RTO operations. No 37% Yes 63% However, a significant minority of responding enterprises (37%) do not allocate a specific RTO budget. COMMENTS: As with Q 12 it is surprising that more than one third of respondents report no specific RTO budget. The replies to these two questions raise concerns about the ability of many ERTOs to conduct any form of value for money evaluation. All enterprises were then asked to provide a best estimate of the total annual expenditure on RTO activities (irrespective of whether a formal budget had been allocated). QUESTION 14: What is your best estimate of the total annual $ expenditure on RTO activities within your enterprise? OUTCOME: Best estimates were provided by two thirds (62%) of respondents and a wide range of RTO activities expenditure was reported. These ranged from a minimum of $15,000 per annum to a maximum of $8 million per annum. Each of these best estimates of RTO expenditure was then divided by the estimates of total training and development expenditure for the enterprise to provide the following comparative figures. The chart shows the reported annual expenditure on RTO activities as expressed as a percentage of the reported total annual training and development expenditure of the enterprise. There is a wide spread in the resultant % value the largest grouping (representing 27% of enterprise RTOs) reporting that RTO expenditure represent 5% or less of the total training and development expenditure of the enterprise. 21

26 COMMENTS: The wide spread of percentages shown in the above table reflects the variety of approaches adopted for the integration of the RTO into business operations and the degree to which the RTO leverages existing business processes for its training and assessment activities. There is a close relationship between the RTO roles and responsibilities reported for Question #5 of the survey and the proportion of total training and development expenditure attributed to the RTO activities of the enterprise. Those enterprises reporting; The RTO is responsible for ALL training and assessment activities within the enterprise (i.e. accredited AND non-accredited) Also reported that expenditure on RTO activities represented 50% or more of the enterprise s total training and development expenditure. These enterprise RTOs were also prominent amongst the group who reported at Question #4 that; There is a general feeling among senior managers and business units that the RTO does not add value to the enterprise and its continued operations need to be reviewed and justified or Senior managers and business units regard the RTO as a complex non-core activity and its future is uncertain. 15 Funding of accredited and non-accredited training QUESTION 8: OUTCOME: Does your enterprise access external sources of funding to support its RTO operations? (e.g. Traineeship, PPP and other government / non-government programs) A majority of respondents (62%) reported accessing external sources of funding to support RTO operations. COMMENTS: The most important sources of external funding currently enterprise RTOs are; Traineeships Productivity Places program Australian Apprenticeship Program accessed by these A range of less significant sources accessed by small numbers of enterprise RTOs were also reported including; Australian Flexible Learning Framework State Government Funding Career Start SA 22

27 Skills Store Literacy (WEL) support Emergency Management Australia It was noted that Government Departments are by and large excluded from these sources of funding. Some enterprise RTOs have entered into partnership arrangements with TAFE colleges or other external providers with a view to sharing available funding. Whilst a majority of enterprise RTOs actively seeks sources of external funding a significant minority (38%) do not. A number of reasons were given for this including: The additional administrative workload required to access and acquit the funds is too high to make the effort worthwhile The associated bureaucratic complexity involved is too confusing Enterprise RTOs within government departments are not eligible for many types of external funding. Those enterprise RTOs accessing external funding were then asked a follow-up question about the contribution that external funding makes to their total RTO operating costs. QUESTION 9: OUTCOME: If your enterprise RTO accesses external funding what is your estimate of the proportion of total RTO operating costs currently funded from external sources? External funding met 25% or less of the costs associated with RTO operations for the majority of Enterprise RTOs accessing those funds. Less than 10% of respondents indicated a total reliance on external funding for covering the costs of their RTO operations. COMMENTS: In some cases the funding went to operational areas or into consolidated revenue within the enterprise and was not available to the RTO. The responses to this question are consistent with those reported for Question #16 Please rate the influence of each of the following 'business drivers' on the decision by your enterprise to seek and maintain RTO registration The least important of the business drivers listed and rated in the table at section 2 above was; Registration as an RTO is a pre-requisite to accessing sources of external funding. 23

