Pop quiz

It’s no secret that people are a business’s
most important resource. After all, people leverage your other assets to make things happen. Employees who are the best
trained — who know their jobs and the “soft
skills” it takes to do them effectively — are
best equipped to help you succeed. Yet, nurturing human capital through training and
education can be an afterthought. Or it may
be the first line item to be cut when your
company is experiencing tough times.

“The ROI for training and educating a
work force is not always transparent,” says
Diane Richards, associate vice president of
human resources for National University,
“but there are effective ways to measure
human capital development.”

Smart Business spoke with Richards
about the benefits of investing in human
capital and how business owners can best
measure their return on investment for
employee higher education and training.

What are some of the key benefits to investing in education and training?

The number one benefit for both the company and the worker is workplace satisfaction. Employees who feel that the business
cares enough to pay for further training and
education have greater loyalty and higher
morale, resulting in better retention. In this
tight employee market, it generally costs a
business twice as much to hire a salaried
employee than to keep one.

Human capital development is also important for attracting good employees, since
education and training are ranked high
among candidates today as critical factors
in job selection. In the same vein, advanced
training and education increase the possibility of promotion opportunities, which often
increases retention.

In what forms do employee training and education take?

Training and education do not necessarily
have to take place outside the company.
Some of the best training scenarios can happen internally through mentoring programs
and workshops held within the business.
Many Fortune 500 companies already have these management training or ‘grooming’
programs in place. That said, it is effective to
train both in-house and through other
avenues, such as seminars, networking and
formal courses at a college or university.

How can a business ensure that it gets a
good return on investment?

Profit in most companies is seen only as
financial, but the profit gained in the marketplace by well-trained and knowledgeable
employees is often harder to track.

One way to measure is to give the employee on-the-job exercises and projects that
test the learning obtained. This way, the
manager can see how the employee applies
the knowledge gained. Setting challenging
goals is another way that managers can
gauge how an employee has benefited from
a course or seminar.

Another way to measure ROI is through an
after-course assessment done by the employee. Measurement does not have to wait
until after the course is completed, but can
be done while the employee is being trained,
taking a course or pursuing a degree.

How can a manager track the ROI during the
time the employee is taking the course or
receiving training?

Ask the employee to bring back concepts
learned to share with the rest of the department in a presentation. Ask the individual
for periodic updates. If appropriate, ask the
employee to use the business setting as a
proving ground for concepts learned. There
are many creative ways in which lessons
learned in the classroom can be applied
directly to a current business problem.

Even a one-day seminar can have a positive influence on the work unit. Make sure
that every time employees go for training of
any kind that there is some method for the
employer to assess what they have learned,
and possibly ask what they can contribute
via a presentation to the work unit.

What advice do you have for an owner or
manager who is considering sending employees for further training or education?

The first thing to do is to assess the business’s needs and tie them to the employee’s
strengths and challenges. What will the business need from the perspective of people-power down the road? How will this course
or degree help the business get to that goal?
The idea is to have the training or education
position the employee better for what the
organization needs to meet its goals.

Second, investigate education options. A
course or degree may be the best route, or it
may not. Perhaps an internal seminar would
be a better alternative. The idea is to make
sure that the method of instruction is appropriate for what the individual and the organization need.

The bottom line, I believe, is that the
employer needs to be aware that human
capital development is important — even
critical — to a company’s success. Every
employer has an obligation to its work force
to have a safe working environment, competitive wages, and so forth. Part of that
obligation is to ensure that the work force is
well trained to not only do the job, but to do
it well.

DIANE RICHARDS is the associate vice president of human
resources for National University. Reach her at (858) 642-8191 or
[email protected].