Since training and development budgets are continuing to grow in most organizations and are often very easy to quantify, they are often the first to go during a cost reduction drive. As the output - Return on Investment (ROI) - is often not immediate and many training programs often fail to deliver what was expected, these are often treated by organizations as secondary activities which can be postponed till the revenues and profits improve.
However such traditional approach to cost savings can be damaging for the organization in the long run. Because knowledge is more specialized and its shelf-life ever shorter, companies that have the ability to learn faster than their competitors by exploiting training and development initiatives as an integral part of their business strategy can have a significant competitive advantage. Reducing the training budget could often result in lowering the efficiency and effectiveness of staff which would in turn reduce the productivity and work quality, both of which are required by the organisation for better cost management.
There is though a word of caution against just undertaking any kind of training. One of the most important aspects of training from an organizational standpoint is determining the costs and benefits that are involved with a training program. All training programs must build to a desired outcome that will advance the objectives of the department/organization, the employee and the customer. Without a clear payoff, managers will back away at the expense of sending a team member through the training and the loss of productivity during the training. Also employees will be less enthusiastic for training if they fail to see a benefit to their job performance and career opportunities.
In our organization we use the same method developed by Donald Kirkpatrick nearly 5 decades back, with some minor modifications, to manage training costs and increase training effectiveness. These criteria are:
1. Post training feedback to check reactions to training
2. Tests to check levels of knowledge acquisition
3. Quarterly performance evaluation to confirm changes in job related-behavior
4. Improvements in organizational results
5. Calculating the training ROI.
A comprehensive evaluation of ROI is typically conducted for approximately 20% of all training programs, especially the ones with high numbers of participation or cost, as the collection and analysis of data can be time consuming and expensive. To calculate ROI of training we use the following method:
1. Identify and separate the training outcomes
2. Convert these outcomes (benefits) into monetary values
3. Calculate the direct and indirect costs of the training
4. Compare the value of the outcomes to the training costs.
This approach has resulted in all the stakeholders (including Managers, Staff and even Customers) prioritize the training type, duration and frequency of each training program rather than arbitrarily capping the training budgets.
No matter whatever the circumstances are, there should be no compromise on training. In a highly competitive industry like IT, we realize that to maintain our competitive edge we need to reliably acquire, develop and retain the knowledge, skills and abilities of our workforce. If training is frozen due to budgetary constraints, it is highly likely that the organization might stagnate or lose its competitive edge. In this knowledge economy it will be a hard position to be in, as the company then always has to play catch up to the industry leader who will be at a much higher level productivity and quality of work. Just hiring talent from outside will not solve the problem as the recruitment costs and time to hire and train new staff are significantly higher.
Some Suggestions for Organizations on Managing Training Effectiveness
The aim of any organizational training should be to integrate it into a Talent Management Program. There should be few areas which might reduce training costs by bringing more focus and direction to the training programs. Some of these can be:
1. All trainings should match the core competency and the business model of the organization. If the company key differentiator is software development in a certain technology, most training programs should be focused on this area.
2. Understanding the employee needs and backgrounds before developing any program. For example, training programs could be categorized as basic, intermediate or advanced to clearly set the expectations of the participants.
3. Do an industry-level analysis and/or include staff feedback to develop a best practices approach to any training program. Inputs for training could come from staff that interact directly with the customers and have a first level feel of the type of training that is required to improve work quality. Alternately it can be found by looking at what competitors are doing to solve the same problem.
4. The more a company can quantify training outcomes, the more effective its training programs will be. Post training evaluation of the training effectiveness through performance evaluation can be a good indicator of measuring the tangible benefit of training.
Training should always be considered as an investment in the organization's human resources, hence it is expected to have a return which can be measured by productivity and efficiency substantial enough to justify the costs associated with the program as well as producing a visible benefit to the organization.
Excerpts of this article has been published in Express Computers - http://www.expresscomputeronline.com/20090907/technologylife01.shtml
However such traditional approach to cost savings can be damaging for the organization in the long run. Because knowledge is more specialized and its shelf-life ever shorter, companies that have the ability to learn faster than their competitors by exploiting training and development initiatives as an integral part of their business strategy can have a significant competitive advantage. Reducing the training budget could often result in lowering the efficiency and effectiveness of staff which would in turn reduce the productivity and work quality, both of which are required by the organisation for better cost management.
There is though a word of caution against just undertaking any kind of training. One of the most important aspects of training from an organizational standpoint is determining the costs and benefits that are involved with a training program. All training programs must build to a desired outcome that will advance the objectives of the department/organization, the employee and the customer. Without a clear payoff, managers will back away at the expense of sending a team member through the training and the loss of productivity during the training. Also employees will be less enthusiastic for training if they fail to see a benefit to their job performance and career opportunities.
In our organization we use the same method developed by Donald Kirkpatrick nearly 5 decades back, with some minor modifications, to manage training costs and increase training effectiveness. These criteria are:
1. Post training feedback to check reactions to training
2. Tests to check levels of knowledge acquisition
3. Quarterly performance evaluation to confirm changes in job related-behavior
4. Improvements in organizational results
5. Calculating the training ROI.
A comprehensive evaluation of ROI is typically conducted for approximately 20% of all training programs, especially the ones with high numbers of participation or cost, as the collection and analysis of data can be time consuming and expensive. To calculate ROI of training we use the following method:
1. Identify and separate the training outcomes
2. Convert these outcomes (benefits) into monetary values
3. Calculate the direct and indirect costs of the training
4. Compare the value of the outcomes to the training costs.
This approach has resulted in all the stakeholders (including Managers, Staff and even Customers) prioritize the training type, duration and frequency of each training program rather than arbitrarily capping the training budgets.
No matter whatever the circumstances are, there should be no compromise on training. In a highly competitive industry like IT, we realize that to maintain our competitive edge we need to reliably acquire, develop and retain the knowledge, skills and abilities of our workforce. If training is frozen due to budgetary constraints, it is highly likely that the organization might stagnate or lose its competitive edge. In this knowledge economy it will be a hard position to be in, as the company then always has to play catch up to the industry leader who will be at a much higher level productivity and quality of work. Just hiring talent from outside will not solve the problem as the recruitment costs and time to hire and train new staff are significantly higher.
Some Suggestions for Organizations on Managing Training Effectiveness
The aim of any organizational training should be to integrate it into a Talent Management Program. There should be few areas which might reduce training costs by bringing more focus and direction to the training programs. Some of these can be:
1. All trainings should match the core competency and the business model of the organization. If the company key differentiator is software development in a certain technology, most training programs should be focused on this area.
2. Understanding the employee needs and backgrounds before developing any program. For example, training programs could be categorized as basic, intermediate or advanced to clearly set the expectations of the participants.
3. Do an industry-level analysis and/or include staff feedback to develop a best practices approach to any training program. Inputs for training could come from staff that interact directly with the customers and have a first level feel of the type of training that is required to improve work quality. Alternately it can be found by looking at what competitors are doing to solve the same problem.
4. The more a company can quantify training outcomes, the more effective its training programs will be. Post training evaluation of the training effectiveness through performance evaluation can be a good indicator of measuring the tangible benefit of training.
Training should always be considered as an investment in the organization's human resources, hence it is expected to have a return which can be measured by productivity and efficiency substantial enough to justify the costs associated with the program as well as producing a visible benefit to the organization.
Excerpts of this article has been published in Express Computers - http://www.expresscomputeronline.com/20090907/technologylife01.shtml
Comments
Post a Comment