28 The following question seeks to establish the degree to which enterprise RTOs successfully accessing external funding are reliant upon that funding for the ongoing maintenance of their RTO registration. QUESTION 10: Do you think your enterprise would maintain its RTO registration if it no longer received funding from external sources? OUTCOME: Only half (52%) of enterprise RTOs currently accessing external funding are confident that their enterprise would maintain its RTO registration if those external funds were no longer provided. A significant minority (20%) stated that their RTO registration would be allowed to lapse if their current external funds were no longer available. This group of respondents consists primarily of enterprise RTOs currently meeting 50% or more of their RTO operating costs from external sources of funding. COMMENTS: A significant minority (38%) of enterprises do not access, or seek to access, external funding to support their RTO operations (See comments for Question #8 at section 9 above). However, on-going external funding is either essential to, or plays a big part, in maintaining registered RTO status for just under half of the enterprises currently accessing it. 24

29 16 Return on investment analysis of RTO operations As noted earlier in this report there is anecdotal evidence that the registration and maintenance of an enterprise RTO is regarded as a complex and costly activity by some enterprise business units and senior managers. These negative opinions are strongly influenced by several factors including the degree to which training requirements are driven by the need to complete a qualification rather than real business needs, and the degree to which existing business processes are leveraged for training and competency assessment purposes. Return on investment analysis is a key function in successful business enterprises and this survey question seeks to establish the degree to which ROI analysis has been applied to enterprise RTO operations. QUESTION 15: OUTCOME: Has your enterprise conducted any type of formal 'return on investment' or 'value for money' review of its RTO operations over the past three years? Only a small minority (16%) of respondents indicated that they had undertaken some form of ROI analysis on their RTO operations. Respondents replying Yes to this question were asked to briefly describe the outcomes of their ROI analysis. The descriptions are provided for information in Attachment E. Only a handful of the responses reflect a rigorous approach to the ROI analysis but the outcomes described are generally positive. Only one respondent reported a significant ROI loss for their RTO operations. COMMENTS: Whilst these responses suggest there has been limited application of ROI analysis to enterprise RTO operations, the outcomes reported are consistent with the broad picture of the good practice training model that has emerged from this survey. The following survey comment highlights the risks to the on-going operations of an enterprise RTO if an unsuitable training model is used. The result (of the analysis) was that the ROI is borderline at the moment and this has precipitated a move back to "training for skills needed" with any competencies and qualifications falling out of that, rather than the gaining of qualifications as an end in itself. We do a lot of "compliance activity "at the moment which does not benefit the enterprise - if this increases the return may not be there and we would go to another quality system. The National Quality Indicators may be the tipping point - this is work for the sake of it and adds nothing to our business. We already gather our own (quality assurance) feedback for our own purposes. 25

30 17 Training and development pathways The following survey question addressed the typical training and development pathways enterprises provided for their employees and the contribution that the enterprise RTO makes to those pathways. Employees within an enterprise can be categorized into a number of broad groupings. These are listed below and survey respondents were asked to identify those groups provided with accredited training and nationally recognised qualifications. QUESTION 7: How many of the following broad groupings of employees are provided with accredited training and nationally-recognised qualifications through your enterprise RTO? OUTCOME: Most training that leads to national qualifications is offered to new starters and frontline staff such as those involved in customer service. The target populations for accredited training in the majority of enterprise RTOs (89%) are new recruits and entry level employees, and the principal focus of the training is the core business activities of the enterprise. Much of the training for middle and senior managers and specialist non-production employees tends to be pitched at a higher level of qualification and is often provided in partnership with an external provider. Key to employee group codes A B C D E F G New recruits and entry level employees Front-line employees (i.e. operational employees/call centre operators/front-counter employees, etc) Front line team leaders/supervisors Middle managers 'Senior' managers/executive staff 'Non-production' employees (i.e. HR, finance, planning) Other employee types not listed COMMENTS: There were clear development pathways in all eight enterprises included in the case study interviews. The most common model was sheep dip induction to the business followed by training for a specific job role. There were also examples of pathways from initial employment to higher management level positions. The RTO manager for the Fast Food company commented: Yes there are well developed pathways from initial induction into a crew member role (Cert II) to Crew Member Training and so on into supervision roles (Diploma level). The L and D manager for the Insurance Enterprise commented: Face to face induction is used for new starters mixed with on-the-job experience. The qualification (Cert III) is totally embedded in the development pathway and there is no additional delivery or assessment just to support the qualification. 26

