Recovering the cost of an employee training program

By Reylito A. H. Elbo

I’m the CEO of a small enterprise with 200 plus employees. My human resources manager keeps on recommending that we conduct a training program for our employees except that he can’t give me a good reason on how we can recover our investment when most employees resign at an average of two years of employment with us. Please give me your advice. — Black Panther.

Your problem has been tackled and solved hundreds of times in the past with an old story that was traced to Henry Ford: According to a CFO: “What’s the point of investing in training when people leave just the same to join another company?” The CEO replied: “What if we don’t train and they stay with us?” In other words, why would you allow untrained employees to commit mistakes and contribute to operational waste, which is more expensive in the long run?

So it’s a choice between the devil and the deep blue sea.

The lesson of this story was reinforced by Sir Richard Branson of the Virgin Group who gave counter-intuitive advice to management: “Train people well enough so they can leave, treat them well enough so they don’t want to.” Therefore, everything about training has something to do with respect for people.

Ignore employee training and you can expect a lot of visible and invisible problems happening around us. This reminds me of one tough job interview question posed by a senior top official to a friend applying for the post of training manager some time ago. The interviewer asked: “When will you stop employee training?”

My friend replied: “When the organization has declared bankruptcy.” He got the job.

WHAT TO DO

In reality, however, many organizations spend a lot of money on useless training programs for the wrong reasons. “The big one is having no strategic focus to the training. Companies don’t train employees in the skills most critical to the business’s stage of development. They send the wrong people to training, over-train them and spend too little time on implementation,” according to Christo Popov, in a 2015 article in Forbes.

In the Philippines, I can see the same issues happening to organizations eager to join the bandwagon, if only to impress people and their management. For one, they don’t connect training with the strategic direction of the organization. Many would simply report on the number of participants who attended the training session.

The more participants they report to top management, the better for the training department, regardless of any concrete measure of whether the participants have improved on their performance. So, it boils down to what a CFO would call “return on investment,” an exercise we can characterize as “quantifying the unquantifiable.” Therefore, how do we reconcile the CFO’s concern for RoI with that of the CEOs quest to quantify performance? There are several things to consider:

One, quantify the RoI in actual monetary value. But then, how are you going to do it? It’s easy for certain type of jobs, like a sales team or a group of factory workers with a production quota or a group of safety professionals who would want to maintain zero-accident levels in the workplace. Even then, how do we isolate the value of training from other factors like the motivation of incentives?

On the other hand, if the RoI of a training program is unquantifiable, there are many ways to define its advantages. Even if the performance of people can’t be measured in actual monetary value, just the same we can measure other related matters, like employee morale, which is often manifested by habitual absenteeism and tardiness, if not turnover.

Two, require people to conduct an echo seminar. If you send employees to attend a public seminar, then the next best thing for your organization is to create an in-house training program where the key learnings are shared with other employees. This creates a multiplier effect. You don’t have to “steal” the content of a presentation from the training program that your employees attended as most resource speakers will not share a soft copy of their presentation material.

In fact, it would be better if your employees create a road map or a template outlining how to implement the knowledge gain from attending an external program. At times, it’s called a “reflection” seminar so the parties can evaluate its internal applications and tweak the learning experience to meet the specific demands of the organization.

Last, require employees to sign an employment contract. If the amount involved in attending a training program is prohibitive, the best approach is to require the concerned employee to commit himself to stay in the organization for at least one year from the conclusion of the seminar. This also applies if you’re sending employees to a foreign-based business conference.

You can also create a formula for this. For example, if the total training expenses amount to P300,000 per program, then you can force the employee to stay in the company for at least two years. If not, the other approach is for you to become resourceful. You can also send your employees and executives to a foreign-based program, all-expenses paid by the Asian Productivity Organization and the Asian Overseas Technical Scholarship. However, these programs are competitive and cannot easily be secured.

TRAINING NEEDS ANALYSIS

As a matter of procedure, before an HR manager can even propose a training program, he must be supported with credible information drawn from performance evaluation of employees. This can be easily done by requiring all people managers to participate in a corporate-wide training needs analysis or TNA. Without it, it’s difficult to define the specific training needs of the organization and much more to calculate its benefits.

In conclusion, rather than avoid employee training because of its attendant costs, it’s indispensable that the organization figure out why it must require its managers to identify the skills and knowledge gap in the workforce that need to be closed in order to achieve organizational objectives. If management knows the real issues, then it becomes easy for it to invest in employee training.

ELBONOMICS: The best way to understand a subject matter is to teach it.

Send anonymous questions to elbonomics@gmail.com or via https://reyelbo.consulting

This article was republished with author approval (originally publish on BusinessWorld).