Quantifying and calculating ROI in training – Can it be measured?


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This topic contains 32 replies, has 11 voices, and was last updated by  Skills Universe 2 years, 2 months ago.

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  • #41566

    Des Squire
    Participant

    Training in many companies is not the most popular activity in terms of “Return on Investment” or ROI. The reason being many HR managers have to strive to justify and quantify the money spent and relate the cost of training back to profitability and increased income to the company.

    Training is often seen as a waste of time, money and effort and the potential value of such training is often questioned. To make matters worse many HR managers have no idea how to quantify or justify such expenditure or to explain the value added through such training.

    So how do we justify the value of training in any company? How can we establish the value of training if we have no means of measuring the effectiveness and result of training?

    The overall objective of any training intervention should be to increase the performance of delegates while at the same time adding to effectiveness of employees and overall profitability of the company. If we say we want to increase the performance of the delegates then it goes without saying there must be an identifiable performance problem.

    If we can identify a problem and find a means of quantifying the effect of the problem we have a means potentially of measuring the impact of training. To do so we have a need to quantify the impact of the problem and to give this impact some form of monitory value. Following training, we would again need to monitor performance and establish if an improvement has resulted and at the same time place a new monitory value on the performance improvement. This can only be done by measuring the cost of poor performance prior to training, the increase in productivity and/or profitability after training and expressing this as a percentage of the total cost of training. This would then give us a percentage return on investment. Not such an easy task is it?

    One approach might be to establish what the problems are that exist in a company?
    Who are the people involved? Are others impacted as a result of the problem? What is the best potential solution?

    It is then necessary to establish the impact of the problem or problems in terms of some form of monitory measurement. This can be considered in terms of the average salary of the group identified, the average number of hours worked per annum, the average rate per hour and the estimated time lost as a result of the problem. From this we can give a value to the time lost expressed in man-hours and at a specific rate per hour. We have a value we can place on the performance problem

    We would then have to consider the possible solutions. For our purposes let’s assume the solution is training. We can then place a cost to the training either making use of our own resources or bringing in an external provider.

    We would then need to decide on the possible or desired results in terms of performance improvement. Initially we would want to get employees back to optimum performance. But we may also wish to see and improvement over and above the optimum. Let’s assume we aim at 110% performance. This can be quantified based on the rate per hour we previously established. We have given the improved performance a monitory value and have quantified desired results.
    In order to calculate ROI I am suggesting we first need to make estimates and assumptions. In order to measure the costs and benefits associated with training. This I feel makes the calculation of ROI a relatively simple process.

    Since it is a very difficult process to measure performance improvement, mainly because it can only be done over a period of time, it is necessary to make assumptions and to decide on a desired result. If the desired result is linked to work hours and outputs during work hours it make the task of measuring results easier and more quickly identifiable.

    Example

    Let’s assume we train a person who was having a performance problem due to lack of skills and our estimate of outputs was that he/she was working to 80% of potential.

    We decide to put the person onto a skills training course.

    So if this person was working at 80% of potential and thereby costing the company say 368 (80 of total hours PA) hours at a rate of R22 per hour, then the cost of the loss has a value of R8096.

    So if we calculate the Rate of Return on investment as

    ROI % = Value of improvement

    Total Incurred Costs

    Then following training we see an improvement of 10% over the optimum then the value of the improvement is R12144. If it cost of training this one individual is R3750 then the return on investment is 323%

    Des Squire
    Applied Management Studies International (Pty) Ltd
    dsquire@amsi.co.za or 011 646 9369

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  • #41596

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

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  • #41595

    Des Squire
    Participant

    I agree and that is why I suggest the quantification and calculation of ROI. Quantifying the problem, the cause of the problem and the impact is what makes the difference in my opinion. There are many problems in a work environment caused by various factors and training might not be the solution. That is why it is necessary to analyse the problem and arrive at the best and most appropriate solution.

    So if the problem has to do with attitude then this may well have an impact on productivity and profitability. What is the cause of the poor attitude?

    Training may be a solution and if so this will have to be brought into the calculation. If training is not the solution then it will be disregarded in the calculation of ROI.

