Training Evaluation Metrics

Recent financial crisis has shaken the world of business.  But besides negative consequences this crisis became a cold shower for many companies that finally understood that human resources are to be valued.  In fact, employees working for the company are the supreme value.  It is through innovation, creative ideas and initiatives that a company may overcome the crisis and turn profitable again, attracting new customers and offer new products and services for existing ones.

Effect of training on organization performance

The last decade saw a sharp increase in popularity of different training courses, seminars, coaching campaigns etc.  It became clear that an initiative coming from the lowest managerial level may give a company enormous competitive advantage over rival companies.  Well educated personnel possessing me you knowledge and techniques will directly work with customers.  Changes in the company management are OK, but the company needs to make sure that those front line employees who contact customers on the everyday basis should use their knowledge to profit the company.  Training and coaching is an inseparable part of a great company performance.  As any performance, of training should be evaluated since the company needs to spend certain amount of money to conduct training sessions, and naturally the company wants to get this money back in profits.

Balance scorecard makes it possible to evaluate training through introduction of key performance indicators and their measurement.  BSC is different from other performance evaluation systems by the fact that all goals and objectives, as well as measures, are subordinated to the company strategy.  In other words, everything performed within the framework of training campaigns aims at implementation of strategic goals.

Of course, it is impossible to avoid financial indicators in evaluation of training efficiency.  Cost per employee cost per training campaign, number of canned beans and total costs of very important indicators.  But balanced scorecard has a full range of nonfinancial indicators which can reveal weaknesses in training campaigns.

With the help of balanced scorecard it will be easier to motivate personnel participate in training.  Every employee should understand why he needs training and what benefits he and his company will get.  By using acquired knowledge in practice and employee can drain profits for the company and get benefits for himself in case a company has a comprehensive compensation and bonus system.

Key training KPIs

Evaluation of training will make it possible to see if the company personnel is ready to use innovative methods and techniques, operate new equipment, apply innovative approaches to customer relations etc.

Nowadays too many business owners forget that the supreme value of their companies is the people who work there.  But the recent financial crisis has vividly demonstrated that well educated and efficient personnel is the key to success.  Those companies who had the best human resources managed to survive the crisis and even increase their profits and in large customer base.  This all became possible because these companies had a comprehensive strategy.  It is strategic planning that can lead a company to success.  In the modern markets short term goal policies sometimes prove to be ineffective.

This is how training works

That is why it is very important to train and educate personnel.  Moreover, this training should be economical if effective.  It is evident that an employer should spend a certain amount of money to educate one employee.  And naturally, an employer expects employee to work better and bring more profits for the company.

An efficient HR department needs to conduct training sessions for employees in such a way so that the entire company benefits from it.  Every training session should have its goals.  At the same time, employees should understand why the need such a training.

Use of balanced scorecard in evaluation of training will help both managers, HR specialists and ordinary employees better understand the importance of training sessions, their efficiency and expected financial gains.

Balanced scorecard uses the principle of key performance indicators evaluation.  Every business or any business aspect has its own set of KPIs.  Training also has specific key performance indicators which help managers find out whether or not a training session was effective.

Training KPIs to be measured

So, what are these key performance indicators?

First and foremost, this is cost per employee.  As said above, the company spends a certain amount of money to train one employee.  One needs to keep balance here, as saving too much and training may result in low education level of the personnel.  This leads us to the next KPI which is expected revenue per employee.  Obviously, the company wants to have profits resulted in education of personnel.  So if the company gets profits as a result of training sessions it means that the training was in general effective.

Training budget is in another indicator one should pay a special attention.  If the company manages to gradually increase this budget and at the same time increase profits this signals that the training campaign proves to be effective.

Every organization or company should always do something to become better. Why? In today’s economy businesses that stopped developing are simply doomed to failure. There are many examples of companies that started as successful business ventures but end up in bankruptcy just because they did not develop.

Those businessmen who think that development of a company is only about buying new things and expanding business (by building new production facilities or constructing new offices) are very short sighted people. Smart businessmen know that investment in personnel is the most lucrative and long lasting investment.

What does it mean to invest money in personnel? Is it just hiring a number of new employees? Well, this is a good idea. But a better idea is to invest money in training current personnel. We can see that nowadays different kinds of trainings are extremely popular. Indeed, it is only a better working employee who can make a profit for your business.

Evaluate training performance with BSC system

Use the best methods of training performance evaluation

However, just conducting a training session for your personnel is not enough. You are to make training effective. There cannot be free training and you need to spend some money to conduct a series of training sessions. If training proves to be ineffective you will simply lose money. Besides, your employees will mock on you, if they ever see that they have just wasted their time at the training seminar.

In order to properly evaluate efficiency of training a manager should certainly use Balanced Scorecard System which is known as a great tool to measure business performance in general. There are certain KPIs (key performance indicators) that directly or indirectly show performance of a company or a particular business department.

Balanced Scorecard System can be easily used in evaluation of training performance. Sure, one of the key indicators is cost per employee and expected revenue. As you understand, the ultimate goal of any training sessions is making profits. A well trained employee can earn more or share some creative ideas which can be used in making additional profits for a company.

Try to keep cost per employee low. However, do not get carried away. If you spend as much as $5 per employee you will get poor performance results. With Balanced Scorecard System you will see what increases or decreases the cost of training session, and thus, you will be able to make relevant decisions. You may also pay a special attention to savings costs (which are result of training sessions).