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Return on Investment workshop – your questions answered


The workshop can only deal with so many questions at once – so here are some fuller answers to the questions raised on Thursday 10 January.

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Sue Press: I work in IT and am interested to know how to get the business excited about training.

Paul Kearns: From an ROI perspective, what better way to excite the business than to offer a higher return in £'s or percentage terms based on an ROI calculation.

Angela Holroyd: My particular interests are how you actually calculate ROI, and how you can use that to persuade companies to invest the money in training in the first place.

Paul Kearns: The formula and calculation is easy. The difficult bit is assigning a £ sign to the 'benefit' part of the calculation.

Ian Lever: We provide technical training to the Telecommunications industry and to major corporates. We increasingly need to calculate and demonstrate ROI to our customers; I'm also interested in evaluation.

Paul Kearns: Technical training is not easy to calculate a Return on Investment for. There is a great deal of theory that has to be understood about the differences between basic/technical training and added value training which can be measured quite easily in ROI terms. In simple terms, training designed to fill a measured business gap (eg. we must train operators to improve efficiency levels by 10%) can be put through an ROI calculation. Training operators how to turn on the machine cannot.

**This is a key issue and will be covered extensively on EvaluationZone**

George Parker: I'm the training and development mgr for Dixons Customer Contact Centre - also have with me Jill & Darren, who are Management Development Trainers. We're interested in the evaluation of soft skills training.

Paul Kearns: Soft skills evaluation is the most difficult area of evaluation – only achievable by those at an advanced level in evaluation. EvaluationZone will not even attempt to provide definitive answers to this one until interested subscribers have reached a sufficiently high competence level in many other aspects of evaluation.

Ian Lever: I have to cost-justify the training, but I have limited abilility to measure the employee's increase in performance.

Paul Kearns: Try looking at the Performance Measurement page and you should be given some ideas on how to set up a simple but highly effective performance measurement system.

Corinne Wilhelm: So we have to get to the business gap up front?

Paul Kearns: That's the only way to do ROI successfully.

Corinne Wilhelm: Are people always prepared to give you that?

Paul Kearns: No. Trainers need to convince them.

Anne Reed: Hi, I'm Anne Reed, responsible for getting NHS staff in North + Mid-Hampshire using computers. I'm trying to get staff doing the European Computer Driving Licence. I need to show in advance what the benefits might be and then show we have achieved them afterwards. Any suggestions?

Paul Kearns: This is basic training. It can only be validated. EvaluationZone covers the difference between evaluation and validation - see Evaluation Methods.

Lesley Rooney: On what basis is an assumption of a 1% return made?

Paul Kearns: Anyone trying ROI for the first time should ask the question 'if this training works and people improve by 1% - what would that 1% be worth?' If this figure gives an acceptable return it is worth doing the training. If it doesn't – forget it. But you will normally get much more than 1% - so under-promise and over-deliver!

Antoinette Gaskell: But Paul, how do you determine whether it is 1% or 10%?

Paul Kearns: You guess – accountants and sales directors do it all the time. All businesses are run on 'projections'. Trainers need to play by the same rules. Over 3 years this would give a 25% return. Is that good enough? Actually, probably not. First ask your Finance Director what an acceptable return is per annum. It is likely to be at least 10-20%. If so you need to re-think the training and come up with better figures for the ROI.

Perry Williams: Suppose the organisation is public sector, and the "customers" are non-paying members of the public. How can one approach quantifying the benefit then?

Paul Kearns: ROI doesn't fit very well in public sector organisations but it can be done. Usually (but not exclusively) you can only look at cost savings as the 'benefit' from the training.

Karen McKenzie: Can you measure ROI in a preventative way, ie. not having problems?

Paul Kearns: You can but it is not recommended. Again you need to understand the theory behind basic training, risk avoidance and added value training. That takes some time.

Read the full transcript from the workshop session.


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