Page 300 - Psychological Management of Individual Performance

measuring costs and benefits 285
solutions such as feedback from the manager, quality circles, job aides and checklists, job
rotation, mentoring. The following should be taken into consideration when calculating
a training budget:
Costs for consulting, designing, conducting, and evaluating the training programme

(e.g. salary costs, fees)
Training materials (manuals, slides, videotapes, overhead transparencies, television

monitors and video equipment)
Travel and hotel expenses

Lost work time of trainees and management (pre- and post-training discussions,

etc.).
Interestingly, for many companies, the net costs for trainers and training development
are often moderate in comparison with hotel and travel expenses. It makes little sense to
economise on trainers when you consider that administrative costs consume the greatest
share of the training budget. Time and money spent on sub-standard training is far worse
than investing a few 100 dollars more per day for an excellent trainer.
The benefits of a good employee development programme are evident but they are
difficult to put into figures. Unfortunately, there are too many influencing factors to allow
accurate measurement of the positive effects that training obviously has in areas such as:
productivity and performance, increased staff competence, greater customer satisfaction,
improved goal-oriented behaviour among managers and employees, increased morale,
reductions in staff turnover, and so on. In the end, it is easier to calculate the costs of
a training programme than it is to calculate its benefits. The following example shows
how this was done in the firm.

INTRODUCTORY-LEVEL LEADERSHIP TRAINING:CALCULATION
OF ESTIMATED COSTS AND BENEFITS

The estimated costs for one training course (13 days over the course of a year) consisted of:
Costs for course planning, organisation, development and evaluation (salaries, fees)

Trainer’s fees

Travel and hotel expenses

Lost work time of participants

Management time (co-trainer’s salary divided by number of training days, time for pre-

and post-training discussions).
The internal training department calculated the overall costs of the programme and estab-
lished a price for each training place in order to recoup the costs of the training course.
The cost of lost work time was not calculated. The cost per participant was set at ca.
$5000. This included hotel and travel expenses and was taken from the senior manager’s
“training and development” budget. Fortunately, senior management viewed the training
programme as being highly beneficial. They shared the philosophy that money invested in
human resources ultimately leads to greater cost-effectiveness for the organisation in the
long run and saw the training programme as an investment in management development as
a whole. Compared to the costs involved in recruiting an external, experienced manager
through a head-hunter or a recruitment agency it showed that it is far less expensive to
invest in the development of the leadership skills of existing staff than to pay recruitment
costs, and to invest the time training an external manager to work effectively in the new
company.