Three reasons to involve functional managers

Ideally, the process of designing training for new staff should involve other employees. A common approach is to allow past graduates to redesign part of an induction week or to become informal mentors to other new recruits. A less common but equally important approach is to speak to the managers of new hires too, because they work with them directly. There is also value in involving the managers of the managers e.g. functional managers, but for reasons that are slightly less obvious.

Here are three:

A helicopter view of trends:

To be effective, any training for new hires needs to be closely aligned with the learning curve they go through. However, this will vary from team to team, and individual managers might not be aware of what makes their team unique or the wider context. The business functions that take on the most new staff will have the best sense of these wider factors and the most common challenges experienced with new staff. This will help HR teams to focus their training onto the most important issues.

A useful perspective on choosing milestones:

Having some high-level milestones for new hires will help ensure that any additional training for them is hitting the mark e.g. by 3 months in the job we expect our new hires to be doing “X”. However, different teams will have different ways of assessing the progress of new hires: be it their communication skills, growing responsibility, or a growing circle of influence. Functional managers are best-placed to comment on these differences in approach and so how HR teams can tailor the support for new hires accordingly.

Helping managers to act:

Good coaching by managers is an important way to boost the performance of new hires. However, managers are often extremely busy and this aspect of their day-job can slip. Involving functional managers in the design of training for new staff makes them more invested in the upskilling process, which makes them more likely to hold the managers of new hires to account. This, in turn, is likely to indirectly boost the time that managers invest in coaching.

ROI: start with the cost of time

Return on Investment (ROI) is often seen as tough to calculate for training. However, with a few assumptions it is easy to find a starting point. The key is to focus on the cost of time.

There are four sets of assumptions we need to make.

(1) is about salaries:

  • The median salary for a graduate/junior hire is £27,000, according to the AGR.
  • The median salary for a manager is £42,230, according to the CMI.

Using the hourly pay converter at Paywizard, this works out to be:

  • £12.98/hr – Junior staff
  • £20.3/hr – Managers

Which we can assume is the minimum amount of value that they’re adding to the company.

(2) is that any extra training they receive will have one of three impacts:

  • Making the graduate faster e.g. they complete 120% of their normal work in 8hrs
  • Increasing the value of their work e.g. a project still takes 8hrs but is worth twice as much
  • Saving managers time e.g. 15min to explain a project, rather than 1hr, means 45min saved

(3) is the effective cost of the training, per person. It’s the sum of:

  • The cost of time spent on the course, because the delegates are not working while they’re being trained
  • Money paid to the training provider per delegate
  • Any internal logistical costs e.g. preparing in-house training materials

(4) is the timescale for calculating ROI. In this example, we’ll use:

  • A financial year

Using these assumptions, ROI is just the sum of impacts (over the timescale), divided by the costs.

To put this into practice, let’s say that you’ve just booked an external 8hr training course for £500 per person for junior staff (like this course). This means an effective cost per person of:

  • £12.98/hr * 8hrs + £500  = £604 (rounded)

Let’s also say that this training course is awesome. In fact, it has the following impacts:

  • Increases the efficiency of a graduate by 20% e.g. an increase of 0.2x
  • Increases the value of their work by 5% e.g. 1.05x
  • Saves their manager 2 hours of coaching time every month e.g. 2*12 = 24hrs/year

Over a full year, this will give your business an extra:

  • £12.98/hr * 2080hrs/year * 20% increase in work done * 105% value of work + £20.3/hr * 2hours/month * 12 months
  • = £6157 (rounded).

So your Return On Investment is (£6157/£604) – 100% = 919% (>900% ROI)

That’s not half bad! You can also reverse these formulas to find the maximum amount that you should be paying for training. The equation to use this time is:

(Financial Impact of training)/(ROI + 100%) – (hourly rate of delegate) * (hours of training) = max spend/person

For our awesome training course, this means:

  • To get an ROI of >919% => spend less than £500/person
  • To get an ROI of >500% => spend less than £900/person
  • To get an ROI of >100% => spend less than £2900/person
  • To get an ROI of >10% => spend less than £5500/person

In other words, you could pay £5,000 a delegate and this one-day training course would still be worth it. So your message to the business is that your £500/person course is actually an extremely good deal.

Feel free to play with these numbers in order to evaluate the ROI of your specific training and interventions. As mentioned, this is only a starting point, but it all helps in the drive to make sensible business decisions.

Calculating ROI is not as hard as it’s made out to be.

Are there other methods that you use? Please do critique this method, or share your own, in order to improve the way that employers and suppliers measure their impact!