| Your
organisation needs a well-developed plan or roadmap for
its workforce from the management team through to the people
on the front line.
All training and development will need to be extended to
all employees based on competency determined roadmaps and
business needs.
Hence, identifying and developing a sound framework that
can measure returns on this investment becomes of vital
importance.
To help ensure a good return, your training must be focused
on its needs and must result in measurable changes in knowledge,
skills and abilities.
The investment must also result in behavioural change, make
a difference to business results as well as meet the needs
of the learner.
At
the end of the day, it will be the learner’s ROI that
is most valuable.
Achieving good returns
A poor return on investment does not mean that the training
is inherently ineffective.
The
learning may be poorly planned and badly implemented, if
it is implemented at all. Employees who are involved in
training without assessing needs, either theirs or the organisations’,
may find their newly acquired skills not effectively integrated
into the workplace.
At a minimum an organisation needs to consider five basic
questions with respect to learning and a healthy return
on investment.
These
are:
What to train: what skills are needed to meet current and
future business goals?
Who to train: who needs to be trained in the role that contributes
best to meet business needs?
Where to train: where is training most effectively best
carried out: on-the-job, in a face-to-face environment or
does a mixture of these need to be put in place?
When to train: when is the best time to schedule training
so it meets the dynamic demands of the workplace?
How to train: which delivery options are available to aid
in the learning process and how should these options be
combined to be most effective?
Measuring the results
Return on investment is determined by taking the actual
cost of the training from the total value of the benefits.
This sum is then divided by the cost of the training.
The first step in measuring ROI is to itemise costs. Once
costs are determined the various benefits can be counted.
By doing this, you can prove to your managers that the work
you do is vital and effective:
Try these steps:
- Defining your objectives
- Application
- Cost assessment
- Benefit assessment
- Doing the sums
- Evaluation
1.
Defining your objectives
Here you define the reasons and goals for the training.
Typically, objectives for training projects are diverse
and can include increased productivity, reduction of errors
and improved employee retention.
With or without defined objectives, many organisations barely
get through the first stage of evaluation - relying on ‘happy’
sheets to let them know if the course went well and leaving
it at that. A delegate who achieves a high score immediately
following a training session may well be the kind of person
who finds it difficult to convert what they learned to the
real workplace, or may just forget everything after a weekend
away from their desk. So what did their delegates actually
gain from the course?
How
much of what was said by the instructor, or read and practised
through the learning mechanism, was understood?
2.
Application
Tests taken after a longer interval (perhaps 3 months after
the course) can prove that certain topics have truly been
taken on board.
On the other hand, it’s the application of these topics
within a business context which is what you really need
to gauge. If goals have been set from the start, this will
be achievable - Is there, for example, a reduction in errors
on the system? Are there fewer calls to the help desk? Are
more people sending emails and easing off internal memos?
Traps have to be placed in advance to capture this type
of information and relate it back to the training course.
Did a user always perform a task in one way and subsequently,
after training, demonstrate a skill that was covered on
the course? If the answer is yes, the course achieved a
degree of success - but was it worth the cost?
3.
Cost assessment
Itemising the costs of a training programme is a detailed
job and requires commitment to the task - breaking down
the share of a cost even if it could easily be lost in overheads.
What was the total cost of the course? And trainer development,
programme materials, instructor/facilitator, facilities,
travel/lodging/meals and administration?
Can you place a value on your delegate’s time; even
calculate a potential loss of earnings from a sales person
who’s been taken away from their customers for a day?
If you can, and therefore obtain a well-researched figure
that can be attributed to the cost of the programme, then
display it against the list of benefits achieved (reduced
errors, improved morale etc) to complete the cost assessment.
4.
Benefit assessment
All benefits must be converted to a monetary value, which
is easy enough for hard facts such as time savings, but
difficult for soft data such as customer satisfaction.
Time savings can be figured by multiplying the number of
hours saved by the workers’ average hourly salary.
Production gains are computed at the monetary value of the
extra goods produced. If such a number does not exist internally,
external studies and expert opinion can be sources for the
data.
Typical benefits you should consider include time savings,
improved productivity, labour savings (less supervision,
overtime or temporary help required), improved quality,
and better morale.
If the measures have been taken before the project began
these can be more than just estimates.
5.
Doing the sums
Once you’ve taken into consideration the above, the
calculation looks simple enough:
ROI = (value of benefits – cost of training) / cost
of training
Return on Investment is usually expressed as a percentage,
but what scale is it measured against? What is a good ROI?
Achieving a minimum of 25 per cent is a respectable goal,
but some organisations are satisfied as long as they break
even.
Management/leadership training programmes typically yield
returns of 150% to 400% because the training affects not
only the delegate’s performance but also the performance
of the delegate’s team members or colleagues.
6.
Evaluation
To maintain the credibility of your ROI findings, it’s
important to try to isolate the effects of training, rather
than taking credit for improvements caused by other variables.
Ask the users, ask their managers, and ask the technical
team. And if enough people tell you the training made the
difference and allowed them to hit a business target they’ve
never hit before, take pride in what the training has achieved
and report it.
Other
activities to complete to measure the effectiveness of your
training
Some of the outputs may not be quantifiable in terms of
direct monetary gains.
If we are asked to help a company measure the effectiveness
of a training course here is something like what we would
do.
For example, when we deliver Customer Service Training we
always make sure that we have got some data as far as customer
satisfaction scores are concerned over a period of time
before the training occurs.
We also ask the trainees opinion of where they see their
strengths and weaknesses before the training and what they
find most difficult to do.
We also ask their managers for some 360-degree feedback.
Then the training event occurs.
Immediately after the course we ask for the trainees perception
of how better or worse prepared they are to deliver superior
levels of customer satisfaction than they were before
3 months down the line we ask for this perception again
plus we get feedback on them from their line manager with
regards to specific behaviours associated with delivering
customer service excellence.
We take a look at their individual performance statistics
as well the overall customer satisfaction scores.
Conclusion
ROI builds a compelling financial case for funding any future
training programmes. It can enable sound decision-making
on which learning programmes to progress, and which to discontinue.
The more detailed the evaluation, the more information you
will have on whether the training is working well and if
not, why not? This will help you make informed decisions
on which programmes to continue, and give you a better idea
of the potential of future programs.
However, evaluations do take planning, time, and money.
You may not be able to perform a full ROI on every skills
development activity you undertake, but it’s worth
choosing to do it on the big ones.
In the final analysis, in an era of budget-cutting, training
managers who can talk to their directors about ROI will
stand a better chance of maintaining a skills and learning
development strategy.
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