Offering a performance bond or guarantee is a growing trend in the training industry. But with guarantees come risks, so Verity Gough asks whether the reward is great enough to take that chance.






 

Performance bond FAQ

What is it?

• A performance bond is issued by an insurance company to protect one party against loss if the terms of a contract are not fulfilled.
• Professional indemnity insurance provides cover for claims brought against the policyholder due to their professional negligence.
• A guarantee of satisfaction such as a full refund usually has a certain time period attached to it and is generally not a signed agreement.

  How much?

  They can be expensive depending on training costs and length of programme. A £50,000 training bond costs around £2,000. Guarantees are usually a refund of the original fee paid.

  Where do I get one?

  Most insurance companies and brokers will be able to arrange these for you.

There are a number of training organisations that offer some form of 'promise to deliver', often with a refund if the desired objectives are not met. But will clients be swayed by these fail-safe guarantees and can you ever really promise to deliver something which to all intents and purposes is intangible?

It's a question of who takes the risk – in most cases the customer, according to Russell Chalmers, CEO of training providers Holst Group. His company promises to fully re-train clients who feel their programme has not been effective after three months. After six months, if they are still dissatisfied, they receive a full refund. "Until the 'product' has actually been delivered, the customer doesn't know what the quality of the training is," Chalmers explains.

"We are confident about what we do and have very rigorous feedback, as well as discussing with clients upfront what we expect them to achieve. Therefore, we think it's reasonable that the risk lies with us, the providers of the training product, versus the client who is essentially taking a leap of faith."

It puts into question the usual indicators of quality training such as testimonials, references and case studies. "The reality is, we can all find some good testimonials," he adds. "But because training worked for someone else, it doesn't mean it's necessarily going to work for you. We believe if we do the job properly, we can give a guarantee."

Critical considerations

As with any form or contract, before papers are signed or money changes hands, a conversation between the client and the training provider must take place. This is when the client's objectives, both organisational and individual, are decided. Essentially, it becomes a three-way partnership between the client, the trainer and the attendee.

"Having insurance and guarantees is all very well but what managers need to do is focus on what a particular trainer is providing and whether it aligns to their specific strategic goals and objectives," says Jo Causon, director of public affairs at the Chartered Management Institute (CMI). "You need to be clear about what each side gets out of it: why are you developing somebody if it does not have a direct benefit to them doing their daily job?"

She advises any company embarking on a training programme to ensure they are able to monitor effectiveness, especially as CMI research suggests one in three managers do not evaluate training. "Organisations should put their own measures in place, rather than leave it solely up to the provider," Causon adds.

Peter Mayes, CEO of TrainerBase, an association of learning practioners, also believes that not having this clarity from the outset could create an issue with performance bonds. For instance, if an organisation requests certain performance objectives covered by the performance bond and the participants disagree with those objectives, it could mar the effectiveness of what the trainer is trying to deliver. "It's a very grey area. The initial negotiations should decide what the learning programme performance criteria are before any training takes place."

Money talks

Although training professionals will already have some form of indemnity cover, there is a concern the costs involved could separate the larger organisations from the independent trainers.

Olivia Stefanino is a coach and author who has been providing her own full-refund performance guarantee for the past seven years. She believes if you are confident in your skills, a bond only serves to highlight this. "A lot of people are scared to offer a guarantee in case people rip them off but I am very careful about making sure clients are clear about what it is they want to achieve from the training," she says.

"I'm not likely to say I'll double your profits in six months because you only need to have a credit crunch or for their business to burn down to be in trouble – it's outside of your control. But when you see something isn't working, we ask what we can do to get the client to where they to be. You are constantly looking at things to make sure you are on track."

Causon agrees. "It's being clear about what you expect. Simple measures of that are really important," she says. She suggests trainers should show as much flexibility as possible in terms of access, be able to prove how they are balancing the training to the individuals, and illustrate how that learning will be applied in a practical situation. In addition, they should indicate how soon the participants will be able to implement the skills they have learned, as this could impact the time frame of any guarantees given.

A sound investment

With so many variables, are guarantees actually going to make any difference? Stefanino seems to think so. "It's a no brainer – if people don't get what they think they should get, they get their money back," she says. "A guarantee tells people you have confidence in what you are doing or you wouldn't offer one."

And while she believes it isn't strictly a unique selling point, she is keen to tell people about it. "It appears on the website, I put it into proposals and I mention it when I am talking to somebody," Stefanino admits. "It's not something I hide away from, it's an added bonus. I also have the testimonials and case studies to prove it."

With some resistance anticipated by trainers, particularly those who feel they shouldn't have to put a monetary value on the integrity of their training, the concern is that if demand grows, trainers who refuse to bend could see themselves squeezed out of what is already an increasingly competitive market.

However, Stefanino believes it is black and white: guarantees will become popular with people who offer a great service and unpopular with people who don't. "If I was looking for someone and they weren't offering a guarantee, I would start thinking about whether they have confidence in what they do," she says.

As with any form of guarantee, performance bonds serve to protect the client, meaning trainers cannot rest on their laurels providing a positive knock-on effect when it comes to raising training standards. So is resistance futile? Only time will tell.

Under offer

CIM's Jo Causon gives her tips on what trainers should consider before offering a performance bond or guarantee.

• Make sure you have solid references and case studies on your work as this is evidence you have delivered this type of activity before.
• Consider offering flexible learning to cover the different types of people you may be working with.
• Make sure you balance theoretical learning with a practical application.
• Reputation and consistent delivery of results counts for more than statements of insurance or guarantees.