Human capital is supposed to be a company's greatest asset, and indeed most employees will tell you that good employees will be the key difference between them and the competition. And therefore training is a critical investment, and a good way to hang on to the best of our teams. But how do we make sure that the training we implement is effective? And since quite a number of us invest in staff training, the question that we frequently ask and should be asking is "Is it worth every penny?"

An easy way of answering this question is to use a direct cost comparison among several training methods offered in the market. A good starting point is comparing between the two most popular ones, ie technology-based training or more commonly known as e-learning versus traditional “classroom with instructor” based learning. Among the number of well-known advantages of e-learning is its lower cost and the measurability of results. On the other hand, classroom based set up allows learners to socialize and it offers real time answers to student questions. From experience, what we have learned is that there are certain subjects suitable to be delivered in e-learning and a few that should be done in a classroom session. This way, you maximize the effectiveness of the employees' absorption of the training materials.

The size of the audience or how many of the employees were able to participate is also a factor. Due to cost-cutting reasons, many companies will send out a select few and not everyone they would otherwise want to. The company then relies on the employees who were able to attend the training session to "echo" what they have learned. This may not be effective unless the attendees are instructors themselves who can properly teach and "echo" the materials.

Another way to test the effectiveness of training in our organization is to check the estimated impact on overall profitability. This is a harder one to quantify but here is a possible example:

Overall Target: increase profitability by 30%
Sales Target: undergo "Closing the Deal" training course for salespeople to increase revenue by 2% more
Operations Target: undergo "Hiring Effective People" training course for HR to reduce required staff thereby reducing operation cost by 1%

          BEFORE AFTER
          Revenue = $100 - $102
          Cost = $90 - $89
          Margin = $10 - $13


          Net Effect: 30% increase in profitability

An even more difficult but equally important way to measure training effectiveness is the cost of lost productivity. Putting people in the classroom translates to lost productivity and therefore lost revenue. The optimal solution is to blend classroom sessions with technology based training at appropriate times.

Some companies are faced with the question of whether to "do it themselves" or outsource. Classroom sessions that are done by an in-house trainor will be expensive to maintain. You will need a room especially conducive to learning and an instructor that is part of the company’s payroll. Outsourcing is best because training companies who already have the expertise and experience will also have highly-trained instructors. In addition, e-learning is also best outsourced because, similar to classroom sessions, e-learning requires specialized skills to properly implement and manage the project. The time, effort and know-how are all so demanding that almost all e-learning projects require full time focus. For training that are done repetitively over the years such as company orientation, the solution is to ask an e-learning expert to convert these courses into electronic format. This option may have a high up front cost but it will definitely have longevity; in the long run, it will cost the company less to invest in this type of conversion. For companies who want to save money and time and get the best of their investment, outsourcing will almost always be better than doing it yourself.

The fact is that a lot of the return on training investment is guess work. However, and in addition, we need to ensure that training programs we undertake are properly thought out and managed. Much of the training we now send people to is a knee jerk reaction to an ad or flyer about some event. It requires careful planning and execution to administer an effective training program. And a well-designed program yields enormous benefits not only to the employees but to the overall health of the company. As one recent IDC study shows, companies that invested the most in training programs saw their share prices and bottom line grow the most. If you spend less than 2% of the payroll on training, chances are you are not getting all you can out of your employees.

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