You Can Lose Money By Saving Money
By Dan Bobinski
If you shortchange new employee training you’re throwing
away a lot of money. I’m talking thousands of dollars –
possibly tens of thousands – slipping away unnoticed.
The mistake comes when managers think they’re saving
money and time by providing only a minimal amount of training when
someone gets hired… just enough to get a person
acquainted with their job responsibilities. They know that new
employees will eventually learn the rest of their job requirements,
but they overlook the expenses involved when using that
approach.
Here’s an example: Julie (not her real name) was hired
into the payroll department of a mid-sized company. When she first
started her job her boss spent two hours showing her how to use the
software she needed to perform her unique duties. Then he left her
to learn the rest on her own, telling her that she would pick up
the rest along the way.
That seems reasonable enough, but over the next few days
whenever Julie had a question, her boss told her to “just
play with it – you’ll figure it out.” After three
days of asking and getting the same response, Julie figured out
that her supervisor wasn’t going to provide any more help.
And, because her position was unique and used a specialized
software program, nobody else in the department knew how it worked.
She was on her own.
Julie says it was more than six months before she felt
competent. Along the way she made hundreds of mistakes, irritated
dozens of employees, and spent countless hours fixing all the
mistakes she’d made – much of which wouldn’t have
happened if she’d had just a little more training.
Today, after being in her position for three years, Julie
looks back and realizes how much money was wasted when her boss
wouldn’t provide that extra training. “Over those six
months I was way less than 50 percent efficient,” she says.
“That means that over one fourth of my annual salary was
wasted because of my inefficiency, which equated to over $8,000.
That doesn’t include the dollar cost of the mistakes
I’d made, some of which were huge,” she
said. Overall, she estimated her lack of training to be an
expense to the company of more than $20,000.
I asked how much it would have cost for her boss to provide
her with extra training. “The cost to train me like I
wanted would have been less than $3,000” she said. Then her
eyes opened wide as she realized that the company wasted at least
$17,000 by not providing her with enough training for her to do her
job correctly.
Sometimes the timeframes aren’t as stretched out as
Julie’s. Kevin is an in-house consultant for an international
training company who recently told me he once spent eight hours
doing a job that should have taken only two hours to complete if
he’d received the hour-long training he requested. “My
rate is $200 per hour,” he says, “so the company paid
me $1,600 to do a job that should have cost them only $400 plus the
cost of the training.”
Kevin says that hour’s worth of training to help him to
do the job efficiently would have cost the company about $400
(including his hourly rate). Add that to the $400 it would have
cost them for Kevin’s two hours to do the job and you get
$800, or 50 percent of the $1600 it actually cost them.
Stories with a lot of math can be hard to follow, so it might
help to think about the dilemma as a simple mathematical formula:
Add the cost of time wasted by not being trained to the cost of
fixing mistakes made during that time and subtract what it would
have cost to provide the training. It’s not an exact
representation, but it gives you a good idea of how much it costs
to skimp on training.
Obviously we can’t spend all our time delivering
training or putting our employees through training. As a matter of
fact, after two days of training the human brain is in serious need
of a break. Mechanically, the brain needs time to process new data
into a person’s existing knowledge base. Most of any
new data presented on a third day of training simply pushes out
data acquired in the previous two days.
Since every training need is different, you must first pay
close attention to what a new employee can do and compare it to
what you need them to do. Then you must keep tabs on how much an
employee is learning and provide training opportunities as much as
is feasibly possible.
Training in this manner provides a phenomenal return on
investment over letting employees “figure it out.” I
challenge you to try it, because I firmly believe you’ll save
a lot of money. Check with your own staff and crunch the numbers
for yourself. I think you’ll be surprised.
