"Only the educated are free."
—Epictetus
Roman philosopher, slave and author of Discourses
Most organizations would like to be able to measure the
costs invested in training initiatives against anticipated results. The
challenge is that it is far easier to measure the costs of conducting training
than it is to quantify results. A useful tool in determining costs and savings
is to compare costs per participant versus savings per participant.
Comparing costs and benefits can be done in the following
four simple steps:
1. Calculate the cost of training. This will
include training costs such as:
Facilitator fees
Training design
Course materials
Videos and workbooks
Facilities rental
Equipment rentals (such as overhead projectors)
Production downtime (including employee time
off the job)
Videoconferencing facilities
Specialized computer equipment
Administration (such as registration procedures
or confirmation notices)
All the relevant costs, divided by the
anticipated number of participants, gives the cost per participant.
2. Determine the potential savings generated. These
savings might include:
Fewer errors
Reduced customer turnover
Less equipment downtime
Increased revenue collection
Faster equipment startup time
Reduced employee turnover, when turnover is
attributable to poor supervision
Proper implementation of new customer
strategies
Higher workplace morale through more effective
management practices
Less time lost to grievance hearings and work
stoppages because of ineffective supervision
Reduced recruitment costs (because training can
create more job-ready candidates for promotions)
Maximized productivity of new employees through
efficient orientation training
3. Calculate the potential savings. To calculate
potential savings, set goals for post-training achievements by identifying and
quantifying the changes a training initiative will produce if all other factors
are constant. The factors in the formula include the following:
Current level of performance (for example, 200
error rates per month; six lost customer accounts per month; five days lost to
work stoppages per year)
Translate the current level of performance into
a dollar figure (for example: 200 error rates x five minutes’ correction time x
$15 salary per hour = $250 per month).
Identify the change that training can produce
(for example, reduce errors to 50 per month).
Calculate the savings that the target criteria
will generate (for example: 200 errors - 50 errors = decrease of 150 errors per
month savings = 150 x five minutes/60 x $15 = $187.50).
Identify a meaningful time line for realizing
savings, based on your best business predictions about factors contributing to
errors remaining unchanged.
Identify the number of employees in the target
training group.
Divide the total anticipated savings by the
number of participants to identify the savings per participant.
4. Compare the costs to savings.
Multiply the cost per participant by the total
number of participants.
Multiply the savings per participant by the
total number of participants.
Compare your figures to establish your business
case for training.
This exercise not only identifies actual costs and
realistic savings but also ensures that your training expectations are
reasonable and targeted to measurable business outcomes.