    The assumptions are necessary in order to establish the potential return. Once we have made certain assumptions it is then up to management to monitor the actual improvement and to measure the actual against the assumed outcome and improvement in order to arrive at a more accurate ROI.

    ROI can only be measured over a period of time as it is not possible to measure say within a month of training.

    Tricia Jones said:

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

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  • #41594

    Craig Woodward
    Participant

    Hi Des,

    Your methodology makes absolute sense and is the approach we take (more or less).

    This does assume however that the decision makers are able to get to identify the actual problem (the truth), when it can be a compounding of small (knocked-on) faults? Tricia makes a valid point that in many cases it’s a perception and the degree of the perception varies according to how close (responsible) the person/people involved is/are. In most organisations, there’s so much protectionism, that to actually acknowledge this is to actually acknowledge that something is failing in the business and that means there’s responsibility (blame) that needs to ‘come out’. It’s then when self-preservation tactics kick in and all the difficulties arise.

    It’s here where third-party evaluation is most valuable and where the outcome (corrective interventions) should become the focus, focusing on the issue as apposed to who? Sadly, because of how businesses have been and are managed, getting to the truth means that you have to almost dismiss the ‘fear’ of any reprisal, something very unlikely in ‘dysfunctional business cultures’.

    This gets me back to our other discussion and where I believe many businesses should be focusing right now; on the creation of performance orientated cultures and thereby, performance accountability. This would allow for faster diagnosis and faster corrective action. So once again, it’s up to the business leaders to take responsibility and seek ways of ensuring their business is ‘functional’ and a place where everyone works toward the greater effectiveness of the organisation and where everyone benefits by this.

    Trouble is, this means changing mindsets and building trust… and that’s too soft and fuzzy for too many business people… and where ROI is even more intangible for the accountants…

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  • #41593

    Exactly! And so in lies the problem…. Management (outside of this actually implementing and managing the training and development) do not measure the ROI or even know how to for that matter! This is expected of the individuals requesting the training or the providers implementing the training. Des, you offer training right? Is this something which you offer your clients as part of your value add? If so, how do you do it? i.e. If I came to you and said we have a need for Management Development Training, what would your approach be?

    Although I agree that assumptions are necessary it potentially creates a huge risk for going terribly wrong, in that if you make the wrong assumption once, and the outcome is that money (usually large amounts) has been spent, whether through training or any other initiative, and very little to no ROI has taken place then you risk not being able to “try again”!

    The trick with implementing ROI as is the case with most things is that it has the potential to help you or hurt you, depending on your stake in the process and the point you’re trying to make!

    Again, we too often assume that the solution is simple, i.e. training and that the impact of the solution can be measured…
    The important point you make about it having to be measured over time is pertinent to this discussion in that ROI should be sustainable or else it’s not true in my opinion! Many management teams battle with this concept though as they want returns immediately and if it can’t be shown then the “baby gets chucked out with the bath water”!

    Des Squire said:

    I agree and that is why I suggest the quantification and calcuation of ROI. Quantifying the problem, the cause of the problem and the impact is what makes the difference in my opinion. There are many problems in a work environment caused by various factors and training might not be the solution. That is why it is necessary to analyse the problem and arrive at the best and most appropriate solution.
    So if the problem has to do with attitude then this may well have an impact on productivity and profitability. What is the cause of the poor attitued? – that is the question.
    Training may be a solution and if so this will have to be brought into the calculation. If training is not the solution then it will be disregarded in the calculation of ROI.
    The assumptions are necessary in order to establish the potential return. Once we have made certain assumptions it is then up to management to monitor the actual improvement and to measure the actual against the assumed outcome and improvement in order to arrive at a more accurate ROI.
    ROI can only be measured over a period of time as it is not possible to measure say within a month of training.

    Tricia Jones said:

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

    Share on Social Media
  • #41592

    Cas Olivier
    Participant

    This is a multi-dimensional issue. So I add on.

    Over and above skilled technical people, companies also need skilled supervisors and managers. So, Tricia, they should also be trained and pre and post training assessment should also be applied to them.

    Facilitators should also be competent to use a combination of methods based on behaviouristic, cognitive and constructive thinking/learning theories in order to enhance and accelerate learning, given the training needs and job profile.

