The costs of training your staff.
You don’t feel that your first tasks are to create learning experiences your staff require, but rather, you focus first on compiling a convincing report to management on why the budget should be spent on training. You know your report cannot just be fluff. It needs to be on point and include the exact information that management needs to make an informed decision. So, how much does training cost?
The notorious training and development response: it depends. There is an array of factors to take into account when identifying the cost of training. These factors vary from company to company and depend on staff wages, technical resources, training requirements, outsourcing costs, development costs and upkeep costs. A definitive number on the cost of training, that is accurate, is near impossible. Of course, you can look at previous training within the company, or compare to similar companies, but this is only a rough estimate. To be able to determine the cost of training for your company, you need to identify the variables of each training project that, when accumulated, result in training costs.
Consider these variables to be the milestones and tasks that need to be completed in order to execute the training in the company.
Once you identify what needs to be completed, you can clearly state which resources are required and their associated costs. For example, the people required to create the training all have a wage where their time equals a project cost. Equally, staff who are participating in the training have an indirect cost of their time no longer being used for projects or work tasks. These wages need to be considered in the cost of a training project.
Likewise, any software or applications required is a training cost that needs to be accounted for. These resources can include annual subscriptions to create eLearning courses or platforms to design and print workbooks. For example, if you plan to conduct training to understand the strengths of your staff by using Gallup’s Strengths Finder Test , there are costs involved in signing up for this software. These need to be considered in the overall training costs. All these resources need to be taken into account including people, time and software.
What are the variables of a training project that impact costs?
To determine the cost of training, you need to understand the major milestones in a training project (from start to finish) and what tasks will impact the costs. Below we explore the seven (7) different milestones of a training project. Remember, each project is different. You may need to add more milestones or replace others. This is a place to start when identify the cost of training.
Milestone 1 - Team to conduct a TNA
To first identify what training is required you need to conduct a form of analysis. Whether this is a gap analysis against required skills and abilities, or individual training needs analysis (TNA), this is the first step of your project.
If you have previously conducted TNAs for staff members, you can use previous documents and update as needed.
If not, however, you will need to start from scratch. Conducting a TNA will include members from the training and development team, the staff member and their manager.
The TNA will need to be stored in your HR platform that has the ability to adjust permissions and version control to set revision dates. This may also simply be a shared file with the manager and staff member only. The costs of conducting a TNA are highly pooled in the wages of the people involved in the process. If you do have HR platforms, these costs need to be taken into account too, however, they are indirect costs (or fixed costs) that are associated with the business as a whole, not just the training project.
Milestone 2 - Team to analyse the TNA
What is the point of conducting a TNA if it is not analysed to determine the training needs? It is pointless and then a wasted cost!
A TNA is the first step in identifying what training is required. The next step is to review each TNA to identify the training needs at the individual staff level and other levels including teams, departments and the entire company. This milestone has similar costs to conducting the TNA, they are mostly associated with the time the team needs to put into the analysis.
Milestone 3 - Create a structured Training Plan
Now it is time to start the process of organising the training, which commences with structuring a training plan. This may be a training plan for the next quarter that looks at all training company wide, or it may be a training plan for a specific training session your team is organising.
Regardless, at this stage you will be building your curriculums for training programs and specific lessons. Again, the resources heavily involved in this milestone are the members in the training and development team. However, your team may not be experts in creating curriculums or you prefer to buy existing curriculums. Additional costs to consider are outsourcing curriculum building or purchasing the license to training plans.
Milestone 4 - Create the training content and follow up material
Once the plans are confirmed, you can finally start the creation of training content and material. Of course, we are speaking hypothetically here. You are not actually creating content, but rather, exploring what the costs are of this milestone.
This milestone has a lot of variables involved. Variables to consider include:
- Is the training and development team creating content from scratch?
- Will the company purchase the rights to use training materials?
- Will you sign up to subscription-based training as a service where all content is ready to be delivered regularly?
Each of these variables have varying costs and include multiple resources such as the time for staff to build content and the software that staff need to build the training.
Whichever method you take, ensure that you account for all costs involved.
To keep costs to a minimum, training as a service is an alternative to creating and conducting training in the workplace. To learn how to work harmoniously while outsourcing training, read this article.
Milestone 5 - Deliver the training (including staff time)
As above, a decision to decrease costs is to subscribe to Training as a Service (TaaS). You can save a large chunk of your budget in this milestone by partnering with TaaS. You won’t need to worry about financial approval for each new training program that you want to enrol your staff in. Regardless of the number of sessions, the subscription remains the same monthly. Learn more about TaaS here.
However, if you are not using TaaS, the costs to consider in this milestone include (but are not limited to):
- The time and wages of staff participating in the training – including the actual time in the session plus the subsequential tasks for developmental purposes
- The time for the staff delivering the training sessions – including pre and post preparation
- Fees for speakers and experts to be involved in the training
- Hiring costs including rooms and any further equipment
- Cost of refreshments during the training sessions
- Resources such as notepads, pens, and other equipment for display and collaboration purposes
- Software and/or applications to complete the training (remember the above example of Gallups Strength’s Finder?)
Depending on your specific training, there may be many more costs involved. This is a great opportunity to review previous training delivered for benchmark costs of the delivery of training.
Milestone 6 - Nurture the implementation of training
Costs do not stop when the training is delivered. A good training session will have subsequent tasks that participants need to implement in order to demonstrate competency. The complexity of the training will help you to determine what is required in this milestone. You may have formal assessments that need to be assessed or informal knowledge checks that are built into eLearning platforms. Consider the costs of assessing your staff through observations or self-assessments.
Observations can be conducted through shadowing the staff member in a particular task or analysing data from platforms. Both have their associated costs that need to be included. Likewise, self-assessments will have their associated costs. However, they will be substantially lower than observations as they are more scalable and do not require human hours (other than the staff members taking the test). Regardless of how you nurture the implementation of follow-up tasks, the associated costs need to be identified and accounted for in the project proposal.
Milestone 7 - Assess the effectiveness of the training
Finally, after the training has been completed an assessment of the effectiveness of training needs to be completed. There are two ways this can be achieved; reviewing the TNA or conducting performance reviews. Reviewing the TNAs will help you to determine if the staff members need further training in this area. Alternatively, a performance review will focus on the staff members role and how they are performing with new skills learnt and existing skills.
Your company should be running performance reviews as part of the human resource functions. Ensure that you collaboratively work together to ensure that the effectiveness of training is assessed in these reviews. Like many previous milestones, the costs involved here are heavily associated with staff wages.
Wrap Up
As the costs cannot be definitively defined as each training project is different, the milestones are a great alternative to identify possible project costs.
If you assume that the costs of training are only those costs involved in the delivery of training, your project can exponentially be over budget. Ensure that when you are planning to propose a training project to management you include all costs involved, including pre- and post-training costs.
To decrease the cost of training, consider CTSA Training as a Service (TaaS) for the delivery section of the project. Click here to learn more about TaaS.