Introduction
Arguably, it is possible to tentatively or entirely sideline the concept of investing in workforce training and development. The principle argument or line of thought states that the process cannot be quantified financially from an investment angle when calculating ROI (Return on investment). However, research on employee training has proven that although the program is costly in the initial phase, the outcomes are very formidable to the progress, growth, competitive advantage and increased returns to the firm (Barrett & O’Connell, 2001). In light of return on investment and employee training and development, I would like to present the following proposal on the same.
Training and development
Training and development is an objective and systematic process geared to improve the overall skills, attitudes, knowledge, public relations and the general productivity of the workforce (Saks, Haccoun, Belcourt, & Belcourt, 2010). The process will be carried out on need analysis basis. Therefore, training the workforce is a key and critically paramount activity worth investing in for the purpose of consolidating the profit making and competitive edge of the company.
Training methods
The employees will receive training with already established objectives and goals which are to maximize their productivity and increase the return on investments. Therefore, the delivery methods will follow the empirical and pragmatic approach. Three training methods will be engaged. The first is on the job training. Here, experts and experienced personnel will personally assist the employees in their day to day work programs and consequently provide guidelines and insight. Secondly, field trips will be organized where the trainees will have the opportunity to visit other firms and projects of similar platforms and learn from them. Finally, simulations will be conducted to mimic the real conditions and assess the progress.
Expected outcome of the training
Training yields a better and motivated workforce. The participants will come out more skilled, having better socialization and public relations, they can bear more responsibility seamlessly, they will be more psychologically stable and robust and most importantly, their commitment level to this firm will increase. Recent research vividly and comprehensively points out that companies that have trained their personnel registered more than 7% growth capacity in sales (Bullen, 2014).
Potential return on investment
After training, the worker has more prowess and enhanced public relation and sales skills, so the sales person now sells two units at $600.
Assume that the overall cost of each unit it $200, therefore, the profit will double from $100 to $200.
In a year, the same sales person will have sold 365*2 units which is 730 units.
730* 100 profit per unit yields $73000 per year.
If tentatively the employee was to be paid $38000 annually, then assuming that it took $10000 to train the worker, then the total cost by the employee will be:
$38000 + $10000 = $48000 within one year after training.
Therefore, the ROI will be calculated as ROI= (Net profit / cost of investment) *100
Therefore, ROI= [($73000 - $48000) / $10000] *100
= ($25000/$48000) *100
=0.52083*100
=52.08% per employee.
In conclusion, it can be seen that although employee training is a financially hefty activity during the initial phase, it can turn out to be a total turn over to the economies of scale of the company. Many firms have tested and proven the theory on employee training and development and the outcome was a positive return on investment. The approach, however, requires sound and premeditated planning and execution of the program.
References
Barrett, A., & O'Connell, P. J. (2001). Does training generally work? The returns to in-company training. Industrial & labor relations review, 54(3), 647-662.
Bullen, D. (2014, December 01). How Top Companies Make The ROI Case For Employee Training. Retrieved from Corporate Training & Development: http://www.skilledup.com/insights/how-top-companies-make-the-roi-case-for-employee-training
Saks, A. M., Haccoun, R. R., Belcourt, M., & Belcourt, M. (2010). Managing performance through training and development. Toronto: Nelson Education.
