Training Must Prove Its Worth

There is no question that training is good for business.  It can increase productivity dramatically, and is often used to attract and keep good talent.  It is common for employees, especially those in the younger generations, to remain at a company for less pay if they believe they are receiving worthwhile training.  It also builds morale because training is viewed by many workers as a validation of their current worth and an assurance of future confidence.  Statistics indicate that companies that spend more than the average amount on training have lower turnover rates.  The problem is, of course, that when the economy takes a dive –no matter how temporary—the first thing that gets cut from the budget is often training.  Far too many employers inaccurately view training as a luxury, not unlike a lavish Christmas party. 

It is imperative that employers NOT cut training programs that are giving them a good return on their investment.  Especially in a downturn economy, businesses must use every tool at their disposal to increase productivity.  But most employers lack a strategy for calculating the value of their various training programs, and are prone to cut where they should not cut.  So, how do you go about determining the bottom-line value of training? 

  • (1) First, training should only be undertaken after careful analysis up-front. Training must be tied directly to a particular business need. No training should be done simply because it “would be good or nice†but because it will ultimately be of gain to the business.
  • (2) Second, there must be observable and measurable behavioral objectives to come out of the training. Training must create a quantifiable difference in something. For example, did the customer service training actually increase the number of repeat customers? Did the management classes you sent your supervisors to actually reduce turnover in their departments, thereby saving money for the company? This requires that the employer monitor and collect hard data both before and after training occurs. This monitoring can be time-consuming, but failure to do so means you have no way of judging the training’s effectiveness.
  • (3) Third, there must be some mechanism in place to determine whether any post-event changes were actually attributable to the training – sometimes a difficult task if other events took place at the same time. The easiest way to track this is to ask participants themselves the amount to which they attribute the training to the resulting changes in performance.
  • (4) Next, any beneficial changes you believe the training has wrought must be converted to actual dollar values. If the training resulted in more units produced, or fewer errors, or less overtime, calculate those savings.
  • (5) Finally, tabulate the program costs == not just the amount of the check you wrote to that training provider but also the cost of taking staff away from their jobs for training, including their salaries and benefits. Then you can easily calculate the return on your training investment by dividing the net benefits by the costs and multiplying by 100%.

This process may seem time-consuming but it is the only way to ensure that you are keeping the worthwhile training that will make you competitive. 

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