Training and

Development of
Supervisors
Cost of Training and Training
Materials

SUBMITTED BY: - GITIKA

AWASTHI

BFT/14/98

NIDHI KUMARI

BFT/14/368
In an ever changing and fast paced corporate world, training and
development is an indispensable function.

Training and development is one of the lowest things on the priority list
of most companies. When it's organized, it is often at the persistence
of the human resources department. There is, however, enormous
value in organizing proper training and development sessions for
employees. Training allows employees to acquire new skills, sharpen
existing ones, perform better, increase productivity and be better
leaders. Since a company is the sum total of what employees achieve
individually, organizations should do everything in their power to
ensure that employees perform at their peak.

Reasons for Training and Development

Turnover
New technology
Cost control
Role & career flexibility
Orientation
New appraisal techniques
Skill & labor shortage
Globalization & speed of change
Product & service quality

COST OF TRAINING
Most organizations would like to be able to measure the costs invested
in training initiatives against anticipated results. The challenge is that
it is far easier to measure the costs of conducting training than it is to
quantify results. A useful tool in determining costs and savings is to
compare costs per participant versus savings per participant.
Comparing costs and benefits can be done in the following few simple
steps:

1. Planning costs

This covers any work selecting the training programme, such as a

training needs assessment or stakeholder analysis. This will include
any staff time spent on conducting an assessment or external
consultant fees.

Setup Cost
Training Program Plan
Consultant Cost

2. Calculate the cost of training.

This will include costs such as:

a. DIRECT TRAINING COST

Facilitator fees
Training design
Course materials
Videos and workbooks
Facilities rental
Equipment rentals (such as overhead projectors)
Production downtime (including employee time off the job)
Videoconferencing facilities
Specialized computer equipment
Administration (such as registration procedures or confirmation
notices)
All the relevant costs, divided by the anticipated number of
participants, gives the cost per participant.

b. INDIRECT TRAINING COSTS

 Participants' wages, including all on-costs (e.g. Tax,
superannuation and workers' compensation)
The cost of temporarily replacing staff, or the cost of
productivity loss while they are being trained
The cost of management time spent setting up the required
training
Any administrative costs and utilities related to the training
activity.

3. Determine the potential savings generated.

These savings might include:

Fewer errors
Reduced customer turnover
Less equipment downtime
Increased revenue collection
Faster equipment startup time
Reduced employee turnover, when turnover is attributable to
poor supervision
Proper implementation of new customer strategies
Higher workplace morale through more effective management
practices
Less time lost to grievance hearings and work stoppages because
of ineffective supervision
Reduced recruitment costs (because training can create more job-
ready candidates for promotions)
Maximized productivity of new employees through efficient
orientation training

4. Calculate the potential savings.

To calculate potential savings, set goals for post-training achievements

by identifying and quantifying the changes a training initiative will
produce if all other factors are constant. The factors in the formula
include the following:

Current level of performance (for example, 200 error rates per

month; six lost customer accounts per month; five days lost to
work stoppages per year)
Translate the current level of performance into a dollar figure (for
example: 200 error rates x five minutes correction time x $15
salary per hour = $250 per month).
Identify the change that training can produce (for example,
reduce errors to 50 per month).
Calculate the savings that the target criteria will generate (for
example: 200 errors 50 errors = decrease of 150 errors per
month savings = 150 x five minutes/60 x $15 = $187.50).
Identify a meaningful time line for realizing savings, based on
your best business predictions about factors contributing to errors
remaining unchanged.
Identify the number of employees in the target training group.
Divide the total anticipated savings by the number of participants
to identify the savings per participant.

4. Compare the costs to savings.

Multiply the cost per participant by the total number of

participants.
Multiply the savings per participant by the total number of
participants.
Compare your figures to establish your business case for training.

This exercise not only identifies actual costs and realistic savings but
also ensures that your training expectations are reasonable and
targeted to measurable business outcomes.
COST-BENEFIT ANALYSIS OF
TRAINING

Cost-benefit analysis (CBA) is used in both planning and evaluation.

In planning it is used to predict whether the benefits of an innovation,

an intervention such as training, or a capital investment will be equal
to or greater than the costs of the intervention. For example, if you are
trying to decide whether to hire a vendor to offer a leadership course,
cost-benefit analysis can estimate whether the organizational benefits
of the training will equal or exceed the training costs.

When used in evaluation, cost-benefit analysis (CBA) is used to

estimate the actual organizational results. After the training or other
type of intervention has been implemented, cost-benefit analysis can
be used to determine whether there was any real benefit in
comparison to the actual costs.

The most common approach is to calculate return on investment (ROI).

This is accomplished by producing a financial estimate of both the
benefits and the costs to determine whether the benefits exceed the
costs. The standard formula for computing ROI for training is

ROI (percentage) = ((Monetary benefits Training

Costs)/Training Costs) x 100.

ROI may also be measured in terms of decreased per-item product cost

or time.

REFERENCES
http://economictimes.indiatimes.com/small-biz/hr-
leadership/people/importance-of-training-and-development-in-an-
organization/articleshow/48739569.cms?intenttarget=no
 https://www.slideshare.net/hemanthcrpatna/a-project-report-on-training-and-
development-in-bst-textile-pvt-ltd
https://www.business.qld.gov.au/running-business/employing/staff-
development/training/costs-support
http://www.workforce.com/2005/02/24/tool-calculate-the-cost-and-benefits-of-
training/