Training and Development as an Investment (Lecture 3: 22nd Nov)

Benefits of training

Who benefits from training?

• Employees
• Guests
• Management
• Property or organization.

True benefits in value or monetary saving.

• Sources of benefits: waste reduction, less turnover, less absenteeism, check- in- time efficiency, guest comments, etc.

Areas of operation where cost can be saved:

• Labor:
• Time saved*Amt. of days being examined* no. of subject= Total time
• Total time saved* the full cost subject wage and benefits= Total labor benefit. (Ex:9)
• Material: more efficient use of materials
• Equipment: more optimum use of the equipment.(Ex:p69)

Resources of values/ saving:

• Observation, performance records, work output records, post test, performance checklists, pilot studies, etc.

Intangible benefits:

• The benefit of the training is in the good will that it generates in the community and the desire to avoid a crisis.
• Positively influence the attitude and behavior of the employee
• Increased guest satisfaction, payback, value of the employee,  level of advancement, reduce alcoholism etc.

Cost Benefit analysis

• It is tool to systematically compare the financial picture of training. It compares the cost as the benefits derived from training.
• It is effective in evaluation of training.
• It provides accurate data to be included in training proposal.
• It will help in better panning of training session, and align it with the goals and objectives of the organization.
• The three steps are: calculate cost, calculate benefit and compare results.

Return on Investment:

• It financially focuses on evaluation, an examination of the effect of training on the work place through measuring three specific sectors.
• Profit, productivity, performance.
• To vividly determine the ROI, the trainer needs to define the specific problem and identify the expected training outcomes.
• Tools used to determine the ROI are:
• Cost benefit analysis: It compares the cost of training to benefits derived from it.
• Cost effectiveness Analysis: It is used when it is difficult to measure the training results in dollars. It helps to choose the best training, compare costs between several training program and ways of reduction of the costs.
• Cost feasibility Analysis: It examines the overall training budget and gives answer to “Can we afford to do this program?” Sometimes even though benefits outweigh costs, the training need to be postpone due to feasibility problem.

Cost of not training:

• It is the loss of profit and productivity that a company could have gained with better trained staff.