Elaborate on two key learnings from the case related to training and development and its integration with the organization
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Elaborate on two key learnings from the case related to training and development and its integration with the organization. Be sure to clearly state the two key learnings and defend them in well-organized, scholarly responses.
Case 8.2 Customer-Driven HR
Costs and Benefits: Assessing the Business
Case for Training
No matter what your business, to stay in business you have to
attract and retain customers. How do you do that? One way is
to deliver a quality product or service in a high-quality way. In
other words, it is a combination of what is offered and how it is
offered that determines if a buyer will become a loyal customer.
Training is one way to make sure that employees’ technical skills
and customer-service skills meet customer expectations.
When making a business decision, two basic elements are
typically considered: costs and benefits. In the case of training,
the issues are: (1) how much does the training reduce costs? and
(2) how much does the training increase revenue? If the training
sufficiently reduces costs and/or increases revenues, there is a
strong business case to conduct the training. Your ability to identify
the potential sources of revenue and costs and to estimate their
levels can be an important business skill. It can be the basis by
which you can successfully make the case for needed training for
your employees.
Critical Thinking Questions
1. As you have read, training can increase revenue. The revenue
could come from increased quality of the customer experience
due to the impact of training. Consider, as an example,
the table of customer survey responses before and after training
shown on the next page.
The numbers are percentages of customers in each
satisfaction category six months before and six months
after employees received their training. A key change
is a reduction in the “Very dissatisfied—will never
return” category of customers, which fell from 15 to
5 percent. What will this 10-percent change mean to
the bottom line?
Customer Satisfaction
Very Dissatisfied—
will never
return
Before
Training 15 15
15 80
70
After 5
Training
OK, but would
return
Satisfied—
would return
Assume that the average revenue generated per
month by a customer is $500.00. Also assume that you
have 500 customers. What is the increased revenue due to
the training for the past six months? What would be the
revenue generated if you had 1,000 customers?
2. Training can also impact the bottom line by reducing a number
of direct costs. For example, employee costs may be reduced
because fewer overtime hours will be needed because of
improved performance. Another cost reduction can be seen in
reduced returns, because training may reduce errors or damage
that can occur when the product or service is provided.
Make assumptions about the costs in each of these
categories and any other direct costs you can think of.
Also assume that you can expect a 10-percent reduction in
each of these categories. Generate the direct cost savings
estimate due to the training.
3. Training can also impact the bottom line by reducing indirect
costs. These are costs that may not be obvious, but that are still
important. For example, safety of work processes or equipment
can be improved due to training if workers handle materials
or equipment more safely. Employee turnover can also be re –
duced, because of improved job satisfaction due to the training.
Assume that training results in a 10-percent reduction
in your turnover rate. Also, assume that the cost of a turnover
is 1.5 times the departing employee’s salary. For a
given average employee salary of your choosing, estimate
the reduced costs due to the reduction in turnover.
4. Given your answers to the previous questions, estimate the
combined impact of direct and indirect savings generated by
training on the bottom line. Extrapolate this number over a
one- or two-year time period.