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How to measure return on investment in hospitality training

Posted by Ilona Wallace on Mar 7, 2017 11:57:09 AM

Before you pack up shop and ship all your workers off to a training session, it’s worth sitting down and looking at what your business will get back from certain types of training.

Not all lessons can be valued in dollars and cents, of course, but if you’re planning a new training regime for your staff, the first thing to do is to make sure the benefits outweigh the costs.

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How do you put a dollar value on skills?


When you think about the importance of training in the hospitality industry, there’s no denying that it’s vital. The main issue with calculating return on investment in training is this: how do you put a dollar value on your employees’ skills? There are a few ways to look at this.
 

Consider wages

However much you pay an employee per hour is what that hour of their time is worth to you. By employing that person, you’ve agreed that their skills and time are worth $X. So, inherently, even subconsciously, you’ve already placed a dollar value on that employee’s skills.

How can training help you get more bang for that buck?

Think in terms of benefits

Take this one right back to basics: if you can train your staff well enough that they can successfully upsell four glasses of wine per week, that extra income goes straight into your kitty. Another way to look at this: without training, that staff member is selling four fewer glasses of wine per week than possible. Benefits also come by avoiding the following losses.

Think in terms of losses

Don’t think of losses simply as a number of missed sales opportunities. Losses can be accumulated across your whole business, and be caused by inadequate customer service, poor waste-management processes, lack of confidence or knowledge to upsell, errors in administration or accounting, or high staff turnover.

For instance, how many refunds does your business process? How many of these errors could be corrected by training?

Or, what food and disposables are you wasting? Could the amount of waste be reduced by educating staff or updating protocols?

Consider your staff turnover. We’ve discussed previously that better training opportunities lead to higher motivation and retention of staff. The longer you can keep your staff, and the more loyal they are, the lower your outlays are.

If staff turnover is high, you have to fork out for these costs:

  • Advertising for new staff
  • Overworking remaining staff, or under-staffing your business, while looking for new workers
  • Expenses associated with basic training for new staff, e.g. paying supervisors to work additional hours, effectively doubling your staffing costs for the training period
  • New uniforms, badges, log-ins, keycards and other accumulating expenses.

Each of those costs is a loss. A loss you could potentially guard against by keeping staff happy and trained to the best of their ability.

So, add it all together. Consider the value of those benefits and costs, and then compare this to how much you’re willing to spend on training.


Doing the math


When it comes to measuring the success of training programs, often businesses rely on end-of-session surveys, six-month reviews and other forms of qualitative feedback. But sometimes this isn’t pragmatic enough. If your café is part of a chain or larger body corporate, the suits will want to know the net value of an investment in training.

ROI calculators can be found all over the internet, but Typsy has built one that is specific to hospitality businesses. Here, you can input your restaurant’s figures alongside industry standards, and compare how your business measures up. It can also be used as a strategic planning tool – if your goal is to reduce staff turnover by 5%, check back in six months to see how you’re tracking.

Download the calculator here, and tell us in the comments below – how do you measure the value of training?

 

Download your Typsy ROI calculator

 

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Categories: HR for hospitality venues, Hospitality training

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