What is the ROI on Workforce Training?

Smart Manufacturing Requires Smart People

Workforce Training ROI: Return On Investment.

As the world moves towards Smart Manufacturing, new demands are being put on your plant and on your workforce. You are investing in new technology, but do you have the people that can effectively use it? That’s what workforce training is all about, (1) training, (2) retaining, and (3) acquiring skilled talent to run your automated manufacturing lines and equipment.

Training Your People

The move to smart manufacturing is putting new demands on your workforce. Convergence of business and industrial systems, and the adoption of the Industrial Internet of Things (IIoT) technologies are creating a need for new skills. The skills gap is a global challenge. As it widens, it threatens to reduce your productivity and slow your time to market. A clear workforce development and training strategy can help you mitigate these challenges.

What types of training are we talking about, specifically? Here are some of the technical subjects that Horizon Solutions and Rockwell Automation offer training on:

Automation Controllers
Visualization
Networks
Process Control
Motion Control
Drives Control
Machine Safety
Functional Safety
OEM Builders
(ex: startups)
System Integrators
(ex: Logix programming)

In addition to the technical topics listed above, our team can also help with what we call “Craft Skills”. This includes mechanical concepts, electrical skills, and precision maintenance courses.

Retaining Skilled Labor In-House

When you invest in an upgrade to a manufacturing line, you want to see years and years of profitability. It was an investment, and you need a return on that investment. In the same way, when you invest in your people, you want them to stick around. A big component of that is keeping people you have trained. How do you do this? We can’t 100% solve employee retention for you in this blog post, but we can offer best practices we have seen:

  • Talk to your HR Department. They may already have ideas or initiatives for long term plans regarding employee training and certification.
  • Document your expectations. As a manager, it never hurts to document that (1) you want the employee to attend the training and pay attention, and that (2) if there’s a test they need to get a score of {for example} 90% or better. Make training part of your yearly performance evaluations. Give an employee a training target (and budget) in April, and then in March of the following year – have a follow up discussion as part of your company’s yearly review process.
  • Require a contractual agreement. If you are investing thousands of dollars into training for an employee, it wouldn’t be unreasonable to ask that employee to sign a contract saying for example, “If they leave the company before X years, they are liable for paying back X $s to the company to cover that training.” This is common enough for higher education and similar institutions. Your company may even have an existing policy to cover this type of agreement.
  • Maintain a positive corporate culture that naturally encourages employee retention. If people are trained and get to use their skills in a constructive way to improve operations and increase company profitability, they’ll be more invested in staying.

Acquiring New Brains for New Technology

The need for talented new employees has taken on greater importance as older workers retire and new technologies require new skills. The technology in your personal phone today is drastically different than it was 15 years ago. Likewise, the technology being used on your plant floor today looks quite a bit different than 15 years ago. New employees coming up through the workforce may find modern technologies easier to use or adapt to. In addition to an intuitive inclination, younger workers may have a predilection to offer fresh insight for “How” and “Why” innovative technology is being used or could be used in your applications.

Workforce Training — So what is the ROI?

A good first way to look at that is to ask yourself these two questions:

  1. What would it cost me to train this person?
  2. What would it cost me to NOT train this person?

What would a small downtime incident (due to poorly trained workers) cost your company? What would a catastrophic failure (due to poorly trained workers) cost your company? What did the initial equipment or the upgrade cost? Could a poorly trained worker “break” that machinery? Could a poorly trained worker cause injury to themselves or others? Let’s look at an example.

  • ROI = (Gain from Investment – Cost of Investment) / Cost of Investment.
  • Cost of training is $1500

Interactive Training Calculator V1, Downtime Reducation

Interactive Training Calculator V2, Productivity Increase


Questions to Ask About Workforce Training ROI

Investing in training is sometimes difficult to quantify. A simple formula should not be the be all end all. We interviewed a cross section of our trainers and our students, and here are 10 good questions to ask about training. Each question includes quotes from actual training personnel.

  1. Does the training fit the student? “If the course content is too high (advanced) or too low (basic) the student might not be invested in the course.”
  2. What is the expectation? (#1) What the employer expects out of the student.
  3. What is the expectation? (#2) What the student expects of both the educational opportunity and from their employer.
  4. Can the ROI be measured via pre- and post- testing? Check what a student knew before the class, have them take the class, and then test that same knowledge base after training. It seems simple, but many training programs simply do not account for what is known or not known in a practical way. Test before and then test after.
  5. Can the employee apply the new skills they already have learned to their job? Again, this may require a review of skills an employee already possesses, followed by another review post training to discuss how their skills will apply to their daily operations.
  6. What is the current attitude regarding training at your company? “People can see training as either an opportunity or a chore. We took some steps to strengthen the view within our team that training was an opportunity and an advantage.”
  7. Has your company investigated funding from local and state organizations? Two of the organizations we know about are: Workforce Development Institute and High Tech Rochester. They may help compensate your company for up to 50% of training costs for ‘skilled manufacturing jobs’.
  8. How can training keep you ahead of your competition? “We were losing our qualified candidates, both new hires and our veterans. We realized that if we didn’t train, someone else was going to.”
  9. What are you doing for long-term training? “We looked at our work force and we saw a danger of aging out. The skills and experience were not yet in place to support a retirement, an exit, or an advancement of personnel.”
  10. Do both the employer and the student understand what is being offered in the training course? This has some overlap with #2 and #3 above. It’s about clear expectations. No one wants to take a course that doesn’t apply to them. All students should understand what is being offered and why it is important to them. Further, all training should be supported by a business goal.

Training Your People – Getting Started

Where do you start in creating a workforce development and training strategy? Horizon Solutions and Rockwell Automation offer a methodology called Training Lifecycle Steps. The steps are (1) assess, (2) train, (3) apply, and (4) measure. Interested in learning more about formal workforce development solutions from Rockwell Automation? Start creating a plan today with this helpful document (60MB PDF, 300 pages). Ready to take the first step to developing your workforce? We can help you get started, contact us today or let me know in the comments section below.