    Cas Olivier
    casper@mweb.co.za
    0832592857

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  • #41591

    Des Squire
    Participant

    Hi Craig
    The assumptions both in terms of the potential return and also in identifying the root cause of the problem are issues that need to be addressed. Deciding to train employees must have a specific reason and objective. If a person working in a call centre has a poor attitude we assume the problem and resulting lack of productivity is poor attitude. But what actually causes the poor attitude? Could it be a training related problem – that is the question? This is where so many companies fail. They do not go through the process of analysing the performance problem.
    You mention “the creation of performance orientated cultures” and of course you have hit the nail on the head. The problem is that counselling of employees on performance problems has historically been linked to the Disciplinary process. This has negative connotations and most employees hstorically fear such counselling. This is what needs to change and be changed. Trust is earned and needs to be cultivated. Unfortunately the past is the cause of the lack of trust in so many instances.

    Craig Woodward said:

    Hi Des,

    Your methodology makes absolute sense and is the approach we take (more or less).

    This does assume however that the decision makers are able to get to identify the actual problem (the truth), when it can be a compounding of small (knocked-on) faults? Tricia makes a valid point that in many cases it’s a perception and the degree of the perception varies according to how close (responsible) the person/people involved is/are. In most organisations, there’s so much protectionism, that to actually acknowledge this is to actually acknowledge that something is failing in the business and that means there’s responsibility (blame) that needs to ‘come out’. It’s then when self-preservation tactics kick in and all the difficulties arise.

    It’s here where third-party evaluation is most valuable and where the outcome (corrective interventions) should become the focus, focusing on the issue as apposed to who? Sadly, because of how businesses have been and are managed, getting to the truth means that you have to almost dismiss the ‘fear’ of any reprisal, something very unlikely in ‘dysfunctional business cultures’.

    This gets me back to our other discussion and where I believe many businesses should be focusing right now; on the creation of performance orientated cultures and thereby, performance accountability. This would allow for faster diagnosis and faster corrective action. So once again, it’s up to the business leaders to take responsibility and seek ways of ensuring their business is ‘functional’ and a place where everyone works toward the greater effectiveness of the organisation and where everyone benefits by this.

    Trouble is, this means changing mindsets and building trust… and that’s too soft and fuzzy for too many business people… and where ROI is even more intangible for the accountants…

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  • #41590

    Good point Cas…. the burning question though….. How many training/service providers offer this as part of their solution??
    I agree with the statement that it is multi-dimensional and honestly until those systems, processes and support functions are put in place, ROI is a scary monster!

    Cas Olivier said:

    This is a multi-dimensional issue. So I add on.

    Over and above skilled technical people, companies also need skilled supervisors and managers. So, Tricia, they should also be trained and pre and post training assessment should also be applied to them.

    Facilitators should also be competent to use a combination of methods based on behaviouristic, cognitive and constructive thinking/learning theories in order to enhance and accelerate learning, given the training needs and job profile.

    Cas Olivier
    casper@mweb.co.za
    0832592857

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  • #41589

    Craig, you obviously have experience in trying to measure ROI in a “performance based culture” challenged company and that is why I really appreciate your view point! I whole heartedly agree with your statement about this whole thing being too warm and fuzzy for these guys to really appreciate the value add! At the end of the day though, I guess that’s what us HR/Training people are about and therefore inherently are by the very nature of what we do… Change Agents!!

    I’ll be honest though I’m still desperately in search of someone who has mastered the application of ROI withing a medium to large enterprise and even more challenging is to source a provider who offers true ROI measurement…

    Craig Woodward said:

    Hi Des,

    Your methodology makes absolute sense and is the approach we take (more or less).

    This does assume however that the decision makers are able to get to identify the actual problem (the truth), when it can be a compounding of small (knocked-on) faults? Tricia makes a valid point that in many cases it’s a perception and the degree of the perception varies according to how close (responsible) the person/people involved is/are. In most organisations, there’s so much protectionism, that to actually acknowledge this is to actually acknowledge that something is failing in the business and that means there’s responsibility (blame) that needs to ‘come out’. It’s then when self-preservation tactics kick in and all the difficulties arise.

