Training: How to Calculate Cost vs. Benefit?

Naval students learn Japanese aboard Aircraft Carrier Stennis. Canner Street Consulting specializes in teaching English to foreign students.

In hard economic times companies commonly look at training as a cost-cutting opportunity unless it is mandated, for example, professional education in such industries as law, accounting, insurance, and so forth. If there is no compelling link to business survival, cutting back on training is common. This is a relatively easy decision because there seldom is a backlash or adverse impact except upon those who lose their jobs. But there can be consequences:
• highly experienced professionals providing an important bridge between management, staff and operations are lost
• company culture and its collective intelligence may lose vigor
• breaks in the continuity between learning and operations may affect quality, uniformity and marketing, especially with multi-site operations
• learning curves, often unmeasured, break down
• morale is adversely affected
• quality may slip, and
• rebuilding will be costly.

Nevertheless, cuts have to be made; there is no reason for them to be poorly made.
As fuzzy as things might get in any organization, every organization understands its core business and the needs of its clients and customers. The questions to be asked when making choices are:
• What training remains essential to our fundamental business purpose?
• Within our training, are there operations that can be set aside for the duration?
• On a line basis, what costs can we reduce without compromising quality?
• Can we reassign and retain our best people to ensure we maintain our training core?

There are ways to reassign costs and in the process reduce them dramatically. Except for most hands-on training, for example, training machinists or phlebotomists, training costs can be cut dramatically with an investment in learning technology. Technology will eliminate jobs, no doubt, but it will not destroy the essential core.
Another option is to look at job growth within training during the good times and ask, “Do we have positions that grew from “want” rather than “need” and are they necessary? You may already know that answer. In fact, that is a question that should be asked of every department. Unless you are bound by contract, this allows and opportunity to rid yourself of the poor and non-performers. This approach may result in diminishing returns if you are bound by contract.

Research conducted some years ago showed that up to 40% of training cost in any organization is unnecessary. There are several reasons for this.
• it may be untimely, either too early or too late in the employee’s development
• it may be irrelevant, that is, it has been accomplished “on the job”
• the cost exceeds the benefit, and
• it may be outdated, that is, out of step with present realities.
Peter Drucker is often quoted: “If you think training is expensive, try ignorance.” Cutting back on training does not suggest that ignorance will emerge. What Drucker is implying is that training is an essential activity in any organization. How it is managed, how it is undertaken, and what it costs determines how well it meets your needs—and cost may be the least of the problem. Any organization, in good times or bad, should be assessing its training regularly in relation to:
• design
• delivery
• effectiveness, and
• cost.

Some years ago, a large utility was experiencing very high turnover and excessive error ratios with its data entry staff. The cost of both, in time and money, was staggering. A new manager stepped in and hired a consultant to look at the problem. The consultant put a program in place that assured almost faultless data entry and reduced turnover to less that 3% annually. The consultant understood two things:
First--tools supporting learning have increased learning effectiveness extraordinarily
Second--designing and delivering training excellence requires that we understand how people learn.
Canner Street Consulting understands both and brings decades of experience to its work. If you decide to look at your training for any reason, including a start-up, we are ready to help. Our minds make a difference.

Retail Theft Prevention: Join Our Benchmarking Study Group

Canner Street Consulting invites your company to join with other leading retailers in a unique international benchmarking study aimed at combating shoplifting and employee theft—practices that cost retailers billions of dollars annually. Estimates of the amount of “shrinkage,” as it is euphemistically called, range from 2% to 5% of sales worldwide. For companies that are not active in combating it, shrinkage often runs into the double digits.

The study includes firms from across North America and Asia. The concept is simple. You provide a little data—completing a questionnaire that takes 2 to 4 hours of your time—and get a lot of data and in-depth analysis in return. You receive a detailed compilation and analysis of the Study Group’s responses. Individual replies of retailers will not be shown; yours will be included in your report only for your convenience so you can easily see how your company compares.
You receive a detailed analysis of the data, highlighting trends and best practices.
You gain a clear understanding of how your practices compare with those of other leading retailers.
You receive a list of participants, including their contact information.

The study covers:
*Analytical measures and techniques used to calculate and estimate theft losses
*Best practices in hiring, training, and operations to reduce theft losses
*Best practices using technology to detect, prevent, and prosecute theft
*New technology developments
*Upstream collaboration practices with suppliers
*Horizontal collaboration practices with other retailers and shopping centers
*Scams, old and new
*Using secret shoppers, consultants, and other human monitoring systems
*Best vendors providing theft prevention support/services
*Apprehension and criminal and civil prosecution practices and results
*Impact of theft on pricing and merchandizing practices
*Practices vis á vis organized retail crime
*Cost/benefit analyses of each of the above, where applicable.

U.S. companies are invited to join the study for a one-time fee of $1,000. Enrollment in the Study Group is open through March 31, 2010. The report will be delivered in May 2010. To join, contact Bert Nelson, at bcnelson@cannerstreet.com.

What Benchmarking Can Do For You

Do you know how your organization stacks up against its industry-wide competition? Are you aware of how your performance measures up to the goals your organization has set for itself? Are you interested in finding out, but don’t know where to begin? You need an expert on benchmarking, and Canner Street Consulting can help.

We'll start by using the principles set forth in the book Benchmarking for Competitive Advantage, which was edited by Canner Street Consulting principal Bert Nelson.

