For decades, companies have been struggling with the real costs,
benefits and return on investment of training costs. With
As online learning opportunities increase, organizations are finding that their focus is shifting from providing expensive on-site training programs to using the new tools and technology now available. Companies need to understand and apply business analytics to fully appreciate the effectiveness and impact that eLearning and training offers.
Companies invest large amounts of money, resources and time in
training. According to a 2002 ASTD State of the Industry Report
where more than 375 major corporations were surveyed, companies spent
between one (1) and three (3) percent of your total payroll in
training. This translated into a per person basis of more than
US$700 per employee per year. In cutting-edge companies that
rises significantly to US$1,400 or more per person per year.
If training expenses are considered as a percentage of company expenses
earnings, then the training budget could represent as much as
5 – 20% of the total profit margin. with rising costs
associated with travel and accommodation, as well as increased costs
and expenses for registering and attending meetings or for developing internal training programs, it is undeniable that the costs of the training budget are going to increase, which only underlines the need to justify its cost.
To effectively measure training programs, companies
they face three critical issues: efficiency, effectiveness and compliance. Every major decision made regarding training falls into one of these three areas. Fortunately, each of these three areas can be compared and measured.
The ASTD 2002 study reported that only a third of companies
measured the effectiveness of learning and that 12% or less attempted to measure the employment and business impact of their training programs. Why? Interestingly, the main reason companies don’t measure training is that they lack the experience, tools, and infrastructure to do so.
It is impossible to effectively improve or optimize training.
program if it is not compared or measured. Training must be measured and evaluated as companies measure productivity, profit or quality. Many scorecards, dashboards, algorithms, or metrics have been developed for this purpose.
If the total investment in training per person in the
company (see above), the question is how much should they spend
in measurement and evaluation? One, five or ten percent? Looking back at the ASTD 2002 best practice study, we find that most companies spend 40-50% of their total training dollars on content development, 8-10% on infrastructure, and the remaining resources on salaries and costs. of facilities.
For many, the development of measurement and evaluation tools sounds like additional costs and expenses for the organization. Companies that allocate a small but fixed percentage of their training budget for this purpose will be able to effectively measure the effectiveness of their total investment in training. One study found that organizations adopting this model and spending between US$2 and US$10 per employee on learning analytics reported notable improvements in measurability and return on investment.
Companies will need to justify the costs associated with learning measurement by identifying the business impact and risk of not training their employees. This could be quantified through fines or loss of earnings as a result of non-compliance with laws or regulations. This can often lead to fines being imposed on the business or even lawsuits or other forms of lost profits.
In the health field, for example, the lack of compliance with
collecting, coding and reporting cancer incidence could have a far-reaching impact on the budget spent not only on the operational and training costs associated with the Cancer Registry department, but could also offset the costs associated with developing cancer programs and community outreach programs. Although program development and extension programs have the ability to compete for consumer dollars, all of this could come to nothing if required reporting is not done accurately and in accordance with state or accreditation program standards. Training programs for the Cancer Registry can ensure that data management processes are managed properly.
So, in short, companies should focus on developing
and measuring their learning programs. The investment in
learning analytics will overcome the risks of inadequate training. The success of any organization will depend directly on its employees’ understanding of its products, services, operations and policies. Employees must be fully trained in compliance, standards, confidentiality, non-disclosure, and other legally sensitive areas of the company. And companies need to be able to track and measure this using effective learning analytics.
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Copyright 2005, MA Webb. All rights reserved