How Can We Transform Our Training Department from a Cost Center to a Profit Center?

Hi All,

I see there are a lot of Training Gurus around, so I am tempted to ask. I work for an organization where the contribution and image of the training department to the improvement of employees and profits are seen as very low, and training is considered a cost center. I wish to create a pitch on "Training - A Profit Center." Can someone please help me with the why, what, and how of the pitch/idea.

Regards,
Gagan

I thank you for the response. However, I feel that saving is not the only way I am considering to include in my pitch. Hiring you will add to the cost before we can demonstrate profitability. :-)

Dear Mr. Gagan Sharma,

I am pained to find that training is treated as a cost center rather than a profit center. It is a failure of us, the training professionals.

In my training program on "Effective Purchase Management," I start my session with a topic on "how purchase is a profit center."

Whoever raises objections to the training or says that the training department is a cost center, tell them how much revenue was saved because of the training. Every rupee saved because of the training directly contributes to the profit.

Make it a point that the cost of training is always 10% to 20% of the cost of non-training. Henceforth, base every program around the cost of non-training. Then work backward. Conduct the training and after the post-training evaluation, prove how much revenue was saved because of the training.

It is quite challenging, but an ideal training manager should be able to demonstrate how gaps in skills and knowledge reflect on the company's balance sheet.

In one of the recent posts, I provided tips on "what is the role of HR/Training manager before, during, and after the training." You can read my reply by clicking the following link: [https://www.citehr.com/243560-roll-duties-hr-personnel-training.html#post1092322](https://www.citehr.com/243560-roll-duties-hr-personnel-training.html#post1092322)

Training programs are also useful for generating ideas. To understand how, click the following link: [link outdated - removed]

If you have further doubts, please seek clarification from me. Also, I will provide you with a brief overview of how I conducted my recent training programs and how I aligned them with cost/revenue through a private message.

Thanks,

Dinesh V Divekar
Management & Behavioral Training Consultant

"Limit of your words is the limit of your world"

Training is seen as a cost center because the decision-makers want immediate results - meaning a "Quick Fix" - throw money and get it attitude. Training should be an integral part of Production, Engineering, Sales and Marketing, HR, and all other functions.

Regards,
Barath
+91 9444063345

Dear Gagan,

Thank you for raising the question. As expected, Dinesh and Shastry have chipped in with their suggestions.

I would have much preferred if you had raised this question after doing some research on the web and studied the opinions of others, and posed more precise questions. For example, Johnny Frankland has written a small piece on "Can Training Become a Profit Center?" which I found on Google. The article clearly states why training is considered a cost center rather than a profit center. When training is conducted without clear objectives, it is not easy to quantify the benefits. Let me give you an example: In an organization, all middle managers were sent on a 2-day Time Management course; they all received excellent diaries. After the training, there was no follow-up, and none of the managers used the concepts and practices. So, how could the training department have shown any benefit from that training? Similarly, managers went on courses on Finance, but they were never privy to the company's Balance Sheet or Profit & Loss Accounts. They were trained in Ratio Analysis, all a waste of time.

Like Dinesh has often stated, one has to start from the outcome of the training and its usefulness before even asking whether it should be a cost center or a profit center.

I am sure HR experts may take a different stance, and I am hoping this will generate a good debate.

Have a nice day.

Simhan A retired academic in the UK