New Hire Training: Four Months of Revenue Loss

Four is just a number – it could be three or six. It is not the duration allocated for Training alone that determines cost – it is also the number of months required to learn and deliver that contributes to cost and impacts revenue. Training a new employee is one the biggest costs of doing business.

So ideally it is a combination of the number of months a new resource is in Training and the number of months they require to come up to speed that sums up to total training cost. Though, other associated costs like logistics, trainer’s and trainee’s salary, instructional designing charges, infrastructure etc is considered during pricing, the loss due to zero productivity of new hires is not really accounted anywhere. This delay in revenue recognition due to different learning curve does not reflect on your profit and loss statement.

In a new project, while billing clients for new hire training based on number of hours is a convenient option, another effective way to control this cost and make it lucrative for your client during bidding is not to own the training piece and completely outsource it.

Signoff Outcomes with Training Vendor: It is not scores or certification that matters, only outcomes. The idea is to have ready workforce from training vendor, with 100 percent productivity from day one and agree on outcome-based fee.

Set Expectations with New Hires: During induction and on-boarding session a new hire has to be made aware that successful completion of training hours is not the end all goal - It is 100% productivity. To be able to achieve that, you can list all tasks and activities a new hire must be able to perform post training. Explain measurement criteria and begin the count down.

Document Standard Operating Procedures: A flowchart that captures different steps that occur following a decision or handoff can be a great aid for new hires. This will assist in adherence to quality guidelines to avoid on the job training errors that can cost the project huge money, drastically reducing the profit margin.

Knowledge Repository: Build a repository to provide a platform and access to all task related information a new hire will need. Such a permanent reference is beneficial not just for new hires but also for cross training other employees to deliver the task or replace the new hire in case of attrition.

Knowledge Transfer and Testing: Self-Learning at a new hire’s own pace can be a feasible alternative, provided resources are not on company’s payrolls. The surest way to test how well they have learnt is let them deliver in a training environment before inducting them in operation or production.

According to industry experts the cost of lost productivity is huge – a considerable portion of their annual salary. So re-do that pricing to maintain margins. By adopting these simple measure companies can reduce the time it takes to have a new employee up and begin generating revenue.