For decades, companies have struggled with the real costs
Benefits and return on investment of training costs. With
With the rise of online learning opportunities, organizations are shifting their focus from delivering costly on-site training programs to leveraging the new tools and technologies that are now available. Organizations need to understand and apply business analytics to fully appreciate the effectiveness and impact of e-learning and training.
Companies invest a lot of money, resources and time in
Education. According to a 2002 ASTD State of the Industry Report
More than 375 large corporations were surveyed and companies issued
between one (1) and three (3) percent of their total salary
Education. This resulted in a per person basis of more than
$700 per employee per year. In ultra-modern companies that
increases significantly to US$1400 or more per person per year.
When training costs are viewed as a percentage of company costs
Win, then the training budget could make up just as much
5-20% of total profit margin. With rising costs
Travel and accommodation costs as well as rising costs
and spending on registering and attending meetings or developing internal training programs will undoubtedly increase the cost of the training budget, which only underscores the need to justify its cost.
To effectively measure training programs, companies
are faced with three critical issues: efficiency, effectiveness and compliance. Every important decision regarding education falls into one of these three areas. Fortunately, each of these three areas can be compared and measured.
The 2002 ASTD study reports that only a third of companies
measured the effectiveness of learning and that 12% or fewer attempted to measure the impact of their training programs on the world of work and business. Why? Interestingly, the main reason companies don’t measure upskilling is the lack of experience, tools and infrastructure to do so.
It is impossible to improve or effectively optimize training
program if it is not benchmarked or measured. Training should be measured and evaluated in the same way companies measure productivity, profit or quality. Many scorecards, dashboards, algorithms or metrics have been developed for this purpose.
If you look at the total investment in further training per person in the
companies (see above), the question arises as to how much they should spend
on measurement and evaluation? One, five or ten percent? Looking back on the ASTD 2002 best practice study, we find that most companies spend 40-50% of their total training costs on content development, 8-10% on infrastructure and the remaining resources on salaries and facility costs.
To many, the development of measurement and assessment tools sounds like an additional cost and expense for the organization. Organizations that allocate a small but fixed percentage of their training budget to this purpose can effectively measure the effectiveness of their overall investment in training. One study found that companies that adopt this model and spend $2-10 per employee on learning analytics report tangible improvements in measurability and ROI.
Organizations must justify the costs associated with measuring learning by identifying the business impact and the risk of not training their employees. This could be quantified by fines or lost profits due to non-compliance with any law or standard. Often this can lead to fines against the company or even lawsuits or other forms of lost profits.
In healthcare, for example, lack of compliance with correct
The collection, coding and reporting of cancer incidence could have a far-reaching impact on the budget that is not only spent on training and operational costs associated with the cancer registry department, but also negated the costs associated with the development of cancer programs and community outreach programs do. Although program development and outreach programs can compete for consumer dollars, all of this could be for naught if the required reporting is not accurate and in accordance with state or accreditation program standards. Cancer Registry training programs can ensure that data management processes are managed appropriately.
So, in summary, companies should focus on development
and measuring their learning programs. The investment in
Learning analytics will outweigh the risks of inadequate training. The success of any organization is directly dependent on its employees’ understanding of its products, services, operations and policies. Employees must be thoroughly trained in compliance, standards, confidentiality, non-disclosure and other legally sensitive areas of the company. And companies need to be able to track and measure this with effective learning analytics.
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Copyright 2005, MA Webb. All rights reserved
Thanks to Michele Webb