How to reduce costs? Better measure training to help cut expenses.

Posted on February 22nd, 2009.

Ok we know times are tough. Our just-released TalentWatch® research (Winter 2009) found that 61% of all organizations now rate “financial pressure to cut costs” as one of their top two business challenges, up from 36% only 3 months ago.

So how well are HR and L&D organizations doing at reducing expenses and rationalizing costs? Not as well as we would hope. We are just completing a major study of talent measurement practices, and there are some important lessons here.

What should be measure now? Measure what matters:

Zero based budgeting for your training and HR programs. We just completed a study of talent measurement practices and found that only 21% of organizations (more than 400 responded) review more than half their training programs for re-funding each year. In other words, many organizations do not have a “zero-based” budget for ongoing programs – so they are “institutionalized.” Now is the time to review everything you are doing. Only by cutting the non-essential programs can you allocate greater research to the strategic talent-driven programs.
Rank training and onboarding programs on a performance basis. Believe it or not, only 31% of organizations have any formal or regular process to review low-performing training programs. The remaining 69% of organizations either never review program performance (28%) or only do it occasionally when needed (41%). How do you measure training programs for such ranking? It can be very easy: attendee satisfaction, manager surveys of utility, learning outcomes, and alignment with business needs. The Training Measurement Book details this in an easy-to-use model.
Don’t eliminate all travel – increase classroom utilization to 70% or higher. Here’s another startling statistic we just found: on average, among 120 global corporations, 46% of their available classroom seats are utilized! That is, 54% of all available training hours are going un-used. For this particular group of companies, this total “under-utilized” training was more than $840,000 per year per company. Force people into a smaller number of sessions, so you do not have to eliminate programs which took a lot of time and money to build.
Allocate 1-2% of the training budget towards a measurement program. On average, companies spend less than 1/2% of their training dollars on measurement – yet more than 80% of the companies we spoke with want to measure training programs in a more systematic way. If you want to save money and rationalize spending, you must spend the time and resources to capture and analyze training information.

Measure what Matters

We have been helping companies with talent measurement programs for years now, and we have identified more than 30 different measures in use. Right now, while strategic talent measures are interesting, the simple and practical measures of utilization and impact will tell you what you need to know.

Now is the time to prove the value of your measurement program. If it isnt delivering clear and easy to understand data which helps you identify the right programs to cut, then your measurement program needs to be fixed.

In addition to our Learning Measurement Advisory Services, we have a deep library of research as well as the Training Measurement Book to help you put these programs in place.

Other posts which discuss this topic: ”Yes you really Can cut Training Costs”

What are you doing today to help rationalize your training and talent program spending?