The Impact of Staff and Manager Training on Firm Productivity: Differential and Interaction Effects

Abstract

Productivity is a crucial goal for firms, yet training investments to develop employee skills and enhance productivity face scrutiny. Despite considerable research into training inputs and performance outcomes, several gaps remain. We investigate the differential effects of managerial and staff training on labour productivity, drawing on human capital theory to explain the value of training investment for workforce development. The analysis focuses on 19,289 firm-year observations from the UK Employer Skills Survey and Investment in Training Survey paired with the Business Structure Database in five waves over a 9-year period, accounting for potential selection bias. Examining several measures of training for different occupational categories and formal-informal modes of training, we find that productivity rose with greater training investment for both managers and staff. Among staff occupational categories, training for professionals and associate professionals yielded particular benefits for the firm. The interaction of staff and managerial training generated further gains, illustrating the value of complementary skill development for different employee levels, especially prioritizing intensity of training expenditure over broad coverage.