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James Quinn

GRASP. Learning & Development

Learning & OD Consultant

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Calculating ROI in the public sector

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It seems a lot more straightforward, in profit making industries such as sales, to calculate the return on investment of training.

What about public sector firms?

When departments are given a budget from government funds that last them several years, how best do you calculate the ROI when there is no profit to be made and no real retention of custom to rely on?

What then, becomes an indicator of the value of training?

8 Responses

  1. ROI & Performance Gaps

    The issue with calculating ROI in the Public Sector is really not that much different to the Private Sector. The core of the challenge is right at the beginning of the process and the primary question is:

    ‘Why are we doing this training?’

    Responses that do not identify specific outcomes and results typically (though not always) indicate woolly intentions, perhaps positively motivated but never the less, woolly.  Unless the training is aimed at closing up an existing performance gap or potentially occurring performance gap the training is peripheral and of no significant benefit other than potentially bolstering the CV of the recipient.

    The follow on questions which will help clarify the initial enquiry ‘Why are we doing this training?’ are:

    ‘What are the recipients of this training being asked to undertake, what tasks and activities are these participants being asked to take part in?’

    and:

    ‘What results, outcomes, deliverables are these tasks, activities feeding into?’

    Let’s take the example of a nurse being trained to operate an x ray machine. Are we training this nurse because we operationaly require this service during all shift periods and there are doctors and patients waiting and requiring x rays and we have no other human resource to cover this? Or are we simply following some set of rules that states: ‘All nursing staff will be trained to undertake x rays.’ If it’s the latter then the training frankly is potentially a significant waste of time and money. If it’s the former then the return is the delivery of X Rays and the maintenance of acceptable waiting times for patients and the delivery of service/data to doctors. Using particular analytical systems you can identify the costs of this training. In the training I provide on this topic I have created a spread sheet which analysis salaries, supporting and underpinning costs of the training and then calculates what the ROI would have to be over a 2 year period to make this a nil cost initiative. Either way you need to calculate the costs of the training, you’ve then got an option:

    1.    Make a judgement as to whether the defined service provision which will be maintained and supported by the nurse was worth the financial investment?

    and/or

    2.    Look at external training providers and look at comparable costs for the equivalent training and make a comparison, asking the question; are we value for money compared to other providers?

    The ROI in this instance is the specific service or clearly specified deliverable which should ALWAYS be identified BEFORE the undertaking of the training, the return in this instance is a service. You can now have an informed judgement as to whether it was worth it, but without that clarity of what your money is returning, you can’t. CIPD promoted a neat phrase; Return on Expectation ROE. If you have clarity in the purpose and intention of the training and a clear view of the existing or potential performance gap the training is to address ROI or ROE is always possible, it may not always be appropriate, but it is possible.

    If you let me know your email I’ll send you a copy of guidance document I was asked to develop for a large public sector organisation last year on exactly how to undertake this process. You can also take a look at an earlier article and some videos that I have here on Training Zone looking at related issues.

    https://www.trainingzone.co.uk/topic/development-performance-gap-analysis/150683

    https://www.trainingzone.co.uk/blogs/garry-platt/platt039s-puzzlings/when-performance-gap-developmental-need

    https://www.trainingzone.co.uk/blogs/garry-platt/platt039s-puzzlings/performance-gap-needs-analysis-0

     

  2. Metrics

    Hi James,

    Until recently I was responsible for the implementation of an ROI strategy for L&D within an NHS board and it was something that seemed quite unfamilar to many of my colleagues.

    I woud agree with everything that Garry has said and would add that one of our critical success factors (for a robust ROI) was ensuring that we not only had identified the correct metrics for measurement but that we were actually able to track changes accurately.  

    We used the following three stage model to help us do this:

    1.  What is the need?

    2. What are our objectives to meet this need?

    3.  How will we measure the success of each of the objectives?

    Each of these sections was specifc and detailed to ensure we kept focussed on what we were trying to achieve.

    Finally, I’d just stress the importance of ensuring you include the staff salaries in the calculation of training costs – from experience these are easily overlooked!

    Happy to discuss further if it would be of any use,  good luck with the ROI. ūüôā

    F.

     

     

  3. Thanks Fiona

    I like the way you’ve kept that nice and simple.

    I’ll definitely make sure Im asking those questions.

    Cheers

    James

  4. ROI in Public sector

    Hi,

    This is an interesting discussion.  I would be very interested to receive a copy of your guidance document Gary if that is OK?

    My email address is [email protected]

    Many thanks

    Carolyn

  5. Identifying indicators

    Good question and good discussion.

    It’s all about value: defining what that value is, and how it may be measured (and no matter how difficult, almost anything can be measured – whether it’s worthwhile is another question).

    There are a number of free papers here: http://www.airthrey.com/papers.htm, most of which have been republished by TrainingZone.  The seventh paper, to be be published next week, is on Business Impact Modelling, a technique for identifying the key indicators and tracking the impact of learning activities on them.

  6. Calculating ROI in the public sector

    Hi Garry

    Very interesting and thought provoking article. Working in the Public Sector and I would love to read your guidance paper.

    My email is [email protected]

    Many thanks

     

    Patrick

     

  7. ROI

    Hi,

    The best resource I have seen for calculating ROI is found on the Kirkpatrick website (http://www.kirkpatrickpartners.com). Go to the free resources section (you will need to create a log on but you dont get any spam) and scroll down to ‘other resouces’. In here you will see a document entitled " Training Evaluation Field Guide".

    This has been produced by the U.S. Office of Personnel Management as a guide to their trainers. It has case studies and examples of a KPI dashboard and loads of other ideas. Well worth a read.

    regards,

    Rich

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James Quinn

Learning & OD Consultant

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