What is the true cost of training?

What do you need to consider when designing and planning for a development program?

Let’s be honest. Time is money. Not developing employees is even more costly in the longer term. Development of employees, increases productivity, engagement and retention, which are all key factors in a successful business. But, do you really have the time to create a program, or training sessions ‘from scratch?” Here are 9 things to consider when designing a development program.

1. Design and development costs

The first category of cost to be considered in the design and development of the training program, whether this comprises classroom events, self-study materials, simple coaching sessions or some combination. You will need to consider:

Internal days of design and development (1-hour training design typically takes  = 8 hours of development for an experienced learning designer.

2. Cost of external designers or instructional design developers

Other design and development costs (purchase of copyright, branding of program, learning licenses, software licences such video creation, eLearning platforms, and  travel expenses, etc)

Outright purchase of ‘off the shelf’ training materials or courseware  (don’t forget to check out customisable training materials options at Facilitated Training.) The cost of a contract instructional designer averages around $800.00 per day in Australia.

3. Promotional costs

Most organisations devote effort to promoting their training programs. This second category takes promotional costs into account:

  • Internal days of promotional activity
  • Costs of external agencies
  • Creation of newsletters, updating on intranets or similar
  • Webinars
  • Promotion via LinkedIn, or other social media sites
  • Other direct costs of promotion (posters, brochures, etc.)
  • Time to create and deploy the promotional activities 

4. Administration costs

An allowance must be made for the time taken by the training department in administrating the training program. This will typically be a factor of the number of learners:

  • Hours of administration required per learner
    • Printing of training materials
    • The organisation of Room hire or charge back of the training venue
    • Organisation of Catering
    • Collation of learner attendance records
    • Collation of level 1 training feedback and reporting
    • Collation of data into reporting cycle
    • Uploading of learning articles/SCORM files, references into LMS or similar

5. Business or Department costs

The next category of costs relates to the delivery of the training, whether this is mediated by the business (tutors, instructors, coaches, etc.) or is self-administered (workbooks, CBT, online training, etc.). Let’s start with the information needed to calculate costs:

  • The number of learners who will be going through the program
  • Hours of group training (whether classroom-based or delivered in real-time, online)
  • Hours of one-to-one training (typically face-to-face, but could conceivably be conducted by telephone, video conferencing link or in real-time, online)
  • Hours of self-study
  • Additional administration hours (preparation time, the time needed to review or mark submitted work or the time needed to correspond by email or multi Media  with online learner or employee)

6. Materials

Then there’s the cost of materials:

  • Cost per learner of training materials (books, manuals, consumables, etc.)
  • License cost per learner for use off-the-shelf materials or access to eLearning library

7. Facilities

You will also need to allow for the cost of your training facilities, whether these are internal or external. Make sure to include the rental or notional internal cost of the following:

  • Training rooms  or Room hire
  • Flipcharts
  • Data projector access
  • Catering
  • Open learning/self-study rooms /break out room for activities
  • Equipment used misc

8. Learner costs

Probably the most significant delivery cost relates to the learner themselves. It is only necessary to charge a learner’s cost against the program if training is undertaken in time that would otherwise be productive and paid for, so you only need to estimate the amount of travel and training that is undertaken in productive work time, i.e. not in downtime, breaks or outside work hours. This, of course, will depend on your organisation’s policy.

When an employee goes through a training program in work time, the organisation is not only having to pay that person’s payroll costs, they are also losing the opportunity for that person to add value to the organisation. When a salesperson is on a course, they are not bringing in new business. Similarly, a production line worker is not creating products, a researcher is not developing new ideas and an accountant is not finding ways to save money.

If an employee can be easily replaced while they are undergoing training, then there is no lost opportunity – the cost is simply the employee’s payroll costs. In many cases, however, it is simply not practical to obtain a suitable replacement, so the output that the employee would have generated in the time that they are receiving training will be lost. In this case, the true cost of the employee being trained is the lost opportunity – the ‘opportunity cost’. The calculation of opportunity costs goes beyond the scope of this article, but, suffice to say, they are greater than an employee’s payroll costs and need to be considered in any serious evaluation of costs.

Finally, don’t forget to include any direct leaner expenses – travel, accommodation and per diem or out of pocket expenses.

9. Evaluation costs

You also need to make an allowance for the time spent evaluating the training, whether this is an ROI analysis or some other method. There are various ways to determine the Return of investment of learning.  Some simple methods include:

  • Ensure that their manager is familiar with the learning outcomes and how it can be applied back to the learners’ role.
  • Schedule time with each learner in 30, 60 and 90 days time to discuss how they have applied new skills
  • Have the learner share an update about what they have learnt with their fellow team members.
  • Have learners coach others to share their new skills and abilities
  • Conduct a post-training assessment to confirm the application of understanding and application back into the workplace.

Michael Leboeuf in his book “The great principle of management” warns of the dangers of ignoring training:

“If you believe that training is expensive, it is because you do not know what ignorance costs. Companies that have the loyalty of their employees invest heavily in permanent training programs and promotion systems. “

The problem is that many organizations see training as an expense and not as an investment. Untrained employees will, inevitably, lack the knowledge to use company resources properly, which will lead to waste, in a service industry; lack of knowledge about procedures will affect customer interaction and retention. Because of this, your employees, your company, and your clients will all suffer.

The Cost of Training

Of course, employee training is an investment-driven affair in any organization. It incurs significant cost and efforts to execute it for the best business results. No matter what stage your company is operating; whether it is a developed business, developing business or just a start-up; training is fuel as like as capital to take your company’s vision forward.

The Cost of Not Training

The untrained or less competent resource may impact negatively on business results. For example, a less skilled resource may cause the company’s client to frustrate by their poor quality work, communication and work style. Moreover, they may fail to win new prospects too.

Simply put, sooner or later, The Cost of Not Training will exceed The Cost of Training.

Have you considered all 9 factors 9 Fundamental things you cant afford to ignore when it comes to Learning program design.

For more detailed information as to how you can get these best out of your investment of training and development of your people, contact Facilitated Training. www.facilitatedtraining.com

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 Facilitated Training has the solution that you need. Editable training materials that can be used again and again. Insert your company logo, add in case studies or examples from your workplace, or train using the quality training materials, as is.

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Facilitated Training offers training and organisational development resources to facilitators, trainers, coaches, HR managers and individuals.

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  • Attendance record
  • Training evaluation sheet

Click here for customisable training materials that will assist your workplace in managing resources and output.

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About the author: Colleen Condon

Colleen likes to keep things creative in all that she does, often using marshmallows as a source of inspiration.

Everyone knows that ongoing learning is essential for both personal and professional success and yet, for many, this means hours of attending dead boring training or completing’ losing the will to live’ eLearning modules. Colleen’s mission is to end tedious professional development while ensuring targeted outcomes for learners and businesses.

Colleen has honed her skills over the last 20 years across multiple industries and locations. Her previous role saw her overseeing the training and development needs of over 60, 000 employees across 13 countries in the APAC region.  This enabled her to hone skills that celebrated diversity and understanding human commonality through learning, and that in the absence of a common language, flip charts and coloured markers helped her to overcome most challenging situations.

After taking a ‘go away package’, in 2019, Colleen founded her own business, Facilitated Training, harnessing her global learning experiences and sharing them through ready to use learning resources, specialising in leadership, mentoring, guest speaking, creative problem solving, filling the gap of high quality, customisable training resources and tools.

 

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