Employee Training ROI: What You Need to Know


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Invest­ing in employee train­ing is an intel­li­gent move. Con­firm­ing that agents are skilled not only in prod­uct knowl­edge, but also com­mu­ni­ca­tion skills, will solid­ify long term com­pany suc­cess. Aside from increased cus­tomer sat­is­fac­tion, invest­ing in cus­tomer ser­vice train­ing will increase employee loy­alty, reduce employee turnover, and lower oper­a­tional costs. Do not miss an oppor­tu­nity to invest in your work­force — and most def­i­nitely take the time to cal­cu­late the return on invest­ment (ROI).

Accord­ing to the 2011 Train­ing Indus­try Report from Train­ing, total expen­di­tures in train­ing appear to be increas­ing. The amount spent on train­ing jumped about 13% from 2010, includ­ing increases in over­all train­ing bud­gets and pay­roll, and spend­ing on out­side prod­ucts and services.

Cri­te­ria for Deter­min­ing Train­ing Success

Cal­cu­lat­ing the return on invest­ment of employee train­ing involves weigh­ing the costs against the ben­e­fits. Here are five of the most impor­tant costs and ben­e­fits to consider.

  1. Direct costs. Direct costs include all expenses related to facil­i­tat­ing the train­ing. For exam­ple, the cost of hir­ing a con­sul­tant, con­fer­ence room fees, equip­ment rental, and employee travel costs.
  2. Indi­rect costs. Indi­rect costs include all expenses related to per­son­nel. For exam­ple, salary costs, and the costs of lost sales while employee is at training.
  3. Increased sales. Employee train­ing will have a sig­nif­i­cant impact on employee per­for­mance. Be sure to add in increased sales due to improved employee effectiveness.
  4. Increased engage­ment. It is a proven fact that employ­ees who receive train­ing are more engaged and more pro­duc­tive than employ­ees who do not receive in train­ing. Track the pro­duc­tiv­ity of employ­ees before and after train­ing to accu­rately deter­mine engage­ment increases and the result­ing benefits.
  5. Reduced turnover. Employ­ees who par­tic­i­pate in train­ing are not only more engaged but also less likely to leave the com­pany than employ­ees who do not par­tic­i­pate in train­ing. Invest­ing in employee train­ing shows that you take the suc­cess of the com­pany and the indi­vid­ual employee seri­ously. Be sure to mon­i­tor annual employee turnover to cal­cu­late the costs asso­ci­ated with hir­ing and human resource procedures.

Employee Train­ing Increases Revenue

While the ini­tial invest­ment in train­ing may seem costly, the long-term ben­e­fits play an inte­gral role in the suc­cess of an orga­ni­za­tion. Improv­ing employee com­mu­ni­ca­tion skills will improve employee engage­ment and reduce employee turnover. But the most sig­nif­i­cant ben­e­fit is the increase in rev­enue. When employ­ees are bet­ter skilled, they can han­dle calls more effi­ciently, han­dle an increased num­ber of calls per day, skill­fully address angry cus­tomers, and quickly iden­tify unmet needs so that they can sug­gest appro­pri­ate prod­ucts and ser­vices and close more sales. The com­bi­na­tion of han­dling more calls, and han­dling calls more effec­tively, improves oper­a­tional met­rics and key per­for­mance indi­ca­tors such as cus­tomer satisfaction.

Key Take­away

Iden­tify which met­rics are rel­a­tive to your train­ing ini­tia­tive and imple­ment a method of track­ing those met­rics before train­ing begins. For exam­ple, you may want to track num­ber of calls answered, num­ber of cus­tomer com­plaints, and length of calls. To cor­rectly cal­cu­late ROI data must be col­lected before and after train­ing. Com­par­ing the data will deter­mine how suc­cess­ful the train­ing ini­tia­tive was, and what areas still need addi­tional improvement.

Mea­sur­ing ROI is an impor­tant step in all train­ing ini­tia­tives. Cal­cu­lat­ing ROI plainly shows the ben­e­fits of train­ing to man­age­ment, and is nec­es­sary to give cred­i­bil­ity and value to employee train­ing as a mea­sur­able con­tri­bu­tion to an orga­ni­za­tions success.

Republished with author's permission from original post.

Rachel Miller
Rachel Miller is the Customer Engagement Manager at Nimble - a simple, affordable social relationship manager.


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