CXO

Control training costs while developing employee skills

The downturn in the economy requires that CIOs find innovative ways to continue training their technical employees. Columnist Tim Landgrave explains a new training strategy that can save money and boost the value of training for the entire company.


Three years ago, the Internet economy drove employee compensation through the roof and made it difficult for any old world company (i.e., a company with profits) to hold on to its most valuable employees.

Back then, training employees in new skills to prepare them for the Internet Age also virtually guaranteed that they would be out the door within six months to find the startup that would give them the most options and the best chance to cash out.

In order to justify the expense of training their employees, many consulting firms and corporations had their employees sign contracts before taking expensive training classes. These contracts typically required the employee to reimburse the company if he or she left within some period of time (typically six to 12 months) after receiving the education. Employees were happy to agree to these terms, because they recognized that improving their skills was the best way to increase their market value.

But times have changed. Finding a job and keeping it has become a much higher priority than finding the job that makes you an overnight millionaire. Employee expectations have become more traditional: a good job, good benefits, and decent working hours. But some things haven’t changed, especially for technical employees. A great technical employee is one who has a burning desire to acquire new knowledge. Great CIOs will find creative ways to provide learning opportunities for their technical staff, even in a down economy.

The true cost of training
For many basic skills, it’s sufficient to provide libraries of books or computer-based training (CBT) resources. But teaching new development or engineering skills to existing technical staff is still best accomplished by instructor-led training (ILT). Unfortunately, this is often the most expensive method.

If you send 10 developers to an off-site, all-day class, you'll not only pay $1,500 per developer for tuition and travel expenses, but your organization will also lose 400 hours of work time and 400 hours of personnel cost at your current internal rate. At a modest $35-per-hour rate, that equates to a minimum of $29,000—$14,000 for employee time, plus $15,000 for training fees (excluding travel) for a week of training.

Unless you can be assured that the $29,000 will not only save you one week of work time somewhere down the road but also make your team productive enough to make up two weeks of work (to pay for the training), it’s difficult to justify the investment. Yes, there are soft-dollar benefits (retention, replacement costs), but they’re even more difficult to quantify.

So how do you create a scenario in which employees get the training they want and need, but the company is able to continue operating with minimal downtime?

Building a shared-cost model
Since both the employee and the company understand the value of getting the training, I think it’s time that both parties figure out a way to share the training costs. In a shared-cost model, the company continues to pay for out-of-pocket training costs, but the employee dedicates some non-work hours toward training to minimize the disruption to company development or deployment schedules. Also, the company should work with key employees to help them evolve into internal training resources, thus reducing the need to seek outside training.

So how would this work? Let’s take an average 40-hour class running 8 A.M. to 5 P.M. Rather than working on this schedule, the company arranges to have the class taught either from 7 A.M. to 11 A.M. or from 3 P.M. to 7 P.M. each day over the course of two weeks. It’s the same amount of classroom time, but employees are only out of the workflow for two hours each workday during the training period. In effect, the company pays for two hours and the employee “pays” for two hours.

The training resources can be provided in one of two ways:

Option 1: Consulting firms
Many consulting firms with training resources will be willing to train on this schedule and only charge their hourly rate rather than charging a per-student rate. If you engage the same consultant for training that you already have working on internal projects, you'll also enjoy the added benefit of having someone teaching the class who also understands your company’s customers and systems.

Option 2: Internal trainers
No one understands the needs of a company’s customers, employees, and systems better than an existing senior employee. I think companies send a positive message when they commit to establishing a training culture that boasts their own internal knowledge base.

I think it’s prudent to invest the time and money to send a senior employee to an off-site training class with the understanding that he or she will train others upon returning. I’ve yet to visit a company that doesn’t already have bright, capable mentors who could become great internal trainers. It’s a huge ego boost for the trainer, and it motivates other technical employees to work toward becoming a mentoring/training resource as well.

And don’t stop at training classes
I’ve always been a big believer that employees who attend events on behalf of the company have a fiscal obligation to find a way to leverage the education they’ve received at the company’s expense.

Take conferences, for example. At the companies I’ve owned or managed, my employees went to conferences only after they produced an agenda and cost justification. Upon their return, they were required to submit a trip report and hold a training session covering important technical topics learned before I would submit expenses for reimbursement.

I believe that those companies benefited more from this approach because the employee was more focused on collecting information for the good of the company while attending the conference.

The bottom line is this: The firms who use the economy as an excuse to avoid training technical teams will eventually lose their best technical talent once the economy rebounds. Those who work to develop a learning culture will have the opportunity to reap the benefits for years to come.

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