Training and the bottom line Featured

8:00pm EDT July 26, 2007

There are many ways that well-trained employees benefit a company’s profitability. “Training provides a positive return on investment beyond the traditional more-widgets-per-hour measurement,” says Anne Hach, executive director of training and development for Corporate College, a division of Cuyahoga Community College. “If you fully look at the productivity of your employees, and you fully look at the costs associated with poorly trained employees, the value of training becomes obvious.”

Smart Business spoke with Hach about how high-performing organizations justify their training budgets.

What impact does an effective training program have on a company’s bottom line?

Effective training programs should have specific learning objectives, measurable outcomes and in some way impact the productivity of a company. The positive impact is crystal clear when you’re talking about hard-skill training for employees who are, for instance, actually engaged in making widgets.

If training helps an employee who usually makes three widgets per hour make four widgets per hour, there is a measurable impact on the bottom line. The same goes for sales training. If a sales training program helps a person increase their percentage of closed sales by 10 percent, they are that much more productive.

Regardless of the competency, it’s important to match your outcomes and your expectations to the content and depth of the program. Long-term impact comes from consistent, connected training.

What about training in the soft skills, like communication, conflict resolution, leadership and management?

It’s a little bit deeper level of thought when you try to justify leadership training. For all companies, linking the bottom-line impact to the benefits of training can help explain the importance to people at all levels of the organization.

The costs of a bad manager add up. There are the costs associated with selection and hiring, as well as the impact that bad managers can have on the people around them. Lower productivity, higher turnover, time spent with HR and poor customer service are all real costs that can be attributed to poorly trained managers.

It’s a little bit simplistic, but it’s incredibly important to consider training’s impact on one of the great American business traditions: promoting from within. When you take the guy who can make eight widgets an hour and promote him to foreman, you may not take into consideration whether the guy’s a leader. But with the proper training, you can make him as productive in his management skills as he is a producer of widgets.

Also, when one of your dependable managers leaves, you quickly find that one of the huge costs of running a business is on-boarding leaders. But if you’ve got bench strength, and you can promote someone from within, that’s a much more cost-effective way of growing your leadership and your organization.

In what other ways can training save money? Fewer accidents? Lower liability insurance rates? More employee stability? Better products, ergo more sales?

Those are the classic ways that training can save you money or can earn you more money. Another way is through improved customer service. For instance, one unhappy customer generally results in a direct revenue loss. Having a well-trained customer service employee can minimize the monetary loss or avoid the loss entirely.

Another issue revolves around having your employees well trained in human relations. What if the company is involved in a sexual harassment suit, mainly because an employee wasn’t properly informed? How much money does that cost? How much money does the company save by not having to endure a court battle — not to mention the financial liability should you lose?

Should a training program be a part of company culture?

Training outcomes should be imbedded in a holistic approach. The goal is to create a culture of learning. Instructional training should be a part of the overall picture, but there’s also self-directed learning through the Web or even something as simple passing a pertinent book around the office.

Training proponents who justify the cost of training to their boss are winning only half the battle. You must also take it to your employees. If they attend training sessions, they are investing time so you need to make sure they understand the value to them.

Training doesn’t need to be confusing. What’s important is to make sure that learning is always happening. You have to really think about the value of having a high-performing organization and the multitude of steps you must take to get your people to that level.

ANNE HACH is executive director of training and development for Corporate College, a division of Cuyahoga Community College. Reach her at anne.hach@tri-c.edu or (216) 987-2962.