Getting a return on investment in training

Companies with IT budgets squeezed to the limit are continuing to spend on training their staff, but with a new approach to...

Companies with IT budgets squeezed to the limit are continuing to spend on training their staff, but with a new approach to getting the highest return on investment.

Most companies like to boast about how heavily they invest in their workforce. But when the economic downturn begins to bite, training has traditionally been one of the first things to go.

However, disregarding training as essential expenditure may be a false economy, and there are a range of options for companies wishing to maintain training through hard times.

According to analyst firm Ovum Holway, the IT training market declined by 15% in 2002 and is set to fall by 7% this year. The trend over the past few years for firms to delay or scale-back new IT projects has also given organisations an excuse not to train IT staff in new skills.

"IT training is pretty much the worst area of the IT market. It has been hit hardest by the downturn as it is a discretionary spend," said Heather Brice, an analyst at Ovum Holway.

However, there comes a point where budgets cannot be squeezed any further and employees' skills have to be updated. Gartner has said that "best-in-class" companies have continued to spend between 7% and 10% of their IT payroll on training staff.

Some companies believe investment in IT training can help the bottom line. Last month, insurance firm Norwich Union said it had saved millions of pounds by using a government-backed framework for managing IT staff skills.

The training programme, the Skills Framework for the Information Age (SFIA), helps employers assess the skills of their IT staff and plan training to meet future needs.

Gary Cannon, people development manager at Norwich Union Life and Pensions, said SFIA was implemented as part of a big change programme. "It allowed us to significantly reduce our reliance on contractors, helped us save millions of pounds and a lot of time and effort," he said.

Ron McLaren, operations manager for the SFIA Foundation, said the framework focuses on the career development of staff and not solely on ad hoc training. "There are certain things that can be easily and efficiently delivered through training, such as getting started on Windows," he said.

However, he said that the majority of what people can learn in their jobs is not covered on a course. "Development is a neglected part of the human resources picture," he said. "What you do on a job and getting the right assignment accounts for 90% of the learning curve."

Organisations should have somebody responsible for training and career development and IT directors should work closely with human resources departments to develop training and career development, training experts have advised.

Suppliers of IT training usually offer a mixture of classroom - including role playing and workshops - and online learning. New developments such as online chatrooms allow staff doing the same training course in different locations to exchange ideas and experiences.

In addition to traditional training programmes in technical skills, such as programming languages, suppliers have begun to train IT staff in business skills such as team leadership and sales.

One company that is concentrating on developing the business and managerial talents of its IT teams, in addition to their pure technical skills, is HBOS. Jane Edwards, learning and development manager at HBOS, said, "In the past, IT people spent most, if not all, of their training budget on technical skills. Our job has been to advance management skills.

"We are shifting the focus of the IT professional from being a service provider to someone who can negotiate and influence the business."

The new approach to training has already paid off, according to Edwards, who said the IT department for its retail banking business was now able to develop new products and services faster.

Other factors have been addressed since the programme started, including gauging a return on investment. Edwards has implemented simple procedures to test IT staff skills before, just after, and a further three months after the training was received.

The shift in skills that the new focus has achieved has not cost HBOS any extra investment in its £2m training budget for its 2,000-strong IT department, said Edwards.

The way companies are delivering their courses is also being scrutinised, such as using e-learning for technical skills courses.

Eddie Kilkenny, training services director at supplier Parity, predicted that e-learning will become more pervasive. "In response to the economic climate, everyone is looking for the greatest throughput of training in the shortest time for the lowest cost," he said.

However, should cost become the driver for companies, there is a danger learning will not take place at all, Kilkenny said. "Some organisations expect employees to do training at their usual desk, which carries the risk of disturbance and disruption.

"In the worst case, some clients are saying, 'do it in your own time - and if you do not make the grade, there is a problem'."

But companies tempted to cut corners on IT training should think again, said Mingay. He said there is a direct correlation between the ability to respond flexibly to new challenges and investment in IT skills.

But he warned IT directors that a good training programme should be about more than just the occasional training course.

"If you train your staff in the latest technology, whether that is Java or mobile applications, make sure you give them the opportunity to use it - and quickly - otherwise they will look elsewhere."

Top training tips for IT directors

  • Consider using a pre-defined system for training such as the government-backed Skills Framework for the Information Age
  • Develop a culture with continuous learning rather than one big bash that requires lots of spending to deliver a project
  • Look to the human resources department for help with non-IT courses and programmes 
  • You can only measure real return on investment by assessing improvements to staff performance, so training has to be built into appraisal systems.

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