Total Cost of Ownership – What is the ‘real cost’ of a learning intervention?

This weeks post is written by Lesley Price (@lesleywprice).  Lesley is a co-founder of the #chat2lrn crew and now, although supposedly ‘semi-retired’, she works part-time for Learn Appeal  and continues to love challenging and being challenged!  Lesley is Scottish and the Scots have a reputation for being ‘canny’ with money…so her challenge to you is: Does the Total Cost of Ownership of a learning intervention really matter?

When we buy a car, some folks only look at the purchase price, others may also consider obvious running costs e.g. insurance, road tax, petrol consumption. Some may take into account the cost of servicing and replacement parts, but I wonder how many factor in depreciation cost and how many years we expect to have the car before we replace it? I have yet to meet anyone who does all of this, puts the information onto a spreadsheet and then calculates the cost of having the car over a number of years. If we carried out this exercise prior to purchase, would we be able to work out which car would offer us the best value for money and the optimum time to replace it? Logic would say yes, as we would then know the total cost of ownership.

IcebergSo what has buying a car to do with learning?  I would suggest that as the picture says, ‘what we see often is only a fractional part of what really is’.   So the question I ask is, ‘what is the real cost of a learning intervention?

All too often we only consider the cost of the course itself or the purchase cost/license fees of either an LMS and/or a content authoring tool, but what about the other ‘hidden’ costs? Do we even know what these are?

When we consider face-to-face training, these are relatively easy to calculate, or are they? If we send somebody on a course that is held elsewhere, there is generally a flat fee, but do we include the cost of the attendee’s time? We are told on a regular basis that time = money, so if we expect colleagues to disseminate what they have learned during the course, how much does that cost both in terms of their time and the time of others who are learning from them?

If face-to-face training is ‘in house’, what is the cost? Should we include the trainer’s delivery time, the time the trainer has spent on creating learning materials, the time of all those who attend the course, the cost of the space used for training which takes place on the premises or might the training involve room hire?

This becomes even more complex when we move into elearning. Yes, we think about the number of licenses we need, but do we consider whether we will need more IT equipment? Most people would say ‘yes of course we do’, but if the system needs a dedicated server what is the cost of IT support of both the software but also equipment?

If we are offering an elearning programme that we are going to create, how do we put a cost on that? We have to consider the time it will take to create…that’s easy….it’s the cost of an Instructional Designer (ID). Mmmm….. but most IDs refer to subject matter experts (SMEs) to ensure the content is fit for purpose and that then takes up the time of the SME and how many do we need to consult?

The other thing we know about elearning is that we cannot assume that just because we create and build systems and content that people will use it. So we have to generate interest and awareness otherwise all the time that has been spent creating the elearning content will be wasted, but that also takes time and to reiterate time = money!

Let’s not forget that to implement a new system; we will need the support of the senior management team (SMT). How many of us factor into the cost of the intervention the number of meetings we have attended, on-going conversations and reports we have written to get SMT buy-in?

Ooohhh and lets not forget all the conversations we have ‘out of hours’ with colleagues and pondering we do ‘in our heads’ about whether or not the learning intervention we feel passionately about will make a difference.

I guess the ultimate question is so what? Does the Total Cost of Ownership of a learning intervention really matter? Do we really need to know the real cost and if we do, what impact does that have on whether we proceed or not? So many questions and probably even more answers. Join #chat2lrn to share your views and thoughts on Total Cost of Ownership #TCO Thursday 30 July 8.00 PDT/11.00 EDT/16.00 BST

Is This a Training Problem?

by Patti Shank, PhD

I was very lucky when I was a young training manager and had the opportunity to learn with Geary Rummler ( I truly believe that this training greatly helped my performance over the lifetime of my career. It provided a certain way of doing my work. The resource I will share with you will provide a brief synopsis of some of the thinking involved that I hope will intrigue you.

Why Care About This?

Training is an expensive intervention. We only need to provide training for one reason: People need skills they don’t have (or need to upgrade or re-establish their skills) and it makes sense to provide it in a formalized way.

When there are problems, such as people unable to do their jobs because of inadequate tools or not enough feedback about whether they are performing as needed (no performance standards), those problems must be fixed and training won’t solve the problem.

Example: A manager asks for team training for her staff because they are don’t work well together. In reality, she causes problems among them by how she treats them. She favors some over others. She provides more work and overtime to people she doesn’t like as much. Training might help this but she is the one that needs it. And before that, she needs coaching about the problems she is causing so the training might be valuable to her.

When we get requests (or demands) for training and we don’t determine if training has a good chance of solving the problem (or being part of the solution), we are creating a problem, not solving it.  Why?

We are using resources that could be better put elsewhere.

We are removing people’s time (when they are stuck in training) that they could be using towards better purposes. They could be using that time to get work done.
The problem doesn’t get fixed. (Think of all the resources used to not solve the problem!)
We look foolish and are unprofessional, and frankly, this happens too often. Who would hire a carpenter who couldn’t measure or build the right solution?

How Training Doesn’t Work

Example: When someone asks for customer service training but they have insufficient tools to answer customer questions or their process requires multiple workarounds, adding customer service training is a misplaced and expensive intervention.  They may need some training (or not) but they DO need better tools and an improved process so customers aren’t angry about being put on indefinite hold or sent to the wrong department.

Carl Binder’s discussion of Gilbert’s Six Boxes is a great introduction to thinking about what we need to do to have the type of performance organizations need and what influences these performance outcomes in the workplace. Read it and think about what part each part plays in your work. If you don’t think it fits in L&D’s world, we’ll have to disagree.

The Six Boxes: