Its fairly well known that computer-based training yields time savings of 35-45% over traditional classroom instruction. Adults read faster than an instructor can talk. Software will not digress or meander or spend class time on course management. This is known as compression.
What is less known is that the most visible impact on ROI is not from the obvious savings in wages but from savings in opportunity costs. An example of this is as follows:
A company needs to put 200 of their employees through a course in plant safety that takes one week. If the average hourly wage is $15 an hour then the wage cost of training alone (excluding travel costs and time, opportunity costs, instructor cost, etc) would be 200 X $15 X 40 = $120,000. If all other factors remain equal, a 40% reduction in time saves $48,000. This alone has significant impact on R.O.I., however this impact can be relatively small when compared to the effect of documented savings in opportunity costs. Opportunity costs are the cost incurred by the company when production or sales are reduced due to reductions in force. Thus, if the 200 employees produce 10 units a day, the total loss for the week is 50 units. If each unit then nets the company $5,000 in revenue, the total in lost revenue would be $250,000. Again if all factors remain equal, a 40% reduction in training time would net $150,000 in lost opportunity savings. This is approximately three times the savings in wages alone.
In addition to compression of training time, MediaTech’s web-based e-Learning products are available 24-7 and can be accessed by your employees at times that further reduce opportunity costs. Add to this the fact that training programs can be monitored and validated to a much greater degree as compared to traditional training, the value proposition of computer-based training products is clear.