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Consider These Cost Factors

May 1, 1996
Related Topics: Basic Skills Training, Featured Article
A program like Borg-Warner's is a sizeable investment, so before you jump right in, there are several factors you should consider.

  1. The cost per employee, per hour is likely to be greater with a consultant than with a community college-but the overall cost may swing either way depending on how many contact hours you'll need with each program to achieve the same results.
  2. When comparing programs, be sure to consider the quality and the approach of the instruction, as well as the student-teacher ratio.
  3. Your first group to go through a new training program is likely to be more costly than those following it because there'll be some one-time setup fees. You also may be able to negotiate better rates for successive groups.
  4. The most expensive element actually isn't the cost of the program—but the lost productivity: the time your employees are away from their jobs and their overtime pay. These costs depend on how much your employees are paid and how much you expect them to produce in a given hour. If the pay rate is $10 per hour and employees are making $40 per hour in product, you're losing an average of $50 per employee per hour of training.
  5. You can expect consulting services to run approximately $15 to $20 per employee, per hour-on top of the $50 per employee, per hour above.
  6. Ask for arrangements that tie performance to cost. For example, EdWel & Co.'s performance clauses guarantee that predetermined goals will be met before the client pays the full fee.

Personnel Journal, May 1996, Vol. 75, No. 5, p. 116.

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