Research shows that the two key factors in achieving a positive return on training investment are the focus and the quality of training. A return on investment is not dependent on the size of your business or the industry you are in.

In order to justify training costs for your business, you should address the following questions:

Is the proposed training in line with your business strategy?

For example, the implementation of:

• sales training to increase annual sales by 10 per cent
• customer service training to achieve a 30 per cent increase in customer satisfaction which leads to repeat business
• plant operator training to increase plant productivity by 20 per cent by decreasing the cost of production, machine downtime, the number of required repairs, and WorkCover premiums due to decreased accident rates.

Compared to your competitors, are there any areas where you can improve performance through targeted training?

For example:

• the cost of unit production (all costs / number of units produced) is higher than your competitor's
• the total sales per salesperson are lower than your competitor's
• you score lower on customer satisfaction surveys than your competitor. Your Industry Skills Council (ISC) might be able to help you with benchmarks.

Are your performance targets achievable?

Make sure that you are setting realistic goals for your business.

Is the implementation of training the best option?

It is possible that your business needs would be addressed more efficiently by:

• recruiting trained staff
• hiring a skilled contractor.

Are the costs of training worth it?

Quantify and weigh up the benefits and costs by calculating your estimated return on investment (ROI) and considering further intangible benefits of training such as:

• high staff morale and commitment
• better customer relationship and experience
• better company image and reputation
• better problem solving capacity of staff
• a more innovative environment
• greater responsiveness to market changes and demands.

How do you propose to measure the effectiveness of your training?

To calculate your return on training investment you must:

• measure the sales/productivity/turnover/accident ratio before and after training
• decide on a realistic period of time over which to measure the return on training investment.

For example, it will take longer to realise a reduction in your WorkCover premiums than an increase in sales or productivity based on training.

In order to assist you in presenting a strong business case for training, we have provided a sample business plan based on the case study below.

ABC Company

ABC is a nationwide health organisation with 1600 cleaning staff.

ABC's current cleaning costs are $56 per square metre per annum - this does not compare favourably with industry benchmarks. ABC plans therefore to reduce its overall operational costs to streamline the business.

During an examination of its cleaning processes, ABC realises that its cleaning operation could be run more efficiently through better staff rostering and the introduction of work standards.