31 The Hotel Chain has a staged development pathway with a self paced CD for induction followed by access to general, then specific job skill development. The L and D manager commented: New starters do an introductory self paced introduction to the business delivered by CD. All operational staff then do an on-line and self paced program that covers risk, compliance etc. Specific jobs then stream into their areas. For instance some will do heavy lifting some porter skills etc. These introductory programs run for about 3 months and have some face to face, work experience and mentoring. A Cert II in hospitality is mapped to this program. Assessment is holistic and on-the-job including check lists, on-line tests and question banks for trainers and assessors. There are a number of possible reasons for the high percentage of accredited pathways offered to new starters and to front-line staff including: Initial recruitment is where bulk processes are used and where cohorts will progress through structured training. There is a high percentage of enterprise staff at these levels. Enterprises are more comfortable offering accredited pathways to staff at lower AQF levels. The uneven distribution of training and development provision across enterprise employee groups evident in the above outcome has implications for the training expenditure measure described in Section 8. The use of measures such as $ expenditure per employee per year significantly understates the real cost of training an employee because in practice the training tends to be focused upon a specific smaller group within the enterprise workforce i.e. new recruits and entry level employees. The number of employees actually receiving training at any given time will therefore be very much dependent upon retention levels and business expansion initiatives. However, if it is assumed that this group of employees represents say 20% of the total workforce then the cost per head will be five times that reported in Section 8. This translates to an averaged training cost per head of around $8,000 per year for the typical new recruit or entry level employee. 27

32 18 Workforce development models All the enterprise RTOs interviewed as part of the case studies for this (See Attachment A for details) had some form of structured workforce development model for new starters. There was some variability in developing existing staff. Typically new starters had an induction, followed by job specific training. Previous surveys of ERTOA members have been able to draw a relationship between the workforce development model in ERTOs and the position of the RTO; with how the role of the RTO is valued. RTOs that are embedded within the existing processes in the enterprises for ensuring staff have the skills to do their jobs, are valued by the organisation and are secure in their role. RTOs that are set up as an addition to the work done to ensure staff have the skills to do their jobs are often at risk. 6 While there are considerable variations in the models of workforce development displayed in ERTOs 7, there are a number of common themes. The following model is used in one form or another in all of the viable ERTOs interviewed for this report. The key features are leveraging existing business processes and job performance measures for RTO purposes. The model is described below: TRAINING NEEDS ANALYSIS CORPORATE STRATEGIC GOALS BUSINESS OBJECTIVES BUSINESS OPERATIONS LEGISLATION & COMPLIANCE CORPORATE INITIATIVES CAPABILITY REGISTERS WORK LEVEL STANDARDS POLICY & PROCEDURE MANUALS WORK INSTRUCTIONS POSITION DESCRIPTION REQUIREMENTS 4 TRAINING CONTENT & MATERIALS TRAINING PROGRAMS & INTERVENTIONS 7 FEEDBACK EVALUATION OF TRAINING 5 ASSESSMENT OF INDIVIDUAL & TEAM TRAINING NEEDS INDIVIDUAL & TEAM TRAINING PLANS 6 TRAINING DELIVERY ASSESSMENT 8 HR PROCESSES FOR WORKFORCE PLANNING RECRUITMENT PERFORMANCE APPRAISAL & SUCCESSION PLANNING MAPPING ISSUE OF FORMAL QUALIFICATIONS 9 ASSESSMENT OUTCOMES See explanatory notes over page 6 See details at 7 For a more detailed description see: 28