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 the two most popular ones, i.e. 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 are its lower cost and the measurability of results. On the other hand, a classroom-based set-up allows learners to interact and offers real-time answers to students’ questions. From experience, what we have learned is that there are certain subjects suitable to e-learning and a few that should be done in classroom sessions. 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 participate is also a factor. Due to cost-cutting, many companies will send out only a select few and not everyone as 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 the training is to check its estimated impact on overall profitability. This is a harder one to quantify, but here is a possible example:
Overall Target: Increase profitability by 30 percent
Sales Target: Undergo "Closing the Deal" training course for salespeople to increase revenue by two percent more
Operations Target: Undergo "Hiring Effective People" training course for HR to reduce required staff, thereby reducing operation cost by one percent
BEFORE AFTER
Revenue = $100 $102
Cost = $90 $89
Margin = $10 $13
Net Effect: 30 percent 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 into 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 is done repetitively over the years such as company orientation, the solution is to ask an e-learning expert to convert these courses to electronic format. This option may have a high upfront 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 that want to save money and time and get the best of their investment, outsourcing will almost always be better than doing it themselves.
The fact is that a lot of the return on training investment is guess work. However, and in addition, we need to ensure that the 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 events. 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 which have invested the most in training programs saw their share prices and bottom line grow the most. If you spend less than two percent of the payroll on training, chances are you are not getting all you can out of your employees.