8 July 2010 | Chris Atkins
Buying external training can cost big bucks and has some big challenges. Chris Atkins looks at how to go about it.
Spend with external training providers is a category that’s difficult to measure and manage, has a highly fragmented market and can be costly. In addition to this, it tends to either be tightly controlled by the HR or learning and development (L&D) department or decentralised across the organisation. Yet it is not usually high on the procurement professional’s agenda. However, given a little attention and category specific know-how, cost savings, improved contractual protection and more quantifiable business benefits are all easily achievable.
Managing the category
Procurement can add value in three ways by: managing the training category from a strategic perspective to maximise outcomes and achieve savings; sourcing and selecting suppliers effectively; and by drafting any resulting contract appropriately.
Comparing like-for-like training courses and suppliers is rarely straightforward. There may be specific reasons why a certain course or supplier is suitable for a particular audience. The trick is to know when additional suppliers are justified – a close handle on the training market and a good relationship with L&D will help.
The market is highly fragmented – there are more than 12,000 training organisations in the UK alone – and analysis of spend will often reveal more than 300 suppliers for a large organisation. Procurement must be aware of the reasons why this long tail of suppliers may legitimately exist (such as location and/or niche specialism) and how the standard industry discipline of rationalisation may be inappropriate.
A benchmarking analysis of trainer day rates and course costs may identify opportunities for straightforward price negotiations and resulting savings. Buyers can, however, achieve the most significant cost reductions in this category by:
• Controlling the type of training courses purchased. For the cost of two or three delegates on a public course (an open schedule course delivered at a training company’s location) it will often be possible to run the course in-house for up to 12 people.
• Maximising the ‘fill’ rates on in-company courses. Working with L&D to schedule the optimal number of events and improving delegate attendance can drastically reduce the overall cost per head.
• Intelligently sourcing the correct ‘blend’ (online self study versus traditional classroom learning) of training. Rather than treating e-learning and face-to-face training as separate categories, it is better to design the right solution which might involve a blend of methods because it may result in much improved value.
• Monitoring the quality of training delivery and phasing out ineffective interventions.
Sourcing and selecting your suppliers
Large-scale training programmes delivered by external consultants
or organisations represent a significant investment and potentially have lasting impact on staff and the business.
Selecting the correct provider and exercising some professional rigour to the process will aid long-term success. However it is imperative the correct questions are posed, and considerations made, to add real value to this process and compliment your stakeholders within HR and L&D.
Although not always appropriate, L&D may not have traditionally considered running a professional tender process to select training providers. A competitive exercise of this nature could help obtain more competitive rates for a higher quality, tailored solution, introduce more innovation, establish favourable contractual terms and challenge existing ways of thinking. Whatever the approach taken, the following six things should be considered:
1 Organisational fit
Crucially important to the success of many training interventions is the extent to which the provider understands your organisation’s structure, culture, industry and the issues your staff face. Get a sense of their training methodology and approach to assess how this will
be received by your people; understand the values they aspire to and how closely they are aligned with your organisation.
Often training consultancies are founded by a small group from a particular industry and by uncovering this, and the clients they work with, it is possible to get a feel for the types of organisations they understand best. The true test is to see one of their trainers in action.
Some training companies offer a bewildering array of courses. However there will often be a select few topics where they have a core competence that they deliver more often. Be mindful of whether the training topic in question is within this core area of expertise or simply something they ‘can’ deliver.
It is also important to be aware of suppliers imposing their ‘one size fits all’ content to your organisation; an ability to tailor training content to your organisation can heighten its impact.
Case studies are an excellent way to gauge how familiar the training provider will be in addressing your specific issue. Examples of workshops they have delivered to other clients (and the type of clients) with a clear indication of the problem, solution and outcome provide comfort other customers have been happy with the service received. Customer references are also a good way of understanding what it feels like to be a participant of the supplier’s workshop and what aspects of the training worked well.
The ability of the trainer to be instantly credible to delegates can make or break the impact of the workshop. You are buying their people so this area deserves scrutiny.
Biographies of the trainers provides useful insight as to whether the individual delivering will command respect and be able to relay experiences from their own career. Trainers should have a good combination of business experience and personality to effectively engage and motivate participants.
It will also be important to ascertain that trainers have experience delivering to the level of the organisation your delegates operate at. The best way of making this assessment is to meet the trainer – not just the sales representative.
5 Due diligence
The market in the UK is highly fragmented. While there are larger scale training companies that deliver courses on both an ‘open’ (delegates from different organisations) and an in-company basis, there is also a multitude
of small-scale niche providers. Given the relatively low barriers
to entry in the market, the volume
of new young companies is high
so it is prudent to assess their stability if a longer term relationship is likely.
It will also be important to check how they manage the administrative support for your training. A dedicated account manager and logistics team can help ensure course arrangements run smoothly. A larger company may have such processes in place but a smaller organisation may be more flexible to your needs.
Find out what they consider their true differentiators to be and how insistent are they on the transfer of learning. Many recent studies, including one by KnowledgePool Group, point to the critical importance of the transfer and application of learning in to the workplace if true return on investment is to be realised. What level of importance does the training provider place on this and what processes do they have in place to achieve it?
Understanding the whole costs involved with a training workshop, as well as adequate cover in your supplier contract for intellectual property and cancellations, represent important contributions procurement can make to the sourcing process.
If the provider will be tailoring content or developing any materials as part of the workshop, consider whether your organisation will want to keep and use any elements at a later date. If so, ensure this is covered within any resulting agreement and that you have an understanding of the costs.
Cancellation terms are often included to protect providers against a customer calling off training at short notice. While this is fair in principle, be aware of the notice period required to prevent any charges being incurred. More than two or three weeks’ notice should be ample time in most cases for a supplier to reschedule their trainers.
In-company training will often be quoted on a day-rate basis for the trainer’s time. Be aware of other costs to be considered when calculating the whole cost to the organisation. These may include:
• Intellectual property (IP) ownership
• Trainer travel expenses
• Venue costs
• Design costs
• Materials (hard copies)
• Charge per delegate over and above a maximum number.
Travel costs incurred by the delegates
Another important determinant of the total cost will be the number of delegates that are trained at any time. Smaller groups will require more workshops but there is a trade off between group size and individual attention. Another consideration should be teaching internal trainers to deliver the workshop if there will be an ongoing requirement.
Depending on the subject, it may be worthwhile discussing the possibility of linking fees to the results of the training intervention (where it can be measured) and look to agree payment post-delivery for all services.
Your organisation undertakes training to improve the productivity, effectiveness and capabilities of its employees. Be mindful of this at all times and don’t lose sight of the importance of this investment.
☛ Chris Atkins is supplier manager at KnowledgePool. Read his MBA diary blog on www.supplymanagement.com from this autumn.