Taking training beyond the doughnuts and coffee.

During the early 1990s, and while attending a local conference, an author overheard a delegate, who was seemingly new to the  HR function say to a colleague in a very condescending fashion, "You know, I have recently been assigned  to look after this affirmative action thing."

It is needless to say that the next 10 years brought with it not only an awareness and policy framework that made affirmative action and employment equity a reality, but also probably made practitioners such as the one referred to irrelevant. Similarly, the need to show a clear return on training is shaping the landscape of people management in South Africa. Employment equity is the legislative framework - a foundation to ensure that training yields more than the proverbial doughnuts and coffee as well as a good lunch during breaks. The pertinent question for today’s training practitioner is how to show that training is related to specific business needs and that it addresses these needs in an effective and efficient fashion. This includes showing a return on the investment made (ROI) for training.

Calculating ROI however does not take place in isolation to other training efforts. Motivating the ROI of a training intervention requires that the following are in place as it provides the basis for, and also informs, the eventual calculation of ROI:

• A framework to determine the underlying business need/problem so as to determine whether training is the optimal solution to service the identified need;
• A process to ensure that evaluation takes place throughout the training process; and
• A framework to ensure that the effects of the training intervention can be isolated and enable the calculation and motivation of the ROI.

In determining the underlying business need/problem the role of the training practitioner as performance consultant is critical, as it entails analysis to gain an understanding of the basis of the problem/need. In addition, one has to determine whether the problem can be resolved through training, a step that enables the practitioner to define the training in terms of the desired business outcome. Similarly should the further design, development and roll out of the intervention enable proper evaluation, and inform future decisions with regard to ROI. In terms of this the following are important:

• The evaluation should be linked to the relevant training objectives and in turn related to the specific business related needs that need to be addressed at the various stages of the intervention;
• Evaluation at all levels need to be done, including reaction evaluation, evaluation of learning (acquisition of skills and knowledge), transfer of learning to the work place as well as whether the training solution has addressed the business need adequately; and
• The information generated throughout the intervention should inform the calculation of the ROI. This evaluation at all levels is as important as in the past but provides the basis information for calculation of ROI.

As the roll out of the training intervention progresses and the evaluation takes place, pertinent questions in regard to ROI come to the fore. The essential question that needs to be answered, however, is how to go about isolating the effects of the training so as to determine the business results and also calculate the ROI of the intervention. The complexity of this is indeed a function of the variables that are in play at any moment in an organisation. It is for this reason that practitioners seldom embark on the road to calculating ROI for training. The good news is that there are several ways to isolate the effects of the training intervention and calculate the ROI with an acceptable degree of certainty. In this regard the ROI Institute shows that one or more of the following methods could be applied:

• Well paired control groups;
• Trend line analysis of performance data;
• Participant’s estimation of impact;
• Management’s  or supervisor estimation of impact;
• Use of previous studies;
• Use of customer input; and
• Estimating the impact of other factors.

Key preconditions to ensure effective isolation of the impact of the training intervention include using more than one approach, data integrity and acceptance of the methods used by the stakeholders (notably management). When the effects of the intervention have been isolated the actual calculation includes the following:

• Conversion of the business related change to monetary value (for example, the cost of improved quality, less customer complaints, etc);
• Tabulating the cost of the intervention; and
• Measuring the financial pay-off by calculating the benefit/cost ratio and the ROI (thus the net intervention benefit in relation to the cost as a percentage earned).

While calculating ROI on training is indeed essential and possible (as motivated in this article). It should never be approached in a purely mechanistic fashion. The process, while more desirable than not calculating ROI at all, should always allow for human judgment, and a such heed the words of Einstein that, “Not everything that can be counted counts, and not everything that counts can be counted”.

Phil de Kock is presenting Training Evaluation and Measuring ROI on Training 7 – 8 November in Centurion. To book, visit www.hrfuture.net.