The ROI For Employee Training Crisis – Where Is the Money Going?

by drjim on August 21, 2008

How can you maximize the ROI on the investment that you make in training your employees?

How can you maximize the ROI on the investment that you make in training your employees?

So you’ve decided that your department / team needs to get some fancy training. Great – more knowledge is always better right? Hold on a minute, maybe not. What happens if after you’ve paid for all of this wonderful training and even some certification (CISSP, CNE, PMP, etc.) your employee decides to walk out the door? That would be the workplace equivalent of buying a new car and then driving it off the lot and immediately totaling it by smashing it into a wall. What can you do to boost your chances of getting a good return on your investment (ROI)?

Staffing flexibility is a challenge without your pricey investments leaving once you’ve sunk your money into making them better than they were. Now I must confess that I am a sinner when it comes to taking the training and running. I ended up getting three additional college degrees that were paid for by my then employers. This might be just a bit different from what we’re talking about here because (1) that work was done at night, and (2) I hung around for at least 4 years each time so that I could finish the degree up. What we’re really talking about here is the more expensive stuff.

Once upon a time, when the only way to get new management was to grow it inside the company it was probably ok to not keep track of what kind of payback you were getting from your training dollars. However, now that company loyalty has gone the way of the pension, it’s probably a good time to take another look. Ultimately, training is an investment just like everything else the company spends its money on and you sure would like to maximize your return.

How to do this? One quick and easy way to get a better return on your training investment is to lower your costs. The fastest way to do this is to find a way to get your employees to share in the cost of the training. Sounds crazy doesn’t it? Here’s the thing: your employees fully understand that certain types of training will make them more valuable. Getting them to shoulder part of the cost may not be as difficult as you might think. Specifically, if the training is going to be accomplished by having the employee take on a learning project, then consider having them do this in addition to their normal job (this way you don’t have to hire in order to backfill their position). The employee gets valuable experience and access to other parts of the company. The cost to them is that they pay for it with their personal time.

A slightly more Draconian approach is to ask an employee who is preparing to receive some training to sign a contract stating that after they complete the training they will stick around for some minimum amount of time or they will be responsible for paying back some portion of the training costs. It turns out that about 20% of U.S. firms have some sort of system like this in place already. What’s interesting about this approach is that often times if the employee does decide to leave before their agreed to time is up, then the firm that hires the employee will end up paying the training fee. You will still miss the employee; however, your training budget will appreciate the pay back.

Finally, there is one more way to handle the issue of maximizing your return on training investments. If an employee that you’ve trained does leave, then perhaps keeping in touch with them and keeping them posted on changes and events at the firm would be a good idea. This is a relatively small investment and yet the next time that that employee decides to switch jobs, there is a good chance that if they’ve been kept in the loop then they may consider returning to work for your firm. Now that would be a real return on your training investment!

So which approach would work for your firm? Do you do any tracking today of what kind of return you are getting on your training investments? Do you feel that training an employee makes them more or less likely to leave once the training has been completed? Leave a comment and let me know what you think.

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{ 4 comments… read them below or add one }

Training Time August 26, 2008 at 4:49 pm

There will always be a worry that employees will leave once they get all they can from training … but what would happen if you don’t train them and they stay?

I think training encourages loyalty, because it shows that the company cares enough to invest in employee development. You make a good suggestion in your post to keep communication lines open if an employee does choose to leave. Put your employees first and help them succeed with training, hopefully they’ll thank you with loyalty.

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Dr. Jim Anderson August 27, 2008 at 12:38 pm

Point well made. I guess one good example of what you are talking about would be everyone’s favorite poster child, Southwest airlines. They provide 3 weeks of training to start their flight attendants off with and then keep sending them back for more. These staffers don’t leave because the company is such a good company to work for. Hmm, maybe that’s the secret to getting the biggest bang for your training buck?!

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Deresa Claybrook May 6, 2009 at 8:07 pm

Good article on ROI and training. As a Human Resource professional I found that training people is never a waste and there really isn’t a need for having them sign a contract. I really feel that managers need to make sure that they are training people on what they really need to be trained on and what they will use in the case of their job. It really is not necessary to send a whole department to training on a new software application if only two people will be using it. I really feel that just a couple of people in the department knowing the system will work.

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Dr. Jim Anderson May 9, 2009 at 10:40 pm

Deresa: I agree! You bring up an interesting point. By rotating training and allowing some employees to become the go-to expert on some system / task, you can boost their job satisfaction. Because they now feel important and realize how they are contributing to the company, their job satisfaction may increase. The manager saves money, get happier workers, and everyone benefits. Now if we could only get that training budget increased…

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