The ROI of training

Justifying the cost of training may not have been necessary in the days of generous bonuses, lavish parties and other perks of the dot-com era. But as companies cut back on salaries and staff, IT managers must demonstrate the return on investment for any expense, including training.

That can be tricky when you’re assessing the effectiveness of a human capital investment. But IT managers say there are ways to make sure your company gets the most out of its training dollars.

Set Up Feedback Loops

Getting feedback through surveys or informal post-training interviews is a good way to measure the effectiveness of your IT training, managers say. At United Stationers Inc. in Des Plaines, Ill., IT employees fill out a questionnaire following an IT training session, says Ergin Uskup, CIO and senior vice-president of MIS. The company’s training manager then has one-on-one follow-up conversations with employees to see whether the experience met their needs and whether they would recommend the class to colleagues.

Three months later, the training manager checks in again with employees and their managers to see if the training helped the employees improve their skills and was applied to their work. Managers then act on the information gleaned from these conversations. United Stationers “drops [training companies that] are not as effective and increases [its] partnership with [training companies] that receive a high [rating],” says Uskup, whose company allocates about US$450,000 per year to train approximately 250 IT employees.

Kevin Bilbee, a network administrator at Standard Abrasives Inc. in Simi Valley, Calif., says his company is just beginning to craft a similar IT training strategy. The plan is to debrief workers after classes “so that everyone [else] gets an idea of what they learned,” he says. That way, other IT employees know whether the class is right for them, says Bilbee. “We’re trying to make training more efficient,” he says.

Train Workers ‘Just in Time’

Another way to maximize training dollars, say managers, is by putting the trainee’s new knowledge to work right away. At United Stationers, employees get to work on projects related to their training immediately after the class about 75 per cent of the time, says Uskup. In addition, the company gives priority to skills training that employees will need in the short term.

“We always try to match training with a task,” says David Molchany, CIO of the Fairfax County government in Fairfax, Va., which annually spends US$600,000 on IT training. Managers work with employees to create a plan for trainees to use their know-how soon after a class. For instance, if staffers attend training on installing Microsoft Corp. products, they might use what they learned when they return to work by performing a software implementation. Molchany calls this “just-in-time training.”

How companies evaluate a training program’s actual ROI varies according to the goals they have for employees. Some managers say a training program has delivered value if it helps IT employees perform their jobs better.

Scott Hicar, vice-president of IT and CIO at Milpitas, Calif.-based Maxtor Corp., says his company’s goal in training is to keep employees’ skills current and keep them excited about their work. The storage firm offers an array of training methods such as Web-based courses, vendor sessions and on-site workshops.

But, Hicar says, holding small workshops with technical experts has been the most effective method at his firm because it lets IT workers put their problem-solving skills to work. For example, this type of training helped Maxtor IT workers use reporting tools from San Jose-based Business Objects Inc. more effectively, says Hicar.

Uskup says his company’s payback from IT training has been retaining its employees: For the past five years, the company has had only 5 per cent turnover. Although that figure isn’t as significant now during an economic slowdown, it was virtually unheard of during the Internet boom. Employee surveys at United Stationers indicate that the company’s training programs contribute to employees’ loyalty.

Uncovering the Hidden Costs

If you’re calculating the ROI for IT training, don’t forget the less obvious costs such as lost productivity per IT worker, says Dave Murphy, membership director at the International Association of Information Technology Trainers in Elkridge, Md.

And remember that instructor-led training includes project management or administrative costs, says William Vanderbilt, director of operations for the technology learning group at IT association CompTIA in Oakbrook Terrace, Ill. These costs include the time spent signing up people for classes or accounting for people who will miss the classes due to scheduling conflicts.

Any training course will require five to 40 hours per week of project management time, depending on the complexity of the project, Vanderbilt says. If you’re aware of these costs, you can prepare and budget for it, he says. If an external company is providing the training, Vanderbilt suggests that you get project management costs incorporated into the price.

So what’s the ROI? It’s unrealistic to expect a payback in a month. But after you’ve determined the cost of training IT employees, ask yourself whether the costs of training can be recouped in the first year, says Murphy. “We’re changing people’s behaviour,” he says. “It won’t happen overnight.”

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Jim Love, Chief Content Officer, IT World Canada

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