If you aren’t seeing a positive impact on your business bottom line from employee training then why bother? Determining the effectiveness of training is essential, however, I’ve come across too many organisations that attempt to measure the impact of staff training on their net income, but that aren’t tracking metrics that will show them an accurate assessment.
There needs to be a strong adjustment in the language that Human Capital teams (HR managers, or Learning and Development managers for instance) are using. Return on Investment needs to be linked more to the language of the Finance and Operations teams. Although it’s critical to measure factors such as employee satisfaction, or internal net promoter score, companies need to evaluate revenue measurements aswell or Human Centric teams and Finance and Operations teams will continue to speak entirely different languages, and the two shall never meet. For instance, revenue per employee, operating costs per employee, or gross margin percentage per employee are some of the metrics businesses should be measuring training up against.When you can compare the ROI per employee, to the metrics you receive from staff training, it becomes much simpler to discover the impact of training on your bottom line.
Ensure Training Positively Impacts Your Bottom Line
Ask the question, where are the business challenges, and how are you going to measure these challenges in relation to employees? Once you’ve identified what you want to drive, you will understand what your training gap is. This is crucial when establishing what your key employee metrics are. Commonly, these are revenue per employee, gross margin per employee, or operating costs per employee. Let’s say that your goal is to reduce operational costs in your business. Now that you have defined that, you can accurately break down what employee training needs to be done to successfully reach that goal, for instance, increasing productivity, or reducing waste. You can break it down even further by concluding that to reduce waste, for example, employees need to be taught the skills of stock-keeping, optimally utilising the tools they’re given, and correctly storing food. Once you separate it into “per employee” metrics, it becomes easy to measure the impact and benefits of staff training.
Another example of discovering key employee metrics is when calculating revenue per employee. In the retail sector, revenue per employee stems from an increase in sales. This requires training in both the skills to sell a product or service, as well as in excellent customer service that ensures your consumers come back for more.
Understanding the Role of the Triple Bottom Line
These days a company’s ability to successfully meet their bottom line means that they have to also successfully meet the triple bottom line. Why? Because companies who don’t meet their social responsibility will find themselves unsupported by consumers. Take Nike for instance. Their scandal in relation to child labour and sweatshops in the 1990s had a dire consequence on their sales and nearly killed the company. The organisation had to spend the next couple of decades cleaning up their act in order to get to the place they are today. Consumers nowadays aren’t tolerant of businesses who don’t take social responsibility seriously. Compared to 15 years ago when the concept was first introduced, the triple bottom line has become impossible to separate from the original bottom line.
What Are Businesses Who Aren’t Seeing ROI Likely Doing Incorrectly?
What I tend to see is that the link between Operations and Fiance is not as strong as it needs to be. If this is the case, you won’t get the best from your training as it’s not strategically aligned with financial goals. Operations and Finance need to be under one roof in order to create an accurate and effective training metric.
I’ve also seen a very low usage of technology in the training space. I’ve come across many line managers who still have concerns around digital literacy levels, and therefore are hesitant to adopt online staff training in their business. However, I have personally experienced this belief to be untrue. I’ve seen learners with only a grade 10 education, able to successfully complete accredited programs on a mobile device. Utilising technology and bringing learning to your line-level employees in a simple manner can drastically reduce your training costs, versus traditional methods of training. Infact, according to an IBM study, the business saved approximately $200 after switching to online learning.
Just through simple training in a large retailer’s deli department, Summit managed to help the company save nearly R180,0000 worth of expenses per annum that was simply being lost on wastage and incorrect usage of product. Our custom, accredited learnerships will target your organisation’s training needs and ensure that you have a successful bottom line. Look at how we did it for Checkers.
About the Author: Matt Lambert, Managing Director
Matt has a passion for innovation and doing things differently, which comes from his broad experience in front line and management roles within Business Intelligence, Sales, New Business Development and Commercial Finance held within blue chip companies. Matt has worked across five continents and 19 countries to launch new products, establish sales operations and lead strategic projects.
His passion for education comes from a desire to address fundamental structural issues within Africa. Matt has extensive experience within International Hotel School heading up its Durban Campus before taking over the online business, and then moving to Operations Director, before taking over and growing Summit since the beginning of 2018.