What kind of business case can you make for training?
US businessman John Wanamaker is credited with saying, ‘Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.’
The value of training can be equally tricky to pin down. There are some people who would argue that training never changed anything and that all the money spent on it is wasted, and in fairness, a good percentage probably is thrown away on ill-advised, untargeted and poorly executed programmes. And since you can just ‘Sit them with Mary,’ there’s surely no need to pay for formal training for staff. Added to that, in straitened economic times, the training budget can be one of the easiest — and one of the first — to be cut.
What are the hurdles in business training?
Faced with those hurdles, how do you create a sound business case for investment in training? As with so many things, by taking a strategic approach. Training can be seen as soft and fluffy, something that’s nice to do when we have the cash; to argue persuasively in its favour you must show that training makes good business sense and will positively impact the bottom line.
What can we recommend?
We recommend that you take a three stage approach to building a business case for training.
- Prove the need
- Identify the benefits
- Prove success
- Let’s take a look at those in a little more detail.
Prove the need
One of the biggest mistakes companies make when they are planning training initiatives is to buy in a generic course and put everyone through it. Old hands will roll their eyes and brace themselves, having seen it all before, and newer employees will wonder how on earth to apply what they’ve learned back in the workplace. This type of training often amounts to little more than going through the motions, can be costly, and can even do more harm than good: it can cause confusion and dent morale. It would be enlightening to know how much of the money that has been sunk into team-building exercises over the years was actually money well spent!
So how do you avoid falling into that trap? By using hard facts to identify and then prove the need.
There are a number of ways you can approach this, starting with conducting a training needs analysis, based on role requirements. This will allow you to measure actual employee performance against optimum employee performance and then plan to bridge the gap. An added benefit is that you can target just those people who need training; if only 20 per cent of staff in a department fall short of the required standard, why train them all?
is to look at the ‘failure rate’ of a process or department, whether in terms of quality control or customer complaints. This will spotlight areas of concern, where perhaps training initiatives should be implemented first.
Always remember, training should be targeted and delivered to the people who need it at the level required. Training people unnecessarily, or pitching it at too high or too low a level, is a waste of time and money and can do more harm than good.
Identify the benefits
No matter what you do, you need goals and targets. Without them, you have no way of knowing whether you have been successful. It’s the same with training, and the goals you set need to be specific. So the aims of your initiative might include:
- To reduce customer complaints by 15 per cent over 6 months
- To improve customer retention rate by 5 per cent over 12 months
- To reduce rejects by 10 per cent over 3 months
- What your goals are will depend on the nature of your business, but this is a crucial step: it is this figure that can help you to make your case in terms of value and/or cost/benefit, as it can be used in a ‘payback’ calculation.
How long until I see the results?
Payback will show how long it will take to earn back your investment in a training initiative — or any other project, for that matter — provided your input data is sound. It is an effective calculation; quick to do and easy to understand. For example, if you can show that by spending $5,000 on training, you can boost profits by $3,000 per quarter, then your initiative has paid for itself in 5 months. If you are competing for budget and an alternative contender will take 8 months to show a profit, you have an immediate advantage. Generally speaking, it is those projects (whatever their nature) that have the shortest payback that are the most attractive.
Incidentally, every training workshop, course or programme should also have aims and objectives for learners. This is necessary for two reasons; first, if you don’t know what you want people to get out of training, you cannot know what to put into it; and second, learners will want to know what’s in it for them.
This is a step that must be built in to your project plan right from the start. Assuming you get your budget funding, you will be required to prove that your targets have been met.
Start by building an evaluation step into the training itself. That way, if the programme is falling short of the mark, you know quickly and can call a halt until you identify the problem. Is it the trainer? Is it the material? Is it something else?
As the programme rolls out, and afterwards for a period of time, make sure you are supplied with data relevant to your objectives. If your goal was to reduce customer complaints by 15 per cent over 6 months, you need weekly complaint figures for at least that length of time. If you aimed to reduce rejects by 10 per cent over 3 months, you need to see those figures to monitor the drop.
Bear in mind that while you will initially need to use forecasts to build your case and get the go ahead, you must convert those forecasts into outcomes. Hard facts demonstrate success and can prove that training has hit the bottom line. In addition, by proving that what you do is well planned and adds value to the business, you help to pave the way for your next business case.