Training should be seen as an “investment” in your organization and people, rather than an “expense”. But with strong competition for resources – especially when profits must be increased or costs must be cut – training and/or professional development often falls on the chopping block. To prevent this from happening, it is strategic to do an assessment of your training needs to determine which are the most effective methods and evaluate the return on investment (ROI) for each.
More than 50 % of CEOs acknowledge that the main reason for training is upskilling. Another 25% say they do it primarily to motivate, and thereby retain staff. So training in order to keep good people interested in their jobs and loyal to your organization is essential to sustainable growth. We all know that staff turnover has high costs to the organization (estimated to be in excess of 30% of the departing employee’s salary) and these costs can be avoided when staff feel motivated and supported and therefore remain loyal and productive.
Surveys reveal that money – while always important and usually among the top five – is not always the most important motivator for staff. However, also in the top five motivators is “opportunity for growth and development” which can include formal and informal personal and professional training. On the other hand, this is also one of the top five reasons given for seeking another job in a study of exit interviews.
Offering training to your employees can contribute to something called the “optimism factor”, which is defined as “an inclination to hopefulness and confidence”. Optimism has been shown to have an impact on all the critical business measures, from productivity to profitability. So when looking for what to cut from a budget, even when times are tough, it is important to not cut items that contribute to the optimism and motivation of your staff. If you say that “people are our greatest asset” – then walk the talk and give them the support they need to do their jobs fully and better.
There are many ways to measure the ROI on training. (This article by Clive Shepherd at Fastrack describes many.) However the real benefits are often intrinsic to the organizational culture and difficult to measure. Furthermore, the payback can grow immeasurably when trainees are encouraged to apply what they have learned through a variety of methods, such as:
- Presenting their learnings to colleagues in staff meetings.
- Use their training to innovate current processes or products within the organization.
- Internally train or coach their peers and co-workers on the principles that they have acquired.
So when deciding whether your training budget should be cut, maybe you should ask your staff what they think. Perhaps they have more innovative ideas for cost-cutting measures that won’t directly impact on their dedication and commitment to you and will improve the bottom-line of the organization.