A resource for safe and effective troubleshooting from the leaders in simulation training.
Hello again, Troubleshooters! For the past few weeks, we’ve been looking at troubleshooting from a slightly different angle—that is, troubleshooting your human resources processes.
In Part 1, we looked at the hiring process and what you should be looking for in an applicant when hiring a new maintenance professional. In Part 2, we saw how Administrators can create custom tests in Simutech Multimedia’s Admin Dashboard (Course Manager) to evaluate applicants’ aptitude and further narrow down the field of candidates.
In Part 3, we talked about how much staff turnover costs organizations, and how to retain your valuable staff once you’ve hired them.
Today, we want to talk about how to make the case to management for training for your staff.
Managers and Directors Need the Numbers
When you’ve got the right staff in place, and you’ve decided on the benefits of additional training, the next step is to make the case for training to the decision makers in your organization (if that’s you, this is also a good way to determine for yourself whether it makes sense.)
In order to justify training as a valid business cost, managers who make decisions about training need to be able to see how the costs compare to the benefits; in other words, what the return on their investment (training ROI) will be.
Calculating Your Training ROI
ROI measures the amount of return on any investment, relative to the cost of the investment. So, to calculate your training ROI, you will need to know both the cost and the benefits.
Costs that you will have to measure include:
- Developmental and Promotional Costs. These are the costs of setting up the program, e.g., time spent designing a curriculum or having it done by consultants, any travel days required, and the costs of promotional materials directed at employees.
- Costs of Administering the Training. This includes the administrator’s time, the educational materials, (e.g. books, manuals, computers, training programs), and the classroom space in your organization or off the premises.
- The Opportunity Cost of Training. This refers to the productivity lost while a worker who is normally contributing to your organization’s production is attending training (and still being paid). It can be the most significant expense incurred during training.
Forecasting the Benefits
Until you’ve actually completed the training, you can’t quantify the benefits with absolute certainty. However, you can reasonably forecast the benefits using data that is available to you.
- Labor Savings. One benefit of training is labor savings—people who know how to do their job properly do it more efficiently. Less effort is required to achieve the same output. Perhaps you will save on overtime costs, or on salaries for skilled workers who are in high demand due to the talent shortage.
- Productivity Increases. This is the other side of the labor savings coin. Trained staff can achieve greater output with the same time or effort as untrained workers. An example would be skilled electrical troubleshooters who can get production line machinery up and running again faster than staff who have never been trained, who use trial and error to fix problems. This is an area of huge potential savings, when you consider that even a few minutes of downtime can cost thousands of dollars of lost production.
- Other Income Generation. Training can often result in income generation through unexpected means, such as when non-sales staff make sales referrals, or when trained troubleshooters spot problems before they happen.
Some of these benefit areas may apply to your organization more than others. Make reasonable forecasts in the areas with the greatest potential impact on your business.
Calculating the Return On Investment
Once you have estimated your costs and benefits as accurately as possible, the formula for calculating your training ROI is simple:
% ROI = (Total Benefits / Total Costs) x 100
You can also present your case in terms of “payback period,” or how long it will take before the benefits have paid for the training. The way to calculate payback period is:
Payback Period = Total Costs / Monthly Benefits
The payback period may be years or months. The shorter the time frame, the more likely management will be willing to invest in the training.
Join us next week as we look at how employees who see the value in troubleshooting training and want to participate can approach their supervisors.
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