Benchmarking is the process of systematically identifying, analyzing, and adapting an industry’s best practices to improve an organization’s performance. Benchmarking helps an organization to:

• Locate its position in the marketplace
• Identify methods to increase its efficiency
• Improve learning, bring in new ideas, and enhance communications
• Hone capabilities that give it a strategic advantage over the competition.

Benchmarking is a proven and cost-effective way to set standards and measure adherence to them. Although benchmarking is widely discussed, few companies are actually doing it correctly. The Canner Street team, which has led dozens of benchmarking projects, can to work with your organization to plan and execute a benchmarking study, and apply the results.

If you are interested in learning more about benchmarking, contact Canner Street Consulting or Opera Advisors.

Documentation: A Matter of Life and Death

It's not likely that a responsible government agency or company would prepare sloppy documentation for a life and death undertaking, such as decommissioning a nuclear warhead. But what about the thousands of companies doing business in China that have farmed out their user manuals for consumer products to non-English speakers? These companies have disseminated untold millions of items into the U.S. market with poorly written user and assembly instructions. Is this a matter of life and death?

Ask Robert and Susan Cirigliano, whose six month old son was smothered when he was caught in the drop-down panel of his Chinese-manufactured crib. Mr. and Mrs. Cirigliano told their horrendous story to the House Committee on Energy and Commerce, Oversight and Investigations, in Washington on January 21, 2010. Their son is one of at least 43 children who have died in cribs with faulty drop-down panels, and the Consumer Product Safety Administration is now overseeing a recall of over 1.5 million possibly defective cribs.

As Rep. Bart Stupak (D-MI) noted during the hearings, the cribs are even more dangerous when they are improperly assembled, and they are improperly assembled when distributed with poorly written instructions, which is often the case--especially when companies cut corners by hiring writers who are not native English speakers.

The smart company doesn't scrimp on documentation. It's a matter of life and death.

Work-Life Balance in the 16th Century

Peasant Dance (1569), Pieter Bruegel the Elder, Kunsthistorisches Museum, Vienna

Here we have a lively scene of a peasant dance in a village of 16th century Netherlands, which was at the time under the control of the Spanish empire, and paid fully 50 percent of the taxes levied by the Spanish king on his domains. We used this painting to illustrate the training services page on the Canner Street Consulting web site, because it made the point that good team work can be fun.
Peasant Dance was painted in 1568 by Pieter Bruegel the Elder (1525 – 1569), who is often considered the greatest Flemish painter of the 16th century. During a period when most artists chose formal classical and religious themes, and sited them in urban environments and elaborate settings, such as cathedrals, Bruegel developed the art of landscape painting and printmaking, and sited even his religious paintings in rural settings. His depictions of village life are important artifacts of what life was like for the laboring population of the period. Both of his sons were accomplished painters in their own right. We chose this painting as a reminder that recreation—whether it be playing the bagpipes, or taking a spin around the village square with a partner—is a key ingredient of productivity for every organization. Good training and team-building programs can serve the same purpose.
Question for readers: What is that object that looks like a broken ale mug handle in the lower right hand corner of the painting? What does it mean?

Employee Newsletters

At Canner Street Consulting, we believe that every middle-sized and large organization should have an employee newsletter. The newsletter should be planned and designed to support the values, mission, and vision of the organization. It should have heart, build a sense of family, and reinforce camaraderie. The benefits often are intangible—until management asks the question “How well are we keeping our team involved and informed about this organizations and its workings?”

Good newsletters include:

§ Current and historical information about the organization

§ Reports on personalities and events within the organization

§ Anecdotes on outstanding employees

§ Listings of new employees

§ Brief bios on new management personnel

§ Personal announcements submitted by employees

§ Acknowledgement of fellow employees by peers

§ Brief thoughts from leadership

§ Statistical information on the services and costs

§ Featured departments

§ A section on the community and the organization

§ A calendar of upcoming events

§ Job openings, with a description of the employee referral process.

Good newsletters:

§ Draw employees together

§ Strengthen company morale

§ Add to employees’ sense of ownership

§ Kept employees informed on important issues

§ Contribute to improved performance outcomes

§ Reinforce company values

§ Close gaps in perceptions while clearing up misinformation

§ Provide standards against which employees can measure their performance.

If your newsletter is what it should be, you will be pleased with the responses.

Canner Street Consulting is experienced in researching and writing organizational newsletters, and we can help.

About the Art Work on Our Web Site

The Ambassadors, Hans Holbein, 1533. The tools refer to the Quadrivium, the four mathematical disciplines that were part of the Seven Liberal Arts: arithmetic, geometry, music, and astronomy.

We decided not to use generic graphics for our web site because there were so many beautiful paintings to choose from to help us get across the ideas we wanted to express. We think that our work deals with beauty, as a well-executed project or a flawlessly produced publication can be a thing of beauty. To make the point about training tools, we chose Hans Holbein's Ambassadors (1533), a portrait of the French ambassadors to the court of Henry VIII of England. The tools on the table between the diplomats refer to the Quadrivium, the four mathematical disciplines that were part of the Seven Liberal Arts: arithmetic, geometry, music, and astronomy. Art historians have long debated the meaning of the geometrically contorted skull in the foreground, which appears in a normal shape when the painting is viewed from a different angle; when the skull appears as normal, the rest of the painting fades out of perspective. Could this be a reference to human mortality, the consideration of which tends to put all the accouterments of this world into a different perspective? For more discussion and references, see this web page devoted to the painting.