Equipment Type

Justifying Training

Corporate management has a responsibility to invest company funds where they will generate a positive return. A decision to invest in equipment that will improve production and lower operating costs can often be justified with statistics. Establishing a budget for employee training, however, may be more difficult to justify.

December 24, 2007

Corporate management has a responsibility to invest company funds where they will generate a positive return. A decision to invest in equipment that will improve production and lower operating costs can often be justified with statistics. Establishing a budget for employee training, however, may be more difficult to justify. How do you know if the time and money spent in training employees, or in some cases the customers, actually returned profits? Profits are what keep the company healthy for the future and they also pay your wages. So if it can't be proven that training provides a good return on investment, senior management may be reluctant to authorize an ongoing training budget.

Where to begin

Start by giving some thought to topics where you currently train. If training is confined to safety issues required by government or insurance or your own company's regulations, such training is not difficult for management to justify. Management usually understands enforced financial penalties for failure to train. But if there are work areas you recognize as needing training, you will have to give it some serious thought and establish a plan.

First, briefly define the need. Write it out so you can refine it. Ask supervisors who will benefit from better trained employees for their input. Develop an outline of the training course as you envision it. Review the outline with affected supervisors for help in editing. If supervisors don't understand, management surely won't. Involving others adds buy-in to the idea.

Now comes the hard part

Company management is persuaded by statistics, and statistics usually involve numbers. If your plan is intended to reduce equipment operating costs through improved equipment operating skills, you need to know how much money has been spent on equipment repair and maintenance for, let's say, the past two years. If it has to do with improved production, you will need some historical numbers to establish a base line.

Once you have a provable base line, you can make some educated guesses as to how much you can save through training. Don't be overly optimistic in your estimate, but don't be too conservative either. You're offering management an opportunity to increase profitability without increasing product prices and that's something they always like. Balance the estimated cost of training development and delivery against the projected savings and see for yourself if it represents a good investment. If it does, you have developed a strong case for the project. If it doesn't, you have to ask yourself if you would be willing to make this investment if it were coming out of your own pocket.

Seeing the intangible

An often voiced concern of senior management is, "What if we spend all this money on training employees and they leave us." An effective counter-argument is: "What if we don't train our employees and they stay?" As difficult as good employees are to find, it's essential to provide adequate training to those we do find in order to keep them on the job, productively.

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