Gerard Doyle answers his own question with a shortlist of sticking points that, if overcome, could lead your organisation to ROI nirvana.

Measuring the return on investment of L&D remains a hot topic, yet significant barriers continue to inhibit the widespread use of ROI methodologies. In my ten years’ experience of training I have identified five major barriers:

Costs and time

There is a misconception that measuring ROI will take a lot of staff time and thus be too costly. Research shows that a comprehensive ROI process can be implemented for as little as 3% - 5% of the overall learning budget. This can be offset by better training results or by discontinuing unproductive programmes. A pharmaceutical company in the South East decided to re-orient a leadership programme costing over £100,000 when a study showed that the ROI was -34%.

Lack of skills 

Many L&D staff are put off by the idea of financial analysis but in fact there are only a couple of accounting principles to understand in the ROI process. After training almost a thousand people in 12 countries to use the methodology, I find that most people can do an ROI study after just a two-day foundation course.

Lack of business alignment

Most L&D programmes are strong on learning objectives and weak on business impact. But if a learning intervention has no obvious, stated and measureable impact on the organisation then why would we spend the organisation’s money providing it? The linkage between learning and organisational outputs and outcomes is the area that most L&D professionals struggle with, and so do the managers who commission our training. We are often bounced into a rapid learning intervention to ‘solve’ an immediate performance issue.

I suggest two questions that people should ask to extend the learning objectives to the level of 'application on the job' and 'business impact'. The first is 'What will the trainee do better or differently back on the job as a result of the training?' This gets you to the application aim. And 'If they do this what will be the impact on the business, and how can we see that impact?' These two simple yet powerful questions get you (and the manager) right into the alignment space.

Fear

Fear of a negative ROI keeps some of us awake at night. Designers, developers, trainers, and programme owners may be concerned about the consequences of negative ROI. An L&D specialist in one of the top three UK mobile phone operators came on our two-day foundation course and then spent over a year developing an ROI measurement system for a programme she was responsible for designing and running. Her programme was delivered over five separate days to all CRM sales agents at a huge annual cost. The result was a staggering -345% ROI. She was afraid to present the results to senior management but their reaction surprised her – she was congratulated for doing the study, the programme was completely revamped and she was eventually promoted.   

False assumptions

L&D professionals often make false assumptions about ROI measurement. For example:

• 'The impact of a learning programme cannot be accurately calculated.' Practice dictates otherwise. Leadership and coaching are often cited in this regard, and yet a large hotel chain I worked with showed a 221% return for a business coaching programme that cost over half a million pounds.
• 'You cannot apply ROI in public sector organisations.' In fact this is the fastest growing sector for ROI in the UK. Many NHS Trusts and state agencies are implementing the model because it provides a tested and credible way to show value for taxpayers’ money. 
• 'We deliver great training, the feedback from participants confirms this and managers are happy with what we do. Therefore, we do not have to justify the financial impact of our programmes.' Lucky you! Even if there was so little need for accountability (which there isn’t) the assumption in the statement is false. In my experience some learning programmes that managers like, and participants react positively to, can show negative ROIs. This is especially so with high-spend flagship programmes like major leadership or change initiatives. Take the leadership programme mentioned earlier in the pharmaceutical company: 85% of participants thought it was great, senior managers were bullish about it but it was only when the -34% ROI was reported that people began to look at what was really happening.
• 'The learning process is a complex, person-centred activity. Therefore, it should not be subjected to a financial accounting process.' The fact is that managers think in financial accounting terms and if L&D staff are serious about winning and retaining resources for their activities (not to mention their jobs!) they need to present at least some results in language that managers understand.

Gerard Doyle is UK and Ireland partner at the Phillips ROI Institute. At the CIPD’s HRD conference this year Gerard will be delivering a workshop that will give delegates an insight into the techniques and methodologies that can be used to measure ROI. For more information, and to book a place in the workshop, visit www.cipd.co.uk/hrd2013/provingtheROI