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A cost analysis of your training expense...errr...rather a "non numbers" discussion of how much you're spending and for what benefit?

As customers tell me all the time, training is expensive. Of course, everything is expensive these days and costs are continuing to rise! So that raises the question, can you afford to train your employees? I think the better question is this; can you afford NOT to train them?

I was sitting here at my desk in true accountant style, just having heard a customer tell me for what feels like the hundredth time this week "It’s simply not in budget for us this year". I blink in silence after I hang up. Why? Because I’m remembering the awful customer service I received from a retailer the last time I purchased a $1,200 mattress set. I won’t ever go there again. That just cost them another $1,200 sale. The average cost of a training video on customer service is $895. I put on my accountant hat and think - that seems worth it.

Putting that can you figure the average cost of training? The simple, easy, back of the envelope way is to take the cost of the training and divide that by the number of employees you are training. If a training video costs $895 and you are training 30 employees, then your cost of training per employee is $29.84. Let’s say $30 to keep it simple. Now - is that worth it? What is your average sale? If you are training employees in a grocery store - it’s certainly worth it where the average sale is more than $30.00. So...if your average sale/contract/transaction/what-have-you revenue stream comes in higher than that per person cost - you’re a winner! It makes sense! Run it by your controller or CFO - they’ll agree. If that ONE employee who sat in on the training session then walked out and completed a new sale/contract/transaction/what-have-you - you have just recouped the cost of training. You can’t afford NOT to.

Let’s get away from retail/sales/customer service though. The average cost of hiring and training a new employee to replace the one who just can’t seem to get along with the rest of the team or has poor communication skills can be in the thousands of dollars. How about the employee who was woefully unaware of how poorly his email joke would go over and your company now has a lawsuit? We all know how expensive a sexual harassment lawsuit can be.

Using videos in your training turns out to make sense. It helps your team deliver important messages in a fun and engaging manner. It can also help to inspire and motivate while you’re teaching. Simply put, video training is a very economical choice.

Posted under Corporate, Miscellaneous Thoughts, Training Ideas by Stewart on Jul 22, 2008 | Comments: 0 | Post a comment»

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