Sometimes we wonder what it costs to put employees through mandatory training. There are organizations that have five or ten programs a year that every employee must take.
The Power of Multiplication
Here’s a great idea I heard last week: If an internal customer wants to add yet another compliance training program, then first they have to help us complete a Workforce Impact Statement. Here’s the general idea:
Let’s say you have 10,000 full-time employees.
And let’s say you want each of them to take a 1-hour compliance course. That’s 10,000 hours.
Calculating By Payroll Costs. If the average burdened rate for these employees is $25.00 per hour (to choose a conservative amount), you’ll be paying $250K just in labor costs for the course.
So we have to be careful about saying, “Well, it’s only an hour.” That hour, in this scenario, is costing us at least a quarter of a million dollars.
Calculating By Person Year. Let’s say our employees work about 40 hours a week and 52 weeks a year. That’s 2,080 hours. If we give them 2 weeks’ vacation and 10 Federal holidays, that leaves 1,920 hours to get a years’ worth of work done.
So our 10,000 hours of training, divided by 1,920 hours is 5.21 person years. That means that collectively, our people will be in training for over 5 years.
So maybe we should pause when someone says, “It’s only an hour.” And we should ask, “How much do we want this training?”
What if we save some time? Let’s say that we can offer the compliance course in 45 minutes instead of 60.
0.75 * 10,000 = 7,500 hours. We could save 2,500 hours. Using our $25.00 per hour and 1,920 hours per year estimates, we’d reduce the labor costs by $62.5K and save 1.3 person years.
We can use similar calculations for any number of minutes that our employees, in general, spend doing something that could possibly be done more efficiently. Depending on holidays and vacation days, you’d have to adjust for the average number of hours your employees work in a year. And you’d also have to calculate the average burdened rate for your organization. Someone in Finance would probably be happy to assist you to make these estimates.
When in doubt, use conservative figures. If you use this data as part of an argument to judiciously shave time (where that is safe, reasonable, and permitted), then you don’t want your savings estimates to seem inflated. Conservative numbers will be more credible than numbers that someone might think have been exaggerated.
It’s not that we usually watch every minute that knowledge workers spend in different activities. But it’s worth thinking about the workforce impact when we ask large numbers of people to spend a day or more in training.
See the Resources list for a simple spreadsheet you can use to make estimates for your own workforce.
Post | Calculate Payroll Burdens
Worksheet | Workforce Impact Worksheet