Sales

As the recession begins to bite, decisions about where to invest (and not invest) in the organization have become even tougher.

As the recession begins to bite, decisions about where to invest (and not invest) in the organization have become even tougher.

Picture the scene: The dim glow of an Anglepoise lamp casts a 5 oclock shadow over a brace of senior executives. With pencils poised, they frantically search for ways to contain costs. Down the P&L they abseil until they come across the training & development linetap tap tap go the pencils as a thought materializesjust what exactly do we get back for that 3m?

The head of training is summoned to explain what Return on Investment (ROI) was achieved with last years spend. In a valiant combination of ROI calculations and REM, they make their move - but each calculation crumbles under challenge. Shoulders sagging, they plod out of the room. Their last few breaths utteringbut we scored an average of 4.2 out of 5.0 on overall achievement of expectations.

The scene above is a common one and rightly so. If we treated our training and development budget like we treated decisions on how we invest our pension funds, things would be very different. And yet it doesnt happen. Very few companies make any meaningful attempt to evaluate the return on investment from their training spend. Studies put this figure somewhere between 3-10% globally.

The truth of the matter is that most companies dont evaluate the business return from their training because its hard. Training professionals will be familiar with the work of Donald Kirkpatricks four levels as a framework for evaluation. It works wonderfully on paper, but implementing it along with your day job is something else.

Weve gotten used to accepting happy sheets (Level 1 evaluation) as the leading factor in evaluation. Happy sheets have their place, but not in demonstrating the value of investment in training.

There is an important distinction between confirming and evaluating learning. It is important to confirm that the skills and knowledge required to do the job at a proficient level have been attained. Confirmation of learning is required to ensure people know how to do their job to the required standard and that procedures are understood and consistently applied.

For example, think about the training a lorry driver may receive. How to drive from A to B, obeying the road rules is a basic skill without which, they couldnt do the job. Companies need to provide necessary training to ensure that their lorry drivers are proficient drivers.

Evaluation is something different. I contend that you should only attempt to evaluate training that will add value to a basic skill. If we look at our lorry driver again, how to drive from A to B using fuel efficient driving and being able to drive defensively if faced with a dangerous scenario are value added skills. There is a benefit in evaluating the return on investment of this type of training.

Hence for certain types of training dont even bother to try to evaluate the return on investment (e.g. basic selling skills and management training, product knowledge training, systems training). Get agreement from your business that these are required to do the job at a basic level, set your standards, train to them, and confirm that the skills have been learned.

Trying to factor out variables and attribute any performance improvements to your training delivery is pointless for core skills like these. For such programs, you should confirm you have achieved your objectives through methods like good old fashioned happy sheets (which can be focused to give clear feedback on the quality of the training and how well it delivers the skills it should), skills assessment, focus groups and line manager feedback.

Your efforts are much better served in using evaluation for programmes that can add value to a basic skill (e.g. negotiation skills, pitching skills, or converting prospective business). When you really apply yourself to these selective areas, the results can be stunning.

And leave your executives stunned.

The most common pitfall when attempting such calculations is to evaluate the results without having taken a baseline measurement. If you dont know where you started, its hard to know how far youve come. The key is to identify the critical thing(s) that influence performance and will lead to improvements. Measure these before you start any training. You can design the most sophisticated training program on the market, but if you cant see how much of a difference its made its worthless.

Some much smarter people than I, like Donald Kirkpatrick, Jack Phillips and Paul Kearns, have all postulated theories on ROI calculations, all of which have their place.

I personally dont subscribe to lengthy calculations to work out Return on Investment. I like simplicity. Evaluation is seen as the Holy Grail. It doesnt have to be complicated though. Within our healthcare world, I find a much better approach is to work with Return on Expectations (ROE) contracting with the manager to agree whats happening now, what needs to be different after the training and how they personally will measure that.

Then I go after it.

Nick Pope is the Director of Global Learning and Sales Training for Bausch & Lomb, the worlds largest eye health company. Nick will be presenting practical case studies of measuring and demonstrating return on investment at the eyeforpharma SFE Europe 2009 conference in the training section: http://www.sfeeurope.com/