Employers must calculate the true cost of training

Dawn Turner says employers, especially those in the SME sector, must know how to calculate the actual cost of training before implementing programmes.

Despite year-on-year rises in GCSE and A-level pass rates, more and more employers say the standard of literacy and numeracy of new employees is falling. Indeed, the fact that the government had to commission a study into training needs for UK plc flies in the face of apparently rising educational standards.

The¬†Leitch report “pledges” to tackle the skills crisis and suggests that employers should be forced by law to provide training unless they ramp up their workers’ basic skills by 2010.

But, if legislation is used as a stick to force employers to address this skills “crisis”, it will either lead to a tick-box approach to training or development, or it won’t happen.

Realistic aims?

Can the aims of this report really be achieved given the challenges that employers face when assessing the true cost of training and development? Small and medium-sized enterprises (SMEs) very often don’t have training expertise in-house, which means that employers will need to consider some major issues when reviewing their training and development responsibilities.

To paraphrase Donald Rumsfeld, are employers really in a position to know what their staff don’t know and do they have the ability to identify skills gaps? If not, then they need to hire training experts to come in and assess their organisation. But this can be costly and time-consuming.

Once training needs have been identified, employers must source, select and negotiate with training providers. Most training companies will promise to deliver exactly what the customer needs, even though they may know little about the organisation or its business.

From the employer’s perspective it is easy to understand how they may see training and development costs as an expensive drain on resources. This issue needs to be turned on its head, so that it is not so much the cost of training, as the cost of not training that we should address.

Costing the training

Given that companies need to balance the cost of training against other areas of expenditure, there are several things to consider when costing a training programme:

  • How much time must staff spend away from the workplace (number of staff x hours x hourly rate)?
  • The cost of covering for employees receiving training (overtime rates temporary staff)
  • Additional pressure on other staff when workforce depleted (absence levels)
  • What is the likely impact on customer service (potential loss of customers due to diminished service)?
  • How is the effectiveness of the training to be measured and over what time period?
  • How to monitor long-term effectiveness of the training
  • What is the actual cost of using outside trainers or cost of sending employees on external courses?
  • What are the additional costs?
  • Perception of the training (is it seen as a ‘jolly’ or treated seriously?).

My advice to any SME embarking on a T&D programme is to find a training solution that fits their business, their people and their pocket.




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