The True Cost of Training
by Gayla R. Sherry, SPHR, BOL Guru BIO AND CONTACT INFO
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Bank officers are constantly bombarded with offers for staff training opportunities through the mail, the Internet and via telephone. We can make choices from: one-day, "canned" programs; customized, onsite programs; videos and audio cassettes; CD-ROMs and even web-based training. Yet, with all the opportunities available, many organizations do not consistently provide training and development for employees. Why? The most common reason that I hear is, "We can't afford it." My assertion is you can't afford not to. Here's why:
Employee Motivation
Today's workforce is generally motivated by "what's in this job for me?" Granted, part of that motivation comes in the form of a paycheck. However, researchers tell us that today's workforce is motivated by:
Cross-training
Promotion potential
Productive work atmosphere
Feeling as if they are making a difference
The common thread among all these motivations is training and development. The message is, if we do not provide training, employees will seek other opportunities with employers, including your competitors.
Turnover Costs
Obviously, as employees leave the organization, turnover rates increase. Many organizations maintain good records regarding their turnover rates, but do you know what the cost of that turnover is? Here's a conservative estimate:
Recruiting costs are the costs to attract applicants, interview and select candidates. Recruiting costs range from $5,000 to $7,000 per employee - even higher for officers and executives.
Retraining costs represent the costs for the minimum amount of training needed to bring the new employee's performance to a basic level. These costs range from $3,500 to $5,000 per employee.
"Hidden" costs are the costs of decreased productivity and morale loss with employees who are performing the job duties until a new employee is hired.
Risk costs - Today's tight job market and low unemployment presents a risk to the organization. The candidate pool may have limited abilities, so your organization risks hiring a replacement who is less talented than the employee you lost. Or, even worse, you may not be able to find a replacement and the position remains unfilled.
By translating these costs to the bottom line, let's assume your bank employs 100 people. If 10 employees leave your bank in a year's time, your turnover rate is 10%. Based on the direct costs for recruiting and retraining, that turnover costs you $85,000 to $120,000 per year - exclusive of the indirect costs.
The purchasing power of $85,000 to $120,000 per year is significant. There are many training and development opportunities for a high quality, customized training for all of your employees, on-site, for $2,000 - $3,000 per day. You can also choose to send your employees to external training through associations, conferences and conventions. Even with material costs and travel expenses, your organization can certainly profit from providing training.
Once you've decided to invest in training for your staff, where do you begin? Here are some ideas…
What are your needs?
Initially, it's important to analyze what your needs are. More than likely, you have noticed something in your bank that is different - is morale suddenly in a tailspin? Do you have a sudden increase in serious customer complaints? Is absenteeism higher than usual? Are teller losses increasing? Are you writing off more loans, absent a poor economic situation?
Determine options for training and development.
In many cases, you may have someone on staff who can assist in providing the training and development your staff needs. If you want to look externally, getting referrals and "word of mouth" references are the best methods for selecting potential training. Ask other bankers for references and referrals, as well as your local chamber of commerce.
Regardless of the options you choose, it is worthwhile to invest some time - before the training is arranged - in making sure the training will fit your needs. Ask for references, sample video and/or audio tapes, examples of training materials, etc. A very important aspect is to ensure that the training professional's personality will fit with those of your employees.
Select the options that best meet your needs.
When evaluating proposals, our tendency may be to select proposals with the lowest cost. However, costs can be misleading - check for hidden costs or add-on costs for travel, participant materials, etc. Look for training that is specific to the banking industry and customized for your organization. Keep in mind that you are evaluating an investment, and analyze the return on the investment! Low cost may mean low quality.
Schedule the training.
Scheduling can be a challenge! Select training on a date and time for the training that is generally acceptable for the majority of the participants - you are not likely to please everyone! If possible, try to schedule the training during working hours, but away from the bustle of the bank's business transactions. If scheduling does not work during regular hours, select morning, evening or weekend times that are feasible. Remember that it is very difficult to learn when the participants are tired or feel as if their work is accumulating while they are in the training session. Also, the opportunity to attend training is viewed by many employees as a perk!
CAN'T AFFORD EMPLOYEE TRAINING AND DEVELOPMENT? YOU CAN'T AFFORD NOT TO…
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