We live in challenging times and organizations are constantly looking for ways to increase productivity. When budgets get tight and management starts looking for places to cut, the training department is often in the cross-hairs. Is this because training is a low-value function of the organization or is it that management does not appreciate the value that training brings to the organization?
Naturally, we believe training to be a very valuable to the organization and touched on ways training value is measured in an earlier post Corporate Training Has No Value. A little background on how we’ve approached training value is in order.
In the early days, TrainingForce was used extensively by for-profit training centers because of its core merchant capabilities. Measuring training value is pretty easy for these centers as a revenue report shows clearly the value of the services offered. But many training centers today do not charge for training directly and thus a revenue report is not applicable for measuring value. At least not directly.
A training department that offers training at no direct charge knows the training to be valuable. The challenge is in accurately demonstrating the value. In TrainingForce, the approach we use is to assign a monetary value to units of instruction. The units may be hours of instruction, specific course material, or delivery method. To derive monetary values, we suggest using publicly available alternatives or a cost-plus-burden methodology. As long as the monetary value is defensible, the resulting values will be valid.
To be candid, it’s takes some effort to establish the monetary values initially. The more effort spent is deriving the monetary values, the better the reporting. But even a simple model can add provide for good management reporting.
Of course, there are other factors besides monetary value that affect the overall corporate benefits of training and we don’t suppose that monetary value exceeds non-monetary values. Instead, we propose training departments include monetary values of training delivered in management reporting.