How Much Training Do Your Employees Really Need?

In my last post, I walked you through a four-part model to help you decide whether training is an appropriate answer to a performance gap. In this post, we’ll look at how to begin with a training initiative once you have decided training is the answer (if you’ve determined Competence is the primary issue creating the performance gap).

The first step in implementing many training initiatives is usually conducting a “Needs Analysis.” The needs analysis is what helps you pinpoint what you are trying to accomplish via the training initiative. A needs analysis can range from very rigorous (formal) to very simple (informal). Of course, the simpler your approach the more likely you may miss critical needs and diminish the potential return on investment of the training. By approaching a needs analysis in a more thoughtful way, you can increase the likelihood of a successful training program (and by successful, I mean the training has the impact you desire and it more than pays for itself).

Before starting the needs analysis, I suggest you have a clear understanding of the essential performance expectations and the requisite knowledge skills, and abilities (KSA) needed to meet those expectations for the performance areas in question. When you clearly identify what you expect from a position (and, thus, the employee in that position), you can easily identify when performance is off-track and, more importantly, why it is off-track. In addition, when you know the specific performance expectations and requisite KSA, you can clearly communicate those needs to the employee. (Sometimes, a concise performance expectation conversation can solve the performance issue.) This understanding also guides you toward what you need to accomplish with the training.

There are numerous resources and publications that can help you create and conduct a needs analysis. I have used and would suggest ASTD and A Practical Guide to Needs Assessment. For those of you who don’t have the time, the money, or the support to perform a more thorough needs analysis, I can offer a Quick Start Approach:

1. Identify the Training Objectives – I believe training involves changing behavior (which changes results). The Objectives are the changes in behavior and results you want to see as a result of the training. Another way of identifying your objectives is to identify what will your participants be able to do differently as a result of completing the training. These should be in quantifiable terms.
2. Identify the Training Costs – what will the training program cost you in hard dollars (out-of-pocket development, training payroll, training materials…) and soft dollars (lost productivity while the trainees are in class).
3. Identify the Performance Costs - what is the gap in performance costing you in real terms: in lost sales dollars, increased expenses, unrealized gains, turnover, etc. This will inform your decision of the significance of the issue. If the Performance Costs are lower than expected, it may not make sense (or cents) to launch a training initiative.
4. Identify the Expected Gains – determine (to the best of your availability) what the training should generate in increased revenue, decreased expenses, improved efficiency (and what that creates for your P&L picture), and whatever other metrics are involved or affected by the performance gap being addressed. This is directly related to (and may even include some of) your Training Objectives.

A simple ROI formula* you can use is:

[ (Expected Gains x A) x B ] – Training Costs
Training Costs

A = % of change attributable to training (how much of the change in performance do you expect will be a direct result of the training; you may institute other changes in addition to the training that also helps improve performance)
B = % confidence you have that the change is attributable to training (how confident are you you’re your estimation in A is correct; what percent or degree of confidence do you have that the change is in fact directly related to the training)

*adapted from the Sherpa ROI Formula for Executive Coaching

For instance, if you believe you can create a $100,000 performance gain by investing $15,000 in training and you are 90% confident that 50% of the gain is generated directly from the training program, your ROI is:

[ ($100,000 x .50) x .90 ] – $15,000
$15,000

OR

200%

Bottom line, you want to implement training programs that create a positive return on investment (ROI), meaning the training pays for itself. If there is no positive ROI, don’t waste your (and your employees’) time and money.

I bet you didn’t expect to hear that from a training professional.