RoI on training

RoI on training is a topic always available for a debate. There’s a good reason for that: people are keen to know if the investment in workforce training is worth the cost. After all, the investor needs justice on the investment made. It is another story that still few people out there consider training cost as an expense and not investment.

Surprisingly, we never ask such questions when we want to enroll our kids in a school. Is it really worth to enroll our kids in a good school paying hefty sum of fees? Did we ever do a RoI calculation on the investments made on our kids’ education? We do that because we want to transform our kids. That is our biggest return. Similarly, we can say this in our workplace too however, we have to show the money to the bosses to get an approval for a training-delivery.

Instead of trying to set a specific figure in currency on the value of training in a workplace, let’s consider some ways that training programs can affect our bottom line by increasing production and efficiency and/or by cutting waste and costs.

The factors to be considered for calculating RoI on training are: Training time; creation of training (Time); Assessment of Training (time); Development of LMS, customized training programs etc. This should be related to the outcome of the training programs delivered.

Honing of Skills/ Updating of knowledge:

In this age of exponential changes, what students learn in their first year of graduation becomes obsolete by the time they complete their graduation. This means, every employee has to undergo training on a continuous basis in order to keep themselves updated with the ever-changing technology. Missing the bus in this process would lead to hidden losses in every operation of the Organization. Plugging these losses with real-time training can be equated to return on the investment.

Increased Efficiency by Narrowing Skill Gaps:

It might be shocking, but the bitter truth is, any production worker had been trained only on 20% of his or her work responsibilities. This means a skill gap of 80%. The first step in narrowing this gap is to create a competency table for each tier in the organization. Then map the competencies and rate where do they stand and what needs to be done to close the gaps. This exercise will yield the Training Need Identification and the list of subjects on which training has to be provided. Such trainings will narrow or close down the gaps existing today and this will indirectly increase the efficiency of the Plant. The reduction in skill-gaps can be treated as the return on investment in training.

Decreasing Costs of Injuries due to Safety Training:

Of all the reasons to provide training on safety, the first & most important is that nobody wants to see anyone get hurt. No job is worth getting hurt or killed for—it’s something you hear all the time. Companies do have financial motives to provide safety training. When a worker gets hurt, sick, or even killed on the job, it’s expensive. You’ve got to take time out to ensure the safety of that worker; you may have to train a replacement; you may have to reassign the sick or injured worker to a new, less-critical position. Periodical training on Safety measures and Ergonomic practices would save Lakhs of rupees in compensation and medical bills. This could be treated as RoI in training.

Decreased Costs of Machine-downtime & damage due to Improved Operations Knowledge:

Any Downtime is expensive. A properly trained workforce can help us decrease that downtime dramatically. Continued training also would facilitate transition of maintenance engineers from Time Based Maintenance to Condition Based Maintenance which has multiple dimensions of saving. Not to mention that the training on processes would reduce the rejections which can directly add up to the production units. This means 200% saving. This could be included in the RoI.

Decreasing Compliance Costs with Better Compliance:

One should provide compliance training to your workers for the right reasons: because it makes them safer and because it’s the law. But along with those carrots, there’s a stick: penalties and fines. And these can be costly. Such hefty fines would fetch us more training programs.

Decreasing the Training Life Cycle:

Aging of existing workers is inevitable and turn-around would be high. Skills are lost along the workers at times. If we calculated the training duration to the young and new generation to bring them to the level of retiring lot, one would not be surprised to find that it will take more than 10 years. This is not an unusual situation but common one. Providing the right type of training blended with simulations and theory is critical for this. A pre-prepared syllabus and with determined delivery methodology, this period can be brought down, and this would reflect in increased productivity.

Conclusion:

Training Can Provide ROI. There you have it. Training programs can directly or indirectly improve our bottom as expressed above. Needless to say, the transformation the organization undergoes in their culture after such repeated training would yield much more benefits than the real money.

In this world where the attention span of the people are very weak, the training modules have to be prepared in a manner in which it enthuses them to get involved. No longer will the pedagogy methodology work. This does not mean that Andragogy is the right method. This too in exclusion might not work. It has to be a proper mix of both and slowly transforming to Heutagogy (self-directed learning). A learning Organization should be having people with self-directed learning. Kaizen Institute offers variety of training programs that is not focused only on Class-room lectures but a mix of Group-work, simulation games, Gemba (workplace) visits, Guest lecture with case-studies etc., Experience the RoI by associating with KAIZEN™ College.

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