(part 2)

and trying to understand whether it is profitable for you

In Part 1, we looked at how to measure the benefits of implementing a training system for new employees. However, we examined the cost of the already-made program impact. What about its preparation which also requires some investments and affects the total cost of the training? Today we will focus on the time and financial costs of preparation and see if it is still beneficial for you.

As in the previous article, to know the cost of program preparation we need to know the time that the manager would spend on it and the salary that also would be including this part of the job.

As in the previous article, to know the cost of program preparation we need to know the time that the manager would spend on it and the salary that also would be including this part of the job.

01

What do we mean by preparation

Doing a training program usually requires:

+

Content writing

+

Video materials shooting

+

LMS launching

and of course time of specialists. Considering this amount of work it would be unfair to exclude the cost of preparing training from the total cost of training a new employee.

02

Cost of training with preparation

Even though preparation requires the powers of many people, for simplicity of explanation, we will take as a basis that the manager prepares everything himself. Later you can count the cost of preparation for each specialist involved using the formula below.

First, we remind you that the cost of training one employee without a program (and, accordingly, without its preparation) was 137,144 RUB.

Our task right now is to sum the cost of the training with a program + its preparation, where the first is known (39,762 RUB), but the second we are going to find out.

For this, we will be counting it as in the previous scheme given in the first part. We consider the inefficient time spent on training (in our case, training preparation) and how much this training is covered by the manager’s salary.

Let's deal with the time first that we would spend on such activities.

Based on our data, it can generally take 2 weeks of work to write the instructions and launch LMS. We mean that managers can devote 3-4 hours per day for a month, but if we count it by hours in total it will turn out to be a couple of weeks.

Our task right now is to sum the cost of the training with a program + its preparation, where the first is known (39,762 RUB), but the second we are going to find out.

For this, we will be counting it as in the previous scheme given in the first part. We consider the inefficient time spent on training (in our case, training preparation) and how much this training is covered by the manager’s salary.

Let's deal with the time first that we would spend on such activities.

Based on our data, it can generally take 2 weeks of work to write the instructions and launch LMS. We mean that managers can devote 3-4 hours per day for a month, but if we count it by hours in total it will turn out to be a couple of weeks.

Let's calculate how much 2 weeks (10 working days) will cost for a manager. Recall from the last part that his salary is 300,000 rubles.

Salary per day = 300,000÷21 = 14,286 RUB

Salary per 2 weeks = 14 286×10 = 142,860 RUB

142,860 RUB is going to be our preparation cost (later, PC)

Here's another thing to consider. LMS is a system that is an already-made product from a third party. There are both free and paid versions, depending on the functionality you want to get.

For instance, the creation and implementation of LMS cost you 100,000 rubles. We also add this amount to the total cost of preparing the training. Keep in mind that you buy an LMS once for a long time, so its cost should be taken into account only when hiring the first employee.

Video content shooting (including renting a studio, finding an operator, etc.) may also cost around the same, however in this case we won't be adding this amount, because not every company needs to implement video education, unlike LMS.

Now we are ready to calculate the total cost of the program with preparation by the manager.

For instance, the creation and implementation of LMS cost you 100,000 rubles. We also add this amount to the total cost of preparing the training. Keep in mind that you buy an LMS once for a long time, so its cost should be taken into account only when hiring the first employee.

Video content shooting (including renting a studio, finding an operator, etc.) may also cost around the same, however in this case we won't be adding this amount, because not every company needs to implement video education, unlike LMS.

Now we are ready to calculate the total cost of the program with preparation by the manager.

*Attention! This is the cost of training the first employee since we introduce materials and LMS only at the first hire. There is no need to recreate it when hiring a second employee

Let's substitute:

Cost of training with preparation=

39,762+142,860+100,000=282,622 RUB

Here we notice that learning with the program loses to learning without its implementation.

Considering that the cost of education without training was 137,144 RUB, the cost of preparation turned out to be much higher, namely:

Time is also spent more by 2 weeks, that gives us a picture that the total cost of training is not profitable for us at the first month.

But is it? Never judge by its cover. If we look from a further perspective, the situation drastically changes.

Considering that the cost of education without training was 137,144 RUB, the cost of preparation turned out to be much higher, namely:

for 145,478 RUB more (= 282,622-137,144)

Time is also spent more by 2 weeks, that gives us a picture that the total cost of training is not profitable for us at the first month.

But is it? Never judge by its cover. If we look from a further perspective, the situation drastically changes.

03

Counting profitability period

We must understand that the preparation of materials for training is a one-time event. If the program already exists, it will only need correction in the future.

In other words, the manager spends 2 weeks preparing materials and never comes back to it. The rest of the time it will work according to the usual principle of four weeks, presented earlier in the first part (5%, 10%, 10%, 10%).

By the way, let's calculate the adjustment of materials, which should be carried out at some point in time due to the ongoing process updates in the company. On average, this happens once a month and 1 full day is enough, which will be equal to the salary of the manager per day = 14,286 RUB.

Thus, the cost of training with the program for the second employee will be calculated as follows:

In other words, the manager spends 2 weeks preparing materials and never comes back to it. The rest of the time it will work according to the usual principle of four weeks, presented earlier in the first part (5%, 10%, 10%, 10%).

By the way, let's calculate the adjustment of materials, which should be carried out at some point in time due to the ongoing process updates in the company. On average, this happens once a month and 1 full day is enough, which will be equal to the salary of the manager per day = 14,286 RUB.

Thus, the cost of training with the program for the second employee will be calculated as follows:

*If the previous formula is applied only once, then this one will be used for the second, third, fourth, etc. employee.

Let's substitute:

Cost of training with preparation=

39,762+14,286=54,048 RUB

Let's calculate how long training with the system will pay off compared to training without it. We summarize the cost of training each employee in one and the other case.

Without a program: the cost always adds up, since the preparation for education is always spontaneous and starts from scratch each time

With the program: the cost of training with the system is added up (once with the first employee) + the cost of training from the second employee

Without a program: the cost always adds up, since the preparation for education is always spontaneous and starts from scratch each time

137,144+137,144+137,144+137,144+…

With the program: the cost of training with the system is added up (once with the first employee) + the cost of training from the second employee

282,622+54,048+54,048+54,048+…

Thus, we see that training with the system begins to pay off, starting from the third employee.

04

Results

It may seem that the training system creation might not be profitable because it requires additional costs and resources. Teaching each individual by relying on explanations seems faster and easier for many managers.

However, explaining the same points to constantly coming new employees after some time and adding remembering all the new information becomes burdensome, and the quality of the provided information can be lower. While obtaining a training program, already structured and updated information allows not to distract busy managers. Also, it can be easily changed or added to the system.

The financial side of the issue also suffers. The manager will lose more time and, accordingly, money on explaining things through his efforts every month. At the same time, the money spent on the implementation of the training program pays off after a few hires.

In your particular case, the indicators may be different, but the formulas derived in our articles can help you understand whether training is beneficial in your conditions.

However, explaining the same points to constantly coming new employees after some time and adding remembering all the new information becomes burdensome, and the quality of the provided information can be lower. While obtaining a training program, already structured and updated information allows not to distract busy managers. Also, it can be easily changed or added to the system.

The financial side of the issue also suffers. The manager will lose more time and, accordingly, money on explaining things through his efforts every month. At the same time, the money spent on the implementation of the training program pays off after a few hires.

In your particular case, the indicators may be different, but the formulas derived in our articles can help you understand whether training is beneficial in your conditions.

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Feel free to try these formulas on your case!