Wasting money on training? Here's how to make it pay
It looks like a great deal: a registered training organisation that will train your people, and pay you for the privilege.
It’s done via well-intentioned government training subsidies and it’s perfectly legal, says Grant Saxon, the founder and chairman of leadership training company, Leadership Management International. “A number of providers use the incentive of cash-back rebates to win companies as customers,” Saxon tells LeadingCompany. “They say to companies, ‘You have 1500 employees, we will give you $100 a head cash-in-hand to enrol them with us, then take the $2,500 for themselves, and do the minimal amount, just ticking all the boxes. People have a 45-minute session with a person from the RTO once a month with a training booklet you can buy off the shelf. The following month they go back, if there are areas they don’t know, the trainer says, ‘Just tick this, tick that. OK, you are competent’.”
LMI has been in the business of training leaders and managers for 40 years, and has 1600 clients and 160 staff and contractors. About 40% of its revenue comes from large corporate clients, another 40% from government and 20% from small companies.
“We guarantee three things,” Saxon says. “Permanent attitudinal and behavioural change; measurable results against pre-determined outcomes established before we commence the training; and an identifiable return on investment.”
Training controversy
Training is an unnecessary expense in the view of many companies, Saxon says. “You have 40-50% of the market that are companies that really see training as a pain in the arse. You do it as cheaply and quick as you can.”
Ruslan Kogan is not against training – he’s against paying for it. The founder of the online electronics store, Kogan, which turned over $1 million in a single day in July, has strong views on the role of training courses in business. “At Kogan every new staff member is told there will never be any formal training, and if you don’t like it, don’t proceed,” he says. “The reason is that we believe formal training is for those who want to look like they are learning; Google is for those who want to learn.”
Kogan, a former consultant for Accenture, says people sign up for training to get away from work.
“The other thing is that by the time someone puts together a training course, it is old information. On Google you are getting new information,” he says. “Because of that, I have an ex-accountant doing digital marketing, an engineer in charge of IT, people with arts degrees running operations. In the six years I have run Kogan, I have never has a person come to me saying I can’t solve this problem. That is a step towards getting fired.”
Susan Herron, the chief executive of the Australian Institute of Management, disputes the idea of Google as the one-size-fits-all training alternative.
She says: “Really, you can’t discount the individual’s experience and the impact that has on their learning needs. Searching on Google for training tips does not take into account that each person’s brain absorbs, retains and uses knowledge differently. While you can get content from Google, good or bad, what is missing is how that content applies to the working environment. Doing a Google search also doesn’t allow for the discussion amongst peers and colleagues as other learning experiences can do, or the ability to reflect on your own view and understand the differences that exist against it.”
Measuring return on investment
AIM, which started over 70 years ago in 1941, runs short courses, online simulations, offers qualifications and recognition of prior learning. Herron is also committed to providing customers with a return on investment argument.
“We look at return on investment depending on client requirements,” Herron says. “You have the option of using survey measurements before and after training to measure progress. If for example, the training is about retaining employees, you can measure employee retention before and after the training. Ditto for absenteeism, which our research tells us it is a big problem.”
Herron says poor organisational culture is tied into leadership, not just at the top but at multiple levels throughout the organisation. “So, if you have a survey measuring organisational culture before and after training, you will get contrasting data.”
Saxon say he can calculate a dollar return on training, which saving hundreds of thousands per person. “Before we start, we sit down and say what do you want ‘Graham’ to achieve, and we ask Graham what he wants to achieve. We negotiate four or five outcomes. They might be turning up to meetings on time, improved delegation, and better-run team meetings.”
Saxon says LMI might ask Graham why he can’t delegate, and then try to solve the issue he raises.
“To measure delegation, we could look at downtime on equipment while everyone is waiting for Graham to make a decision, and that downtime leads to overtime.
“The overtime costs 60 bucks an hour, but he might say, ‘I can’t delegate because I don’t trust people’, So we train his staff so he can trust them, and they can handle the decisions. At the end of 10 or 12 weeks of training, if overtime is down from 60 hours to 20 hours and the downtime to two hours, I can justifiably say I have saved you $2400 a week, or $120,000 a year.”
Non-financial results
Not every goal is measurable, Saxon says. “Turning up late to meetings can just piss you off. You don’t know whether to ball them out in front of the others. But little things are important to demonstrable returns.”
Training is also a part of any good succession plan, Saxon says. “It is used to funnel talent, it upskills and prepares them for advancement. A significant workplace projects allows a company to take their talent out of the everyday environment, to stretch them and see what they can handle.”
Kogan says formal training constrains creative thinking and innovation. “Other reason this is important is that all our staff are taught to go against the grain, to swim upstream and question everything. We need innovation on daily basis.”
However, stress and burnout are just as likely to be the outcome of poor or non-existent training, Saxon says. “The issue is because we are all using flat management structures, we have all got stuff that we have to do ourselves; we are training and mentoring on the run.”
He has trained managers with 10-years-experience who say. “For 10 years I have hated this job, and now I understand what the role is!”
Saxon believes billions are lost because of the mismanagement of the first step into leadership. “You take a guy who is working with mates on Friday, and on Monday he is telling them what to do. If he isn’t any good, he disrupts the productivity of the team. So he leaves, and never takes on responsibly anywhere else, not because he is not capable, but because of a bad experience.”
Kath Walters
Kath Walters is the editor of LeadingCompany and an award-winning journalist of 15 years’ experience. Kath was previously a senior writer and editor at BRW magazine covering management, strategy, finance, entrepreneurship and venture capital across all industry sectors. In 2006, Kath won the Citibank Award for Excellence in Journalism (General Business). Follow her on Twitter @KathWalters
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