What Should Business Productivity Improvement Cost?
The strong belief system in our country that a penny saved is a penny earned probably keeps a lot of individuals, small business owners, solo professionals, entrepreneurs and even C-Level executives from taking action to improve business productivity or even personal productivity. If I do not spend it, I save it. Before we can talk about the cost, a few ideas need to be discussed.
First, the paradigm that business productivity improvement is a cost needs to be changed. Is not the goal better results? Then, should not productivity or performance improvement always be an investment?
The reason many people think performance improvement is a cost is because they have not realized a positive return on investment and they fail to understand that human capital is their greatest asset. When we invest, we expect to receive more which is logical. Yet, again based upon our beliefs rooted in our K-12 experience, we think of learning or any type of intervention more in terms of cost rather than in terms of investment.
Most training including the K-16 educational experience does not deliver a positive return on investment when we look at the outcomes and the money spent to secure those outcomes. (I include college in this because it is now taking 6 years to earn a 4 year degree. This conditions young people to think that they need spend 60 hours of work to complete 40 hours of work.) Employees in corporate America face ongoing training because the training addresses symptoms and fails to craft solutions to the real problems.
Productivity improvement solutions should deliver at least 2 times the dollars being invested in a relatively short time frame and then that ROI should continue to deliver positive results. (This is called sustainable change.)
For example, most people admit to wasting 12 minutes per day on the job (research suggests that time is actually closer to an hour or 3 hours for manufacturers in Indiana). If the base salary is $30,000 without benefits, this wasted time translates to approximately $750. So, if the employee training for time management is $375 and the wasted time can be redirected to productive time, then the training has delivered a 2 to 1 investment.
A recent training and development seminar publication advertised time management training for $1,495 over 2 days (approximately 12 hours). Participants leave with 2 SMART goals and are exposed to 25 learning objectives. To recover these dollars, participants would need to redirect their wasted time of 12 minutes per day for 2 years for the company just to break even on the initial fees.
As a side note, I truly wish I could charge $750 for every goal that I help a client commit to writing and work through. If I sound cynical, you are right because courses or seminars like this one truly do not consistently deliver a positive return on investment.
The reason for this failure is simple because learning is the acquisition of knowledge while performance is the application. How in the world are you as a participant going to apply 25 learning objectives in 12 hours?
One of the learning objectives within this public training event is dealing with difficult attendees at a meeting. To be effective at this skill, you need practice. Given that these seminars attract 10 to 50 people, how much time will you have to practice just this one skill set? None! And this presumes that you totally understood the knowledge being imparted. (Please excuse my ranting, but I am so tired of many training companies as well as business consultants to business coaches not focusing on delivering a positive return on investment.) I call this malpractice.
So how much should business productivity improvement cost? The answer is “that depends on the results that you want based upon what it is costing you not to improve.”
By not taking action to improve my time management, I am losing $750 per employee if I am an organization. If I am a solo professional, wasted time is costing me customers. Depending upon what income I want and the actual value of each client, each wasted minute could be costing me from $.50 to $1.00 or even much more.
If you are thinking that you need training to business coaching because you truly want performance improvement from time management to goal setting to leadership to customer loyalty, then take some time to determine what your desired results are and be able to quantify them. After you take this action, you can then construct a budget to truly actualize the human potential residing within all that human capital.
Possibly, you will begin to change your mind and replace the word cost with the word investment.
Leadership is responsible for productivity. Take this free leadership audit at http://www.processspecialist.com/od.htm
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