Applying “Return On Investment” (ROI) to Training & Development.

Applying “Return On Investment” (ROI) to Training & Development.

Both national and multinational organizations tend to spend a great deal of money every year on training & development their employees. Sometimes the training is considered an “INVESTMENT in PEOPLE”. However, more frequently, it is seen by Senior Management as an expense that has to be assumed under the law or to keep the peace within the company. Some of the money is invested in “hard skills” which are purely work-related such as using a specific computer program like Excel, learning a foreign language, operating machinery, etc., and the rest is invested (or, more frequently “wasted”) in “Soft Skills” such as Communications training: Presentations, Meetings skills, leadership, Negotiation, etc. which are more difficult to evaluate.

Since the start of the economic crisis, many organizations have actually cut, or almost eliminated, Training & Development budgets in order to save money as they are seen as an unnecessary expense rather than as an investment in the future of the organization. Thought it might seem obvious, many people seem to forget that a better trained group of employees is going to be much more motivated, effective and productive than those who are not trained so cutting these budgets is actually counter-intuitive and counter-productive.

One of the principal problems for both HR & Training departments is the task of proving to Senior Management, Managers and other employees that any training done has produced a positive improvement on the skills of the employees involved and, more importantly, a noticeable effect on the profits of the organization. Since “Hard Skills” are relatively easy to evaluate, there is no real problem. It is easy to see if someone knows how to use a specific computer program – Tell them to do it a specific task and there is an obvious and immediate answer: Yes or NO.
“Soft Skills” on the other hand present a far greater challenge: Since you are dealing with “people skills” how can you measure the effect of the training done? However, EVERY course should have a predetermined set of Key Performance Indicators (K.P.Is) agreed by the HR Dept / organization & the Training provider before the course. These K.P.Is should form the basis for an evaluation of the R.O.I. of every course.

The following are some examples of possible K.P.Is for various types of  “Soft skills” training courses. We recommend a minimum of seven (7) and a maximum of ten (10) K.P.Is per course and as the basis for an R.O.I. analysis.

At the end of the course the trainees will be able to:

Negotiation: Show that they are able to prepare all of the documentation necessary before entering into the negotiation and share the psychological reasons behind their preparation and use, etc.

Presentations: Show that they are able to structure the presentation in the most appropriate manner and justify the steps used on the basis of sound psychological & communication theory, etc.

Meetings: Show that they are able to prepare all of the documentation required beforehand and effectively carry out the meeting by controlling the time, the behaviour of the participants & the results obtained.

I would like to propose that HR Managers & Trainers consider using R.O.I. techniques to measure the improvement in soft-skills after any & every training. However, it appears that there is a certain degree of reticence, or fear, in using evaluation techniques “because we are dealing with people” and the trainees might be offended or feel bad!

However, In many organizations the HR department have no problems measuring the language skills of employees receiving language training when they enter the language program and again at the end of the course / year AND deciding if the organization will continue paying for the language courses! This double standard is both inappropriate, unrealistic and unfair to the Organization – If the organization pays for training, they should get visible, real & measurable results.

The objective of training is to provide new and better ways of working and organizations are always investing in new technology or “Innovation”: both of which are designed to improve profitability and productivity. If, after being evaluated, they do not produce the required results, they are discontinued. It should be the same with training courses & providers.

We believe that it is the responsibility of the HR department and the line managers to ensure that the employees use the material covered in the training course actively in their daily work activities. Why spend so much money for a training course and then do no follow up on its use, success and the benefits obtained by the company? It is easy to understand the attitude of Senior Management if there is no real proof of the value of the training!

One simple way for the HR Dept / Managers to identify the R.O.I. is to include in the trainees´ annual objectives a section where they are OBLIGATED to use the newly learned skills, techniques and tools in certain contexts and then evaluate the trainees on their usage & application by others who have received the same training. This would be a relatively simple and effective way of using the K.P.Is to ensure that the organization benefits from its investment in its staff. However, it is recommended that the following 6 conditions are met whenever possible:
1. The senior managers have received the training before the other employees.
2. The Senior Managers actively support & permit the use of the new techniques / tools
3. The Managers / HR provide active reinforcement of the new training on-the-job.
4. There is NO interference from the immediate (work) environment.
5. The trainees have the perception that the training was practical & realistic.
6. The trainees have access to the support of the trainer.