    It’s here where third-party evaluation is most valuable and where the outcome (corrective interventions) should become the focus, focusing on the issue as apposed to who? Sadly, because of how businesses have been and are managed, getting to the truth means that you have to almost dismiss the ‘fear’ of any reprisal, something very unlikely in ‘dysfunctional business cultures’.

    This gets me back to our other discussion and where I believe many businesses should be focusing right now; on the creation of performance orientated cultures and thereby, performance accountability. This would allow for faster diagnosis and faster corrective action. So once again, it’s up to the business leaders to take responsibility and seek ways of ensuring their business is ‘functional’ and a place where everyone works toward the greater effectiveness of the organisation and where everyone benefits by this.

    Trouble is, this means changing mindsets and building trust… and that’s too soft and fuzzy for too many business people… and where ROI is even more intangible for the accountants…

    Share on Social Media
  • #41588

    Des Squire
    Participant

    hi Tricia
    A simple response – I would need to have a meeting with the company to establish what training needs to be conducted and why. This would necessitate discussing specific problems and issues and their impact. The impact assists me in establishing the need. I would then propose training based specifically on meeting the need.
    In some instances I may well propose a course on analysing performance problems and/or counselling employees related to performance issues.

    Tricia Jones said:

    Exactly! And so in lies the problem…. Management (outside of this actually implementing and managing the training and development) do not measure the ROI or even know how to for that matter! This is expected of the individuals requesting the training or the providers implementing the training. Des, you offer training right? Is this something which you offer your clients as part of your value add? If so, how do you do it? i.e. If I came to you and said we have a need for Management Development Training, what would your approach be?

    Although I agree that assumptions are necessary it potentially creates a huge risk for going terribly wrong, in that if you make the wrong assumption once, and the outcome is that money (usually large amounts) has been spent, whether through training or any other initiative, and very little to no ROI has taken place then you risk not being able to “try again”!

    The trick with implementing ROI as is the case with most things is that it has the potential to help you or hurt you, depending on your stake in the process and the point you’re trying to make!

    Again, we too often assume that the solution is simple, i.e. training and that the impact of the solution can be measured…
    The important point you make about it having to be measured over time is pertinent to this discussion in that ROI should be sustainable or else it’s not true in my opinion! Many management teams battle with this concept though as they want returns immediately and if it can’t be shown then the “baby gets chucked out with the bath water”!

    Des Squire said:

    I agree and that is why I suggest the quantification and calcuation of ROI. Quantifying the problem, the cause of the problem and the impact is what makes the difference in my opinion. There are many problems in a work environment caused by various factors and training might not be the solution. That is why it is necessary to analyse the problem and arrive at the best and most appropriate solution.
    So if the problem has to do with attitude then this may well have an impact on productivity and profitability. What is the cause of the poor attitued? – that is the question.
    Training may be a solution and if so this will have to be brought into the calculation. If training is not the solution then it will be disregarded in the calculation of ROI.
    The assumptions are necessary in order to establish the potential return. Once we have made certain assumptions it is then up to management to monitor the actual improvement and to measure the actual against the assumed outcome and improvement in order to arrive at a more accurate ROI.
    ROI can only be measured over a period of time as it is not possible to measure say within a month of training.

    Tricia Jones said:

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

    Share on Social Media
  • #41587

    Hi Des,

    I find it interesting that you said:- “In some instances I may well propose a course on analysing performance problems and/or counselling employees related to performance issues.” What would those instances be?

    I would love to see that content of such a course? If you have an outline available would you mind passing it on??

    How do you know when to trust the diagnoses of the problem and proceed with a solution??

    Des Squire said:

    hi Tricia
    A simple response – I would need to have a meeting with the company to establish what training needs to be conducted and why. This would necessitate discussing specific problems and issues and their impact. The impact assists me in establishing the need. I would then propose training based specifically on meeting the need.
    In some instances I may well propose a course on analysing performance problems and/or counselling employees related to performance issues.

