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Enhancing the Bottom Line : Manpower Training and the Return on Investment
by Oliver Tian

 
   
 
   

An organization’s greatest asset

If people are an organization's greatest asset then the training and education of those assets has to be viewed as investment in human capital and not just as another expense.

The benefits of training and education in any organization includes increased productivity, fewer errors, higher staff moral, lower turnover rates, product consistency, and customer advocacy amongst others.  Organizations that grow are those that obtain and manage knowledge the quickest and cheapest.

Challengers

There are however numerous training and education challengers that face both the organization and its employees.  For example; the vast amount of information available – where does it all fit in terms of the organization and how is it to be used effectively?  The rapid rate of change – how often does knowledge need to be updated?   The complexity of content – how is the “need-to-know” best defined?  The varied and shifting skill sets – what competencies are needed to do the job “right first time?” Finite time to learn – what tools are best used to develop knowledge quickly and efficiently?

In today’s world, organizations need a highly skilled workforce to stay competitive.  They need to quickly distribute information globally to employees, customers and partners and manage their training process with an eye firmly on the bottom line while acknowledging new products, changes in technology and just in time learning requirements.

In the more traditional view of employee development, learning was seen as budgeted expenses and peripheral to the organization’s development and growth.  As an entity, knowledge has been entrusted to a select few and meted out in small portions to those close to the top.  Face-to-face instructor-led training was viewed as the only and most appropriate way of disseminating knowledge and that learning needs should only be addressed as required.  It made sense therefore that any return on investment was a non-issue.

The new reality

The new reality is, of course, quite different. More and more organizations are starting to understand that both learning and knowledge have enterprise-wide implications and have to be aligned directly and firmly to business goals. 

Also, many more options are available to disseminate knowledge and aid in learning today.  Technology-enabled training includes computer-based instruction; Web based tutoring, electronic mentoring and workshops, virtual classrooms, video streaming and a wide variety of personalized training models.  These delivery methodologies, when blended in some way with the face-to-face method, create new and powerful models to help people learn – anytime, anywhere; always on, always there.

In the new reality an organization needs a well-developed competency plan or roadmap for its workforce from the management team to the shop floor operations.  It is obvious that training and education will need to be extended to all employees based on competency determined roadmaps and business needs.  Hence, identifying and developing a sound framework that can measure returns on this investment become of paramount importance.

To help ensure a good return, organizational training and education must be focused on its needs and must result in measurable changes in knowledge, skills and abilities.  The investment must also result in behavioural change, make a difference to business results as well as meet the needs of the learner. 
At the end of the day, it will be the learner ROI that is most valuable. 

Achieving good returns

A huge amount of money is currently being spent training people and the growth of this investment is staggering.  For example, total training in the United States is projected to grow from USD 63.5 billion in 1999 to USD 72.8 billion by 2002 (source: IDC).  Taking advantage of reduced costs, scalable delivery and other technological advantages that the Web can provide, it is estimated that Internet related learning will quadruple in two years to USD 4 billion and could reach USD 11.4 billion by 2003.  (source : IDC) In addition, more “soft skills” contents are included as part of the learning package.

A poor return on investment does not mean that the training and education is inherently ineffective.  The learning may be poorly planned and badly implemented, if it is implemented at all.  Employees who are involved in training without assessing needs, either theirs or the organizations’, may find their newly acquired skills not effectively integrated into the workplace.

At a minimum an organization needs to consider five basic questions with respect to learning and a healthy return on investment. These are:

What to train: what skills are needed to meet current and future business goals?

Who to train: who needs to be trained in the role that contributes best to meet business needs?

Where to train: where is training most effectively best carried out: on-the-job, in a face-to-face environment or does a hybrid model need to be put in place?

When to train: when is the best time to schedule training so it meets the dynamic demands of the workplace?

How to train: which delivery options are available to aid in the learning process and how should these options be combined to be most effective?

Measuring the results

Return on investment is determined by taking the actual cost of the training from the total value of the benefits.  This sum is then divided by the cost of the training.  The first step in measuring ROI is to itemize costs. Once costs are determined the various benefits can be counted.  Typical tangible benefits include:

- Time savings
- Improved productivity
- Labor savings
- Improved quality
- Improved health and safety 
- Better employee moral

Putting the financial aside, the most important questions to consider should be: 

1. Was the learning relevant to the needs of the organization? 

2. Did the learning achieve its goal? 

3. Is the learning being used in an appropriate manner?

4. Is the learning making a difference to the way the business is working?

Redefining organizational learning

The evolution of information and communications technology in the learning environment is revolutionizing the perception, practice and process of learning.  Technology is changing both the structure and the business of learning.
 
The impact of technology on learning

Technology-enabled learning is not ever going to replace the role of direct peer and/or instructor contact in learning.  Technology and personal contact can be used to complement each other, primarily because there are aspects of training that technology can provide for, and aspects that are best left to the human touch in the traditional settings. 

However, technology-enabled learning has removed the confines of the traditional learning environment and provided unprecedented access to quality learning resources regardless of the location of the learner.  The Web has also brought together widespread communities of learners both inside and outside the organization.  This combination has empowered both learners and organizations to take control of learning, making the concept of individualized lifelong learning a reality.  The vision of customized learning anytime, anywhere has arrived and learning will never be the same again.

Training and content providers, policymakers and the high-tech industry have been partnering for many years to bring the benefits of computer technology to the classroom.  While the integration of technology as a learning tool has been a gradual process, learners of all ages are reaping benefits at an exponential rate due to the increasing ubiquity of the Web.

Current technology provides four complementary learning enhancements that help learners to learn anytime, anywhere.  While far from distinct and often integrated, these elements form a baseline for understanding the new paradigm of learning that is taking place in organizations of all types and sizes.

1. Access to Content: The web is making information available to learners and enabling real-time, real-world exploration from the desktop.

2. Distributed Learning: The Web is providing unparalleled learning materials that integrate rich curriculum, expert instruction, and global discussions through a distributed repository.

3. Individualized Learning: The Web is providing the tools to tailor content and instruction to the unique learning needs and styles of organizations. Learners can be directed through integrated diagnostic assessments to linked, supplemental enrichment or remedial curriculum.

4. Improved Communications: The Web is facilitating efficient and effective contact and enabling peer networks and learner interaction with facilitators.

Integrated learning

Organizations have to recognize the pivotal role of learning in competing effectively and quickly in the dynamic marketplace of the knowledge-based economy.  When faced with high workloads and limited resources, they have to be able to take advantage of an integrated learning approach to create, enable, and deliver the on-going learning needed to achieve a higher and competitive return on investment and meet business objectives.


     
   
     
   

The Author

 

A visionary in learning strategies, Oliver Tian heads the Education business in Asia Pacific, and specializes in developing integrated learning environment models at Hewlett Packard.  He has a comprehensive background of computing technology, business applications and education exposure.  To date, Mr Tian has been invited to speak at numerous HR and knowledge related conferences, and consulted with various large organizations and government bodies. (To enquire about speaking engagements contact Hazel Tee at hazel-sp_tee@hp.com providing date, venue, audience profile and size, proposed agenda, synopsis of topic and length of presentation.)

     
   
     
   
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