Cost Effectiveness and Your Training Investment

Training can be an expensive proposition, when you factor in all direct and indirect costs, training can quickly become a huge expense. Think about how much your company is investing in employee training and development and consider the effectiveness of your existing strategies for obtaining as high a return as possible on this investment. This article considers the efficiency of cost and the effectiveness of methods of training

The Cost of Training & Development

To get a complete picture of the impact of training on your company’s bottom line, it is wise to look beyond such direct expenses as the cost of the workshop and the cost of training material to such indirect costs as:

  • Travel and mileage
  • Hotel expenses
  • Meals
  • Compensation costs (salary and benefits) for each employee involved in the training
  • Opportunity cost (for example, while a salesperson is attending a training, how many potential sales are not being closed)
  • How much time will employees spend away from the workplace (number of staff x hours x hourly rate)?
  • Is there a cost related to covering for employees receiving training (Costs associated with overtime rates or temporary staff)
  • What pressure does the employees absence put on other staff?
  • What is the impact of the employees absence on your service levels?( lost calls, high telephone response, safety issues?)
  • What is the actual cost of using outside trainers v.s cost of sending employees on external courses?

The point is that your employees and contractors can cost you money, or make you money. Effective training, does not ‘cost’ as much as it can pay!  However,  improperly trained and poorly motivated people can cost you a fortune, £100,000s annually.

Measuring cost alone is irrelevant. Cost-effectiveness is what matters. An ineffective solution that does not produce the intended result is a waste of money!”

Ineffective Methods

Let’s consider the costs associated with ineffective delivery methods, many organisations favour lecture as a method of delivering training, research suggests that lecture presents one of the most ineffective forms of learning. With traditional, lecture-based, training, content can pass virtually in one ear and out the other. Lecture alone has many limitations:

  • Our ability to retain information decreases badly after 10-20 minutes. 
  • The audience is passive – Communication is one way
  • Experts – usually subject matter experts are not always effective teachers
  • Cognitive overload:  too much content leads to cognitive overload.

The evidence of the weakness of lectures to  is devastating. Bloom (1953) found that during lectures students’ thought involved attempting to solve problems, or synthesise or inter-relate information for only 1% of the time, while 78% of the lecture was spent in”passive thoughts about the subject” and “irrelevant thoughts”. Some people place so much faith in their ability to stimulate thought via their lectures and expect thinking skills to be absorbed, like some mystical vapours, from an academic atmosphere”.

Research by the National Training Laboratory (World Bank)
shows that the amount of new information learners retain depends
on how the information is presented.

This research suggested retention rates for seven common ways of teaching new information as follows:

  • Lecture 5%
  • Reading 10%
  • Audio-Visual 20%
  • Demonstration 30%
  • Discussion 50%
  • Practice by doing 75%
  • Teaching others 90%

In other words, learners learn best when they are actively engaged in their own learning.

HR Zone recently published an interesting article Employers cling to ineffective training method   in which Dr John McGurk, the CIPD’s learning and talent development adviser, said: “Many of the learning approaches used by organisations are legacies  of a learning environment where the classroom, courses and ‘sheep dip’ learning were the order of the day. However, in today’s environment, the skills of continuous collaborative and connective learning are paramount.”

As Confucius said nearly 2,500 years ago,
I hear and I forget.
I see and I remember.
I do and I understand.

…………………Memory Fails Us All!

Return on Investment (ROI) in training and development means Connecting and measuring all of the economic returns generated from an investment in a T&D programme. That means measuring both the costs and the impact of the training.  Zero impact is not an option whatever the cost!





Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s