Training, as with anything else, must be justified. It is necessary but management may be reluctant to allocate the required resources. Cost/benefit analysis can be a powerful tool to change their minds.
Costs are usually the easier part of the equation. They include explicit costs such as materials, hiring an instructor or renting a training facility. The opportunity costs of taking associates off the job and/or stopping production may be less obvious. There is also the cost of administering the training and of development if done in-house. Valuing these opportunity costs may be somewhat harder but is not impossible.
The benefits of training are more nebulous. This is where many people may throw up their hands. Take the example of troubleshooting training. This training teaches technicians to correctly identify the problem as well its root causes before attempting to fix it. The first step in estimating the value is defining the expected benefits. These may include:
• Reduction in line downtime per instance. Systematic troubleshooting will usually be quicker than the trial-and-error practices that might otherwise be used.
• Reduction in overall line downtime. If root causes are identified and corrected, problems are less likely to recur.
• Reduced stress on technicians. A systematic technique, properly applied will reduce stress, reducing mistakes.
• Reduced consumption of repair parts. Trial-and-error diagnosis often results in good parts being unnecessarily replaced.
After identifying the benefits, the magnitude of those benefits must be estimated. In a plant where 30 minutes per day are being lost to diagnosing problems, training in effective troubleshooting might be expected to cut that in half. Finance should then be able to translate that 15 minutes per day of additional production into a dollar value. Don’t forget: all costs and benefits must be expressed in dollars. It is the only way they can be evaluated rationally.
Comparing the estimated value of the training to the estimated costs then determines whether it is worthwhile.
The final step is evaluating the results of the training. Did it achieve the expected results? If not, the reasons should be determined and used to improve the process for subsequent training evaluations.
Training is not just something nice to do as time and resources allow. It is an imperative in any company that hopes to remain competitive. Cost/benefit analysis is a tool that will help convince management to provide for it.