Many years ago, I was sitting at my desk when I received a strange email from my supervisor, it was merely one question!
He said, “Did we meet ROI?”
My instant reply then was “What do you mean? We haven’t met any ROI so far…”
I will leave it to your imagination to find out what his next response was.
Ever since that moment I decided find out more about Return On Investment and how it works: Is there a measurement tool for training ROI? Or can we simply convert training figures into monetary figures?
Technically, it’s near to impossible to convert training figures into monetary ROI. I have sat with a mathematician and tried! We started to count the variables that affect the business process in general and to identify those factors that have a direct and an indirect impact on the Revenue Generation Process.
The results were insane! We counted over 250 major variables distributed between areas such as HR, market variables, customer variables, product or service variables, after-sale service variables and many others.
To cut a long story short, if we want to measure the real ROI for any training, we should go through a process to identify the following:
1- Find out all the variables that affect your revenue generation.
2- Analyze those factors and assign each of them with a correspondent weight, not all of them have the same impact on revenue generation.
3- Measure the impact of training on each one of those variables.
This is a complicated process, even if you manage to do it one way or another, the resources you need to complete this “Challenge” will be substantial, very demanding and the cost will be very high.
Should we therefore forget about training ROI?
No, we shouldn’t! However, what we have to do then is remember the reason why we are doing the training in the first place. Based on the answer, you can do “Return on Expectation”, and it will be more logical, cost-effective and direct to what you want.
Starting from the training stepping-stone, namely the TNA (Training Need Analysis), you can identify your main expectation of the training.
1- Is this TNA reliable and accurate enough to define the improvement areas in the targeted employees?
2- Based on my strategy, is this training urgent or can it wait?
3- Again, based on my strategy, is this training essential or supplementary?
4- What is the best training method to cover my needs (online sessions, classroom training, E-training etc.)?
5- Are we equipped enough to cover the training internally with quality and impact?
6- What is the cost of this training per head?
7- How am I going to assess the training
effectiveness (direct evaluation, pre and post evaluation, exam grades, before and after field observation etc.)?
If you could answer all these questions in a sufficient manner, then you are ready to set your training expectations based on your answers.
Furthermore, you are able to find a measurement tool for each “expectation” that may vary according to the situation. For example, if your expectation is to achieve a better understanding of a certain topic, then maybe you can do a pre and post training evaluation. However, if your expectation is to increase customer satisfaction, then maybe you should consider the NPS results or the percentage of complaints before and after training.
What if management has asked for the opposite?
Sometimes you have to do it in a reversed manner.
Let’s say that management has asked you to increase sales by doing the needed training (and this is what happens in most cases). At this point, you have to start working on a customized TNA of which you will measure all the factors that affect the sales volume.
The results will reveal the type of training that could meet your new TNA, putting in mind that to get clear results, you have to set the right time and conditions for the training. For example, you can’t expect to achieve an increase in sales volume if your training schedule is run at the same time as a sales campaign offered by your competitors!
Lastly, find the most suitable reporting tool that will measure your ROI as accurately as possible, even if it’s the direct cost, indirect cost or the efficiency of the training.