    Tricia Jones said:

    Exactly! And so in lies the problem…. Management (outside of this actually implementing and managing the training and development) do not measure the ROI or even know how to for that matter! This is expected of the individuals requesting the training or the providers implementing the training. Des, you offer training right? Is this something which you offer your clients as part of your value add? If so, how do you do it? i.e. If I came to you and said we have a need for Management Development Training, what would your approach be?

    Although I agree that assumptions are necessary it potentially creates a huge risk for going terribly wrong, in that if you make the wrong assumption once, and the outcome is that money (usually large amounts) has been spent, whether through training or any other initiative, and very little to no ROI has taken place then you risk not being able to “try again”!

    The trick with implementing ROI as is the case with most things is that it has the potential to help you or hurt you, depending on your stake in the process and the point you’re trying to make!

    Again, we too often assume that the solution is simple, i.e. training and that the impact of the solution can be measured…
    The important point you make about it having to be measured over time is pertinent to this discussion in that ROI should be sustainable or else it’s not true in my opinion! Many management teams battle with this concept though as they want returns immediately and if it can’t be shown then the “baby gets chucked out with the bath water”!

    Des Squire said:

    I agree and that is why I suggest the quantification and calcuation of ROI. Quantifying the problem, the cause of the problem and the impact is what makes the difference in my opinion. There are many problems in a work environment caused by various factors and training might not be the solution. That is why it is necessary to analyse the problem and arrive at the best and most appropriate solution.
    So if the problem has to do with attitude then this may well have an impact on productivity and profitability. What is the cause of the poor attitued? – that is the question.
    Training may be a solution and if so this will have to be brought into the calculation. If training is not the solution then it will be disregarded in the calculation of ROI.
    The assumptions are necessary in order to establish the potential return. Once we have made certain assumptions it is then up to management to monitor the actual improvement and to measure the actual against the assumed outcome and improvement in order to arrive at a more accurate ROI.
    ROI can only be measured over a period of time as it is not possible to measure say within a month of training.

    Tricia Jones said:

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

    Share on Social Media
  • #41586

    Hi Des , Craig , Cas and Tricia

    Des calculation of ROI is perfectly correct as I guess that we all agree (in an organisation that is operationally healthy). It is upon the HR and HRD practitioners to lead the organisation in terms of development. In too many organisation HR is lagging and giving the production departments to lead. In that way going astray and nothing will materialize. For instance, performance appraisals are done just to make HR or management happy thus producing unintended effects. The second major challenge is the recruitment of the candidates into correct jobs or posts, not just to fill the post. I think I will try and use Des ROI formulae and see if it will yield at least close to accurate results.

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  • #41585

    Des Squire
    Participant

    That is exactly where most problems lie. Managers are not equipped to corretly analyse the problem and in many instances jump to conclusions. They then tell HR manager they have a need to train x number of people on such and such a programme. Training is set up and delegates are trained on a course that is totally innapropriate. I am in the processs of re-designing something I have not revised for many years. This I am doing based on established need.

    Tricia Jones said:

    Hi Des,

    I find it interesting that you said:- “In some instances I may well propose a course on analysing performance problems and/or counselling employees related to performance issues.” What would those instances be?

    I would love to see that content of such a course? If you have an outline available would you mind passing it on??

    How do you know when to trust the diagnoses of the problem and proceed with a solution??

    Des Squire said:

    hi Tricia
    A simple response – I would need to have a meeting with the company to establish what training needs to be conducted and why. This would necessitate discussing specific problems and issues and their impact. The impact assists me in establishing the need. I would then propose training based specifically on meeting the need.
    In some instances I may well propose a course on analysing performance problems and/or counselling employees related to performance issues.

    Tricia Jones said:

    Exactly! And so in lies the problem…. Management (outside of this actually implementing and managing the training and development) do not measure the ROI or even know how to for that matter! This is expected of the individuals requesting the training or the providers implementing the training. Des, you offer training right? Is this something which you offer your clients as part of your value add? If so, how do you do it? i.e. If I came to you and said we have a need for Management Development Training, what would your approach be?

    Although I agree that assumptions are necessary it potentially creates a huge risk for going terribly wrong, in that if you make the wrong assumption once, and the outcome is that money (usually large amounts) has been spent, whether through training or any other initiative, and very little to no ROI has taken place then you risk not being able to “try again”!