An additional benefit of these steps is that they help to identify training providers who are less proficient at covering the K.P.Is required by the client organization & the trainees. Many organizations are loyal to their oldest training providers, however, loyalty to the organization that pays their salaries every month is more important.

Over the last few years, many of our forward-looking clients have actually implemented this process and the overall improvements at all levels in the organization, both short-, medium-  & long-term noted by managers and employees have resulted in a much more motivated, efficient, productive and professional group of employees.

Please feel free to contact the author if you require more information.

© Brownlee & Associates, Madrid, Spain, 2012. All rights reserved. This material may not be copied, translated or reproduced in any form without the prior written consent of Brownlee & Associates.

 

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About ianbrownlee

Ian Brownlee, the founder of Brownlee & Associates has been actively involved in the field of interpersonal & transcultural communication since 1977. He has worked in universities and companies in the following countries: Laos, Thailand, Hong Kong, Korea, Japan, Singapore, Saudi Arabia, France, Italy, England, The United States of America & Spain, as a teacher, university lecturer, trainer, researcher & consultant. In addition, his experience in living in these countries, and studying the language & communication and interaction styles of each has aided him in reaching a real understanding of intercultural and transcultural differences and how to resolve them. Ian Brownlee has various masters degrees from British Universities: One in Linguistics & Teaching English Overseas from Manchester University, one in Training & Development with a specialization in the area of Communication and Adult learning awarded by the University of Sheffield. He has also gained professional qualifications in Psychotherapy & Hypnotherapy from various professional organizations. During his university career he has also studied elements of Sociology, Organizational psychology, Educational psychology, Psycholinguistics and Kinesics. He is a licensed Practitioner, Master Practitioner, and Master Trainer in NLP. as well as being a trainer in Ericksonian Hypnosis. He is a member of a wide range of professional organizations involved in Training, Applied Psychology, Hypnotherapy & Ericksonian Hypnosis, Psychotherapy, Interpersonal Communication & Cross-cultural Communication. He is also recognized by the Program on Negotiation, Harvard University, as a Negotiation Skills Trainer & Mediator and has been a collaborator on various projects with the program, and as such is in great demand as a negotiation consultant for some of the largest multinationals operating worldwide. His wide experience gained in multinational organizations in positions such as Director of Training, Communications Consultant and Negotiator / Mediator has helped many people to learn and apply new methods of negotiating skills and advanced communication techniques both in their private and professional lives. He has published various articles & books related to the field of interpersonal communication and he is the author of all the courses taught by Brownlee & Associates. He has lived and worked in Spain since 1985, initially as a trainer / Special Assistant in a multinational pharmaceutical company and then as the Training Manager for a multinational company involved in Clinical Analysis & Nuclear Medicine. Brownlee & Associates was formed in 1991 and currently has a small, highly-trained staff. While based in Madrid, courses are given world-wide either in English or Spanish. Brownlee & Associates currently work with leading international companies in the areas of pharmaceuticals , Information systems, luxury products, food & beverages, etc.
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One Response to Applying “Return On Investment” (ROI) to Training & Development.

  1. Alan Miles says:

    Enjoyed the article, Ian. I’d add a couple of points. I’ve found that WHEN you measure ROI is important. Immediately after training isn’t a good indicator .. I’d want to see whether the impact of training on workplace performance is long-term, not short.

    And second, rather than setting out KPI’s before training, I’d build them right into the job description – or rather achievement plan (there’s an example at my blog http://www.hroomph.com/explorations/model-achievement-plan/ ) – so that they’re part of the fabric of the employee’s everyday life. That way, you have a tool that indicates immediately (and the employee might spot it first) that training is required.

    Would I want senior managers to take the same training course before other employees? In most cases, no. Presumably the manager already have these skills, so all they’d be doing is to verify that the training delivery is effective. A better indicator, in my view, is to evaluate the impact the training has made on live workplace performance.

    But these are refinements. I’m with you 100% – that measuring training effectiveness is all about ROI.

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