In the first of three parts, Krystyna Gadd takes a practical look at ROI for trainers and training departments.
Writing objectives for training is not sexy, exciting or what trainers really want to do, but in this article, I will show you how to make it so simple that this missing piece of the jigsaw will take your training from great to sensational, as well as impactful, in minutes. To set a good example and to practice what I am about to preach, the objectives of this article will be, that once you have read it you will be able to:
Define Return on Investment (ROI)
Define Return on Expectations (ROE) and how it relates to ROI
Explain the importance of objective setting for ROI, ROE and training/learning
Work through an example of how to set objectives for ROI and learning for a given example (e.g. Feedback skills)
An interesting story to start off with:
It is always refreshing and inspiring to hear how other organisations approach common problems and find a new way of solving them. A well known telecommunications organisation has a new and interesting approach to approving new L&D projects. In years gone by, when a senior manager said 'Deliver this customer service training to all contact centre staff by the end of next month', they did just that. If it did not get the results that were expected, you can guess whom they blamed.
Having had their fingers burnt on more than one occasion they decided to radically alter their approach to the commissioning of any new learning events. Now the process is like this:
A stakeholder approaches L&D with a proposal for an new L&D intervention
They come prepared with objectives, measures and the expected impact of the intervention
A discussion takes place with L&D, further exploring the expected impact of the proposed learning intervention, discussing ROI and ROE
L&D considers the project’s merits along with other proposed projects and prioritises according to the organizational priorities.
There are very many benefits to this approach, not least that the credibility of L&D is enhanced as well as the training being more focused and targeted at what the organisation really needs. In order for you and your organisation to be able to adopt a similar approach, there are several things that you need to know and to be able to do. So let’s start with defining ROI.
Defining Return on Investment
It is not a difficult concept, the return on investment is an indicator of what you will get for every pound (or dollar) you spend. Watch this short video to learn more
Return on Investment = Total benefits (£) x 100 (expressed as a Total costs percentage)
If you don’t multiply by 100, this calculation gives you a straightforward “for every £1 spent how may £’s do you get back in benefits?”
Here are some examples of benefits, for which we could calculate a monetary value:
Reduction in errors/complaints (calculate how much the errors/complaints cost on average)
Increase in sales
Reduction in labour turnover (recruitment costs are reduced)
Reduction of production time
Increases in efficiency
Increase in production levels
Decrease in wastage
Decrease in repeat work
Here is what you need to consider when calculating the total costs:
Trainer time:
In design
During the training
Cost of the materials and resources
Cost of the venue, refreshments, equipment hire
Travel expenses (if applicable)
Time away (x hourly rate) of the employees from their normal work
Stand-in temporary staff costs
It is useful, if not essential to make sure that before doing any calculations, you have at least listed all the possible costs and benefits.
Krystyna Gadd Assoc CIPD is founder of How to Accelerate Learning and creator of the Learning Loop. For more info watch this short video and contact her to find out more and book a no-fee consultation.
Bibliography
- “Implementing the four levels” Donald L.Kirkpatrick & James D.Kirkpatrick 2007 B.K Publishers
- “Learning Needs Analysis and Evaluation”, Frances and Roland Bee, CIPD 2nd Edition
- “Measuring the impact of training” Gary Platt, Training Journal, 27th January 2011