    The trick with implementing ROI as is the case with most things is that it has the potential to help you or hurt you, depending on your stake in the process and the point you’re trying to make!

    Again, we too often assume that the solution is simple, i.e. training and that the impact of the solution can be measured…
    The important point you make about it having to be measured over time is pertinent to this discussion in that ROI should be sustainable or else it’s not true in my opinion! Many management teams battle with this concept though as they want returns immediately and if it can’t be shown then the “baby gets chucked out with the bath water”!

    Des Squire said:

    I agree and that is why I suggest the quantification and calcuation of ROI. Quantifying the problem, the cause of the problem and the impact is what makes the difference in my opinion. There are many problems in a work environment caused by various factors and training might not be the solution. That is why it is necessary to analyse the problem and arrive at the best and most appropriate solution.
    So if the problem has to do with attitude then this may well have an impact on productivity and profitability. What is the cause of the poor attitued? – that is the question.
    Training may be a solution and if so this will have to be brought into the calculation. If training is not the solution then it will be disregarded in the calculation of ROI.
    The assumptions are necessary in order to establish the potential return. Once we have made certain assumptions it is then up to management to monitor the actual improvement and to measure the actual against the assumed outcome and improvement in order to arrive at a more accurate ROI.
    ROI can only be measured over a period of time as it is not possible to measure say within a month of training.

    Tricia Jones said:

    Hi Des,

    You argue a good point… The concern however is the assumption part…. due to performance management in most business’s being done subjectively; true gap analysis/performance gaps are not available, therefore the impact on profits and productivity are all left to assumption…

    So let me pose another perspective… What if the assumptions are wrong? Then one would effectively spend a large amount of money on training and admin hours to find that out! Yielding slim to none ROI.

    I think in terms of training, the ROI is obvious, and if proper pre and post assessment practices are used then this would prove the ROI point. However, I think the mistake that most of us make is always assuming that lack of skill (training) is the problem when in some instances it may be due to other factors such as attitude, environmental factors, “misfit” or even demotivation and lack of opportunity!

    In more than one instances, I’ve seen large organisations with great strategic minds, throw large amounts of funding into “upskilling” their workforce and then couldn’t understand why the productivity and ultimately the profits in relation to people outputs didn’t improve….

    The power of assumption….

    Share on Social Media
  • #41584

    Good Morning Everyone.

    I have been following your discusion and in my opinion… I think the only way managers can see the effect of ROI is by measuring the perfomance of people after training has taken place. A supervisor assisgned in a certain department would be able to spot the changes of trained employees in their section and advise their managers of improvements or challenges. In that way one can say ROI was measured correctly or incorrectly after all calculations have taken place.

    But this also boils down to the diagnosis of the matter. If for instance an employee is trained on the “wrong” issue due to “perception” and not proof or knowledge of the real problem than employers will continue to see training as a waste of time and money. As it has been said trust plays an important issue for any organisation. I dont believe having trust in your employees makes any manager a “softie”. I believe its the only way to build confidence in the employee and the employer and of course that trust will have to be earned by both parties. (thats just my opinion).

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  • #41583

    Cas Olivier
    Participant

    This is my summary of what is happening in the country, and surely it applies to supervisor and management training as well. If it is not addressed it wil go on and on.

    Because of the lac of skills companies plan and budget for downtime and waste. Low skilled workers must work under supervision (downtime for supervisor). They also create waste by making mistakes. They cannot detect machine wear and tear which leads to breakages (downtime). The above is exacerbated by the fact that most workers cannot maintain standard work speed.

    What is the easy way for companies to keep up profits? They calculate the price per unit to cover the cost of downtime and waste. This means that customers are paying inflated prices for goods and services.

    For example, the real lean and mean price of an item is R1000-00, but because of downtime and waste is conservatively estimated at R25 which is added to maintain good profits. This product now costs 2.5% more. This can be added to inflation as the price is rising without any value added. A million of these products per year cost the customer R25 000 000 per year extra. This is over and above the carbon footprint to re-process the waste.

    Someone must take lead.

