Advancing Your Business With Effective Training Strategies

Theme: The Business Case for Training

In today’s knowledge economy, attracting and retaining the right person at the right time for the right role is key to success. Talent development activities—including recruiting, onboarding, performance management, employee engagement and compensation—are all essential to achieve mission goals.

Training is a specific type of talent management solution. It focuses on teaching adult learners the skills needed to achieve their tasks and improve organizational outcomes. From introducing organization policies, to teaching project management skills, to developing underused strengths in leaders, training plays a vital role in the talent development toolkit. While training used to occur almost exclusively in classroom settings, the evolution of online training (or eLearning) has diversified that landscape. A 2014 study found that almost half of training hours (47%) were in a classroom setting; 29% of hours were spent using a combination of face-to-face and online (or blended) learning methods; and 28% of training hours were delivered exclusively online. We are now also seeing rises in mobile and social learning as well (Pappas, 2015).

Organizations are choosing to invest in training at increasing rates. One study (Deloitte’s Corporate Learning Factbook 2014) estimated that U.S. spending on corporate training grew by 15% in 2013, the highest growth rate in seven years, to over $70 billion in the U.S. and over $130-billion worldwide. Another study of 336 diverse organizations reported that, in 2014, organizations spent an average of $1,229 per employee on learning.

This was an increase of 1.7% over 2013, when spending was at $1,208 per employee (ADT Research, 2015). With respect to the number of people trained, one study found that almost 50% of surveyed companies were spending at least $100 per learner per year (Wentworth and Lombardi, 2014); another found that the average number of learning hours per employee was 32.4 hours in 2014, compared with 31.5 hours in 2013 (ADT Research, 2015).

The Return on Investment for Training

Why are these organizations investing in training? Many cite capability gaps in organizations, estimating it can take 3-5 years before a professional is fully productive in a new company. Another study found that poor project performance leads organizations to waste $122 million for every $1 billion invested (Project Management Institute, 2016). Avoiding wasted dollars is a key goal of training, and helps explain why top training areas include management and leadership, at 35% of training spending (Bersin, 2014).

Training also helps organizations avoid risks and costs by teaching employees how to comply with a range of regulations and legal requirements; the benefits of this cost avoidance is hard to quantify. Organizations provide training to demonstrate compliance with health and safety requirements, financial and personnel management rules, human resources topics (such as diversity training and equal opportunity training) and training to teach the core requirements of federal and state statutes.

How do we maximize the return on investment? Those accountable for training programs should carefully consider the related business needs or problems. How can we expect a training event to affect organization metrics, such as quality, customer satisfaction, employee satisfaction, efficiency and productivity? Gekoski (1999) recommends that organizations consider these impacts across three timeframes: immediate outcomes (immediate satisfaction and skills improvement), short-term benefits (increased morale and efficiency) and long-term value (reduced turnover, impact on customer satisfaction and costs).