You want to train your employees, but you don’t want to waste money on that training. Not only is it expensive, it’s time-consuming. And, time is money. Here’s how you can measure the ROI and what to look for.
Choose what to measure
Choose which items to measure, based on the type of training being offered. If your training is supposed to teach some new, faster, process to make a product, for example, then you’ll want to start with how long it takes to make that product now. That’s your baseline. The variable is your new process.
Then you can measure efficacy of your new process.
Be careful about investing in education
Employee training and education systems are important, but not all of them are worth dumping money into. Most of these systems out there need to be evaluated for accuracy and efficacy. It’s easy to throw up a training course online, or start a training company without many credentials. With the proliferation of social media, bought “likes” and “astroturfing,” a company can make themselves appear to be more than what they actually are.
So, for example, if you’re investing in Real estate continuing education, you should know how to measure the results of that education. If it counts towards legal and regulatory requirements for CE, then the company selling you the training and the proctor and testing facility should easily be able to prove it.
Employee training should be practical. So, if you’re making a widget, then you should be able to measure the educational course’s effect on an employee’s ability to make that widget. For example, if it normally takes an employee 40 hours to produce 60 widgets, then you know what your benchmark is. Your employee should be able to improve on that process somehow.
In means instead of making 12 widgets per day, they should be able to make more or somehow improve the quality of the widgets they produce so QA is rejecting fewer widgets.
Related: 8 Strategies For Getting The Most Out of Your Employees
Calculate overhead, production, and training costs
Calculate the company’s pre-training, per-widget, production cost. If it costs your company $180 per employee per week for wages, materials, equipment, facilities, distribution, and overhead, then you know how to measure other costs. If the employee makes 60 widgets per week, it costs the company $3 per widget.
Over the course of 50 work weeks, it costs $3,000 per employee in profits.
Reducing this cost should be the goal of the education and training. You can measure ROI of the training in this way to ensure it’s paying off. If it’s not, then you can invest in other training or eliminate it altogether until you find something with a positive ROI.
It takes time to implement training, so don’t think if an employee isn’t improving right away, the training doesn’t work. Help employees implement their training through process improvement training.
After it’s all said and done, you should be able to calculate the new cost per widget and also give employees a path toward continual improvement using the training you gave them.
Jay Marsden has several years of experience as an employee training coordinator. He enjoys taking some time out each month to write business articles.