Training is important as it enables company to offer products and/or services of high quality. It also increases the revenue and reduces direct costs incurred in the daily operations in an organization. Through training, the employees acquire adequate technical and customer service skills which in turn improves the customers’ experiences. However, before an organization invests in training programs, it should evaluate the benefits it will bring to the company and the costs incurred, that is whether it reduces or does not have any impact on the direct costs.
Critical Thinking Questions
Question 8-20a
The 10% change will mean that after the training, the number of the customers who were satisfied by the customer service provided by the employees increased by 10 percent.
Question 8-20b
Average revenue generated by a customer per month is $500 and the number of customers is 500, the increase in the revenue in the past 6 years is;
The increase in the customers (who were satisfied and had a higher probability of returning) is (10%*500*500) * 6 = $ 150,000
Question 8-20c
If the customers were 1000 the revenue generated would be (110% * 1000 * $500)6 =$3,300,000
Question 8-21
Assume 6% of the direct costs
Average revenue generated by a customer per month is $500 and the number of customers is 500
Sales return cost six months before training = 6%*500*500*6 =$90,000
A reduction of 10% of cost due to training (after 6 months of training) = 10% *90,000= $9000
For the employee overtime; assume 10 employees with an average salary of $5000 per month and 12% of the salary is offered as overtime every month.
The monthly cost = 10 * 5000= $50,000 per month
Overtime per month=12% * 50,000= $6,000
After training the overtime reduces by 10% = 10% *6,000= $600
For six months= 6*600=$3,600
Therefore, the total direct savings= 3,600 + 9,000= $12,600
Question 8-22
For the employee turnover assume an average salary of $5000 per month
Total cost of turnover in a month = 1.5 * 5,000=$7,500
Overtime reduction rate by 10%= 10% *7500= $750
In six months after the training total reduced costs = 6*750= $4,500
Two Key Learnings
Training and development can increase an organization’s revenue and reduce its costs. “Training for customers directly impacts the bottom line and is targeted to increase revenue, customer loyalty and/or productivity” (Combs " Davis, 2010). On the other hand, costs can reduce due to employees’ observation of safety rules and procedures and increased satisfaction which reduces the rate of turnover. As asserted in 3rd Multidisciplinary Academic Conference proceedings in Prague (MAC-EMMT 2014), “through this incentive (training and development) a motivation material raises or promotes efficiency in the organization”. I strongly agree with the above because technology is changing fast and the employees’ need to acquire the right skills for them to cope with it. For example, most of the companies are moving from building stores to online shops or incorporating them into the organization. Employees’ population is made up of different generations and some started working when technology was not popular. For them to be motivated to work and provide better online customer experiences, they should learn the skills which could make them conversant of the technology and software used. Continuous training programs can improve their ability to use computers and other devices and this can make their work easier thus improving efficiency. Therefore, employees are not motivated by a good salary only but training and development among others promote their confidence and performance.
References
Combs, W. L., " Davis, B. M. (2010). Demystifying technical training: Partnership, strategy, and execution. John Wiley " Sons.
Proceedings of MAC-EMMT 2014: The 3rd Multidisciplinary Academic Conference in Prague Economics, Management, Marketing and Tourism MAC-EMMT 2014
