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Seb Anthony

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can anyone help me with a simple effective format for a cost benefit analysis of inhouse versus external training?


Can anyone assist me with asimple format cost benefit analysis of internal versusexternal training?
sue critchley

3 Responses

  1. this isn’t one!
    You need to define what exactly is meant by “inhouse” and “external”. I did a project with a training team looking at the “cost comparison” between these two areas but to actually produce the “benefit” part you need to consider the outcomes from the training. I don’t think there can be a “simple” answer but I’d be happy to discuss it further if you want..

  2. Effect on the bottom line
    The measure has to be the same for both.
    I have seen a lot of debate about what that measure should be. It all centres on how we can prove that what we do is effective.
    If it truly is effective then there will be an effect on the bottom line. Increased retention, cost savings, performance improvement.
    If there is no demonstrable effect on the above you have to question whether you are being effective at all.
    If you are being effective then the comparison is easy.
    The comparison is only difficult when you are not being effective.

  3. Consider a range of factors
    Hi Sue

    Cost-benefit analyses of training are renowned for being difficult to conduct (just look at previous articles and questions posted on this site). I don’t blame you for looking for a simple solution!

    As mentioned already, compare like-for-like and you won’t go far wrong. However, the greater the number of factors you consider the better.

    For example, if you only look at how much you spend, then you will be ignoring important factors such as lost opportunity costs (admin takes up an internal trainer’s time but is ‘absorbed’ by getting an external trainer in).

    Consider also the softer factors such as (depending on your culture) demonstrating that you are investing in your staff by using an internal/ external trainer – “Wow, they think that much of us that they’ve spent the money getting a specialist in/ employing a trainer…!” and so on.

    Perhaps the simplest route is to define what criteria are important to you: Demonstrating an investment in your staff?
    Cost? (lots of factors need to work that one out, but pro-rata salary vs. daily rate is a good ‘finger in the air’ job)
    Quality? (i.e. specialist vs. generalist)
    Flexibility? (Is it important that you can cancel at short notice?)
    Availability? (How inconvenient would it be if your internal trainer was sick vs. an external company having more back-up?)

    Having decided what is important to you, just write up two columns – internal vs. external – and rate each one against your criteria on a scale of 1-10. Some ratings can be worked out logically, while others will be intuitive. This is a really simple yet useful analysis, which you can tailor to what factors are important to you and your company.

    I hope this helps but do get in touch if this needs further explaining.



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