Trained to thrill

July 11, 2012, 10:39 AM UTC

FORTUNE — The problem with corporate training is obvious: almost no one pays attention. Perhaps worse, often-important company policies and security procedures are typically presented once during a new worker’s training and seldom seriously revisited. In a workplace where manual labor is involved, that can mean serious injury or worse.

Carol Leaman, CEO of startup Axonify, argues that sitting workers down in half-hour-long sessions or making them watch mind-numbing training videos are poor ways to go about it. Case in point: it’s not uncommon to hear workers brag that they completed training in the background, while they did something more interesting or important at the same time. By some estimates, employees forget 90% of what they’ve learned just days after. That matters because it can cost some companies millions of dollars compensating workplace injuries that could have been avoided. “The way our brains work is we remember the first thing and the last thing,” says Leaman, “but very little in the middle.”

Enter Axonify. Founded in 2011 and funded by the Menlo Park-based growth equity group Bridgescale, Toronto’s Investment Accelerator Fund, and Leaman herself, the company aims to transform the way employers train workers. The Waterloo, Ontario-based startup with 16 employees offers cloud-based software built around a behavioral-learning technique called “spaced repetition.” Here’s how it works: Instead of packing training into one long, mostly-ignored session, Axonify breaks things up. It serves up trivia-style questions, bits of data, and games on computers, smartphones, point-of-sale, and security terminals that take up 90 seconds a day or less to complete. Leaman argues workers better remember information in the long run without taking a large chunk of time out of their shifts. Each employee’s experience is personalized, so a company can target that individual’s so-called “knowledge gap.”

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Six retailers are quietly testing the software. One, Pep Boys, an auto company with over 700 stores and nearly 19,000 workers, rewards employees with cash and merchandise for playing. In return, some employees have reported back that the culture in their workplace has improved. The software boosts worker confidence, increases their efficiency, and puts them in the good graces of their employer says Axonify.

Axonify can measure how much money they’ll save by reducing workplace injuries over time. One unnamed large retailer approached Leaman about reducing the number of incidents reportable to the Occupational Safety and Health Administration (OSHA) — an injury or illness requiring more than simple first aid — by 5%. After workers trained with Axonify, incidents dropped by as much as 25% in some facilities. “They were shocked,” says Leaman.

Leaman, 46, says startups are her raison d’etre, having advised more than 50 ventures over the years, including as a mentor at the Waterloo-based startup incubator Accelerator Centre. Axonify also isn’t the first startup she’s helmed. Her previous venture, PostRank, was a well-liked service that ranked posts in an RSS feed based on a number of social media metrics. When it was acquired by Google (GOOG) last summer for an unspecified amount, Leaman found her next opportunity in Axonify, turning it from a struggling brick-and-mortar-bound HR business into the e-learning service.

Leaman predicts 2013 will be Axonify’s big year. While the company may only have 6 clients now, it’s in talks with 75 retailers interested in deploying its software. And beyond human resources, they’re exploring ways to expand into other areas — hospitality, entertainment, healthcare, even oil and gas — wherever “lack of following procedure creates big loss.”