In a modern, progressive and profitable equipment dealership, investment in the ongoing training of people is vital.

Your competitiveness — and the future success of your dealership — depend on improving the skills, behaviors and productivity of your most vital asset — the gray matter between your employees’ ears.

The pace of change is fast and your employees (and you) must be learning continually in order to stay up with and ahead of the changes — and ahead of your competitors. The list of changes confronting dealers is daunting:

• Equipment technology (think Tier 4 engines, precision farming, CVT transmissions)
• Business software and hardware (think cell phones, remote diagnostics, RFI chips on parts and inventory)
• Business processes (think customer relations management or health care plans)

Every one of these and many others require training and re-training when technology or processes are updated.

In this environment of rapid change, training is not a separate task, but part of every employee’s job description.

Former GE CEO Jack Welch made these two points when it comes to employee training. First, for knowledge workers, one day in five will be devoted to training. Second, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.”

Training Q&A’s

We regularly receive questions about quantifying the value of training programs. Here are some examples:

Q. How should we measure the effectiveness of employee training?

A. The same way you do with other capital investments.

Too often, the number of sessions that are scheduled or the number of people trained are equated with the value of training. This doesn’t adequately represent the value of training to a dealership.

The purpose of training is to improve the dealership’s current performance, provide the skills and competencies required for the future success and increase the profitability of the company. The value of training should be tied to these outcomes: improved performance, skills, competency and profitability.

Often a business will focus first on the cost of training and disregard the dividends that the training investment can produce. If your organization only sees training as a cost, then talking about measuring return on investment (ROI) becomes even more meaningful.

Let’s look at a real life example. Recently, one of our clients saw a $233,000 annual expense for workmen’s compensation for one department with 50 employees. The cost for implementing a safety training program was $36,500. If you were only focused on expense, this would be hard to swallow.

But experience shows the importance of looking beyond cost to “value.” After the safety training was implemented, workmen’s comp costs dropped to $21,500. This isn’t a typo. The dealership’s cost dropped from $233,000 to $21,500. The following year, Workmen’s Compensation costs dropped to $2,000!

Would you invest $36,500 to add $196,500 to your bottom line in the first year and $231,000 in the second year? Of course you would. This is the true ROI for training.

To achieve a high ROI from training, you must be willing to expand your perspective from “training as a cost only” to view it as an “investment.” In other words, you must spend the money to realize the returns.

Q. What results should be measured?

A. Those that relate to the
business objective.

To achieve your business objectives, it’s imperative to measure them; you can’t manage what you can’t measure. Examples of business objectives include improved productivity, higher quality, reduced expense, customer or employee satisfaction, elimination of downtime or capital creation. Various measures to manage these objectives could include sales volume, number of accidents or defects, reduction of expenses or output per employee.

To truly appreciate the value of employee training, you need to establish criteria for measuring it before the training takes place. What are your expectations?

It may involve established financial or productivity data that you’re already keeping, so you don’t need to do anything special. For example, you should already know how your employee productivity levels compare to industry standards. In many cases, all you need to do is compare productivity improvement following the training with the same productivity data you already have at your disposal.

In other cases, the results may involve “softer issues” such as job satisfaction or quality of decision making. These issues might require new measurement tools. For example, consider employee retention as a new tool for measuring the effectiveness of employee training.

Training is Vital

Some dealers don’t spend enough time evaluating the ROI for training expenditures and merely look at it as a disruption to their business. They ignore or avoid considerable improvements, like value and return on their training investment because they don’t think about what they’re getting back from spending the money.

Think of training like any other capital investment. The investment is in human capital and the results can be measured the same way as any other — as ROI.