Last time in this column, I talked about the cost of training employees, and I think I may have scared a few people by showing exactly how expensive it can be to send an employee away to train for a month.

So, why do smart companies still invest so massively in training their employees? Read on, and I’ll tell you why those investments make sense.

Assumptions, Assumptions, Assumptions…

Let’s start with what we already know, and I’m going to stick with the assumptions from last time.

In the previous column, I stated that the total cost of training could easily reach US$2,000 per day of training when you account for course costs, travel, accommodation, salaries, lost income, and overhead.

I also explained that the value produced by an employee would need to be around $150 per hour in order to defend a salary of about $40 per hour, and this number is key to understanding why investing in training employees make sense.

Finally, I also mentioned that I’d be using a return on investment for employees of 25%, meaning that of that $150, the company should retain a net profit of $37.5.

Return on Investment Economy

If we are to have any chance of defending a cost of thousands of dollars for a training class, we need to understand how basic return on investment work.

No client will walk up to your organization and say that because you have taken a “Get Good at SharePoint 101” then we’re going to pay $10,000 extra for a project. That’s not how it works, and your boss knows that. The client doesn’t care what kind of training you have; they care only whether you can deliver

• what you promise,
• when you promise,
• and at the cost you promise.

As such, we need to base our return on investment not on how much more clients will pay but on how much better you become at delivering the what, when, and on-budget of projects.

What?

Your boss will want your clients to give him as many projects as possible. Of course, your boss also needs to be confident that you can deliver those projects. The more varied your skill set is, the more likely it is that your boss can say (without crossing his fingers behind is back) “Yes, we can do that” and thus accept more projects.

Let’s look at an example. A client wants to build a document solution that includes a workflow, and the client values that project to 80 hours for the document taxonomy and 20 hours for the workflow. Let’s also say, for the sake of the example, that you know very well how to set up a document management solution, but you’ve never handled workflows.

The client now has two choices. They can send the whole project to another contractor, or they can let you do the document solution and let someone else do the workflow. In either case, your organization does not get the 20 hours paid because you lacked the proper training in designing workflows.

If had you already done your training on workflow, you could easily accept the additional 20 hours, which would net the company 25% of the price of the contract, in this case $750.

Granted, this isn’t $10,000, but keep in mind, this is the profit from half a week of work, and there’s 104 of those in the year. Scale it up, and you’ll see that getting those extra contracts would net the company almost $70,000 per year per employee. You can’t scale it like that, but it does show you how much value you can squeeze out of being able to pick up extra projects here and there.

Of course, if you’ don’t work on the workflow project, you’d be available to do other work, so this argument works only if the organization doesn’t have fully booked employees already or if the client is likely to take all their projects, not just this one, to another contractor if you cannot deliver.

But Wait, I Can Learn as I Work!

Ah, yes, this is a common situation. Your boss accepts the workflow project and expects you to just pick it up even though you can barely spell workflow. It’s just computers, right? How hard can it be? And there’s always Google.

Let me elaborate on why this doesn’t work, even if you think you can learn what you need while you are doing the actual work.

When?

Delivery on time is not just a budget concern. You may spend the 20 hours on the project, but if you’re already fully booked, finding the time to do those 20 hours may be difficult.

However, what if you didn’t need to spend 20 hours on the project at all? In fact, what if you increase your efficiency so that you spend less time on all your tasks? Let me illustrate what I mean.

Use Google or any other means and find out the name of the largest city by population in Australia. If you already know the answer, pick another country.

Done? Good.

Now, do it again.

“Wait, ” you say. “Why would I need to find out the same information if I already know it?”

The answer is, you don’t. You’ve already learned something, so you don’t need to learn it again, unless you forget.

If your job is to find out the name of the largest city by population in Australia, then your second day on the job would be a lot easier than your first day. I’d even bet that after a while, you’d even learn to type it faster. That’s because you’ve learned and because you’ve trained.

This may seem like a silly example, and it is, but it does illustrate one important thing related to training of employees: if employees know what they are going to do and don’t need to research or learn from scratch, they’ll do their work much quicker and thus be available to produce more for the organization. Similarly, if the employee has done a task before, they’ll do it faster and thus achieve the same result in less time, yielding still more time to produce even more value.

This argument works on the “Learn it as you do it” idea from before too. If it takes you five hours to learn enough basic workflow to do the project for the client, then with proper training, you could have done the project in 15 hours instead of 20 hours, and thus your organization would have been able to bid lower or deliver faster than the client expected, both of which certainly would please me, were I the client.

In fact, if you scale that saving, of 5 hours self-learning per 20 hours of work, you’ll see that in a year, if you already had the training and thus could do your work in 15 hours instead of 20 hours, the savings would easily exceed $35,000, depending on how often you take vacations.

Again, you can’t really scale like this because you don’t learn new tasks for every single project you do. However, the effect of increase in efficiency is substantial for trained versus untrained employees.

There’s another factor in the self-learning versus structured training equation. When you sit down to learn stuff yourself, you can pick up all the technical details of how to do something. However, only experience will tell you what the best approach is. Trainers and teachers usually have field-tested experience and can more easily tell you the good from the hype, the “works” from the “nah,” and probably even the “yeah” from the “oops.”

How many clients will see problems in your solution until you’ve built that experience yourself?

On Budget!

When you, your boss, or the salesperson talks to the client, it usually revolves around one very important question: how much is it going to cost?

Of course, this is a very easy questions to answer, if you know how much time you’ll need to complete the project tasks. However, if you’ve ever actually been in any of these projects, you know that what those tasks are may be very unclear, especially if there are factors of the project you know nothing about.

The result is that the client needs to run a separate project to accurately determine how long their main project will take and how much it will cost, or, more likely, someone sticks a finger in the air and throws a dart at the ‘”How much should we charge” board, and you’re stuck with a random figure for which you’ll be held accountable, regardless of whether you had any input on that figure.

But wait! Here’s a crazy idea. What if someone in the organization knew what these tasks meant and had a good understanding of the complexities or simplicities of building a given solution? Such a person would be able to join the project meetings to help estimate costs and provide insight into what works and what doesn’t. In fact, they may even have new ideas about additional features that the client may think is the coolest thing since sliced bread and thus further increase the value of the contract.

However, for such a person to gain such skills, they would need to already have been in every conceivable project type so that they understand all the possible aspects of a new project. If you’ve never worked on a workflow project, you’ll need to screw up a few projects to fall into all the pits before you know enough about all the tasks to accurately estimate the time a project will take.

The answer is as simple as the question: with proper training, you build the understanding and practical skills required to know what you’ll need to solve a specific problem or implement a new solution. More accurate estimates means better project performance, happier clients, and, eventually, happier bosses.

Conclusion

Trained employees can do more varied tasks, can do them faster than untrained employees, and can more accurately determine the scope of tasks. Those employees will help you win new projects and will drastically reduce the problems you see in those projects. Together, these factors greatly contribute to increase the return on investment of training employees.

However, to understand the whole picture, we still need to look closer at the numbers and set up some realistic scenarios. So, in the next part of “Making the Case for SharePoint Training,” I’ll go into more numbers to show how it is possible to defend investing thousands of dollars in employee training without breaking the bank.

In fact, I’ll show you why it’s an absolute no-brainer.

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