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  • #41582

    Des Squire
    Participant

    Hi Themba
    You raise two very important and interrelated issues. The one has to do with recruiting candidates correctly and the other has to do with ROI. Competency based recriting and selection is so vital today but the competencies have not, in many instancs ben established. so how can HR practitioners recruit the correct people.

    Where ROI is concerned the approach in my opinion needs to be – Identifying the problem – Analyse the problem to establish the cause – Deciding on an appropriate solution – implementing the solution – ongoing follow up and support – establishing results – identifying further appropriate action.

    Themba Mavundhla said:

    Hi Des , Craig , Cas and Tricia

    Des calculation of ROI is perfectly correct as I guess that we all agree (in an organisation that is operationally healthy). It is upon the HR and HRD practitioners to lead the organisation in terms of development. In too many organisation HR is lagging and giving the production departments to lead. In that way going astray and nothing will materialize. For instance, performance appraisals are done just to make HR or management happy thus producing unintended effects. The second major challenge is the recruitment of the candidates into correct jobs or posts, not just to fill the post. I think I will try and use Des ROI formulae and see if it will yield at least close to accurate results.

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  • #41581

    Good Day Everyone,

    I am disapointed too see that companies (both sellers and buyers of training) mostly look at an ROI when considering training. I do not believe that anyone can quantify training in Rand Values exactly. The idea of comparing various returns to asses the best option, which works so well in investment, does not work in training.

    Since there are many ways to make “Profit” – one is to Increase Returns. Another is to decrease Costs.

    If you are training staff to work safer:
    % Decrease in Risk = (New Injuries – Old Injuries)/Old Injuries– The above formula can measure a decrease in overall “loss” which has to push up the company’s return. The decrese in risk should also be addressed not only the increase in returns.

    Training is Tax Deductable:
    – Very simply training decreases company costs (wheather or not it even works).

    The Efficiency of the worker can be measured by the change in what he produces… (his personal labour) MEANING IN LABOUR UNITS NOT IN REVENUE.
    – Because revenue of a company arises as a diference between Sales and Cost Of Sales, even if you increase their sales, their management of costs might make them a loss anyway. Therefore, if you can prove that the worker did more work, even if the company made a loss, you are still doing good training.
    Efficiency = …….

    Ofcourse we know that training DOES work. If a new user of Excel comes to work and is not trained, he will be 0% Return and R-unlimited costs. However specifically what training will create the the most production relates to the company’s goals – as Mr. Des Squire pointed out.

    It is by including NEW ways of measuring training, you are not being ordinary, you are being extraordinary.
    That must add to the competitive advantage of your training firm.
    I urge an investigation into new measures of NON-FINACIAL rewards of training which POTENTIALLY LEADS to financial rewards.

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  • #41580

    Skills Universe
    Keymaster

    Hi Des

    Thanks so much for all you input. Your approach covers the whole spectrum of possible problems and I just love the way you put something so complex in such few words.
    I totally agree with what you say.

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  • #43557

    Skills Universe
    Keymaster

    Hi Des

    Thanks so much for all you input. Your approach covers the whole spectrum of possible problems and I just love the way you put something so complex in such few words.
    I totally agree with what you say.

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  • #44580

    Skills Universe
    Keymaster

    Hi Des

    Thanks so much for all you input. Your approach covers the whole spectrum of possible problems and I just love the way you put something so complex in such few words.
    I totally agree with what you say.

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  • #41579

    Des Squire
    Participant

    Hi Asanda
    The ongoing monitoring of improvement is as you suggest a “team effort”. HR managers cannot alone establish performance improvements, assuming the original problem was performance related.

    Again for the benefit of those participating in the discussion, I point out that, correctly analysing the problem – treating the illness and not the symptom – is one of the most important aspects of ROI. Fail here and the exercise could be costly.

    Asanda Magwede said:

    Good Morning Everyone.

    I have been following your discusion and in my opinion… I think the only way managers can see the effect of ROI is by measuring the perfomance of people after training has taken place. A supervisor assisgned in a certain department would be able to spot the changes of trained employees in their section and advise their managers of improvements or challenges. In that way one can say ROI was measured correctly or incorrectly after all calculations have taken place.

    But this also boils down to the diagnosis of the matter. If for instance an employee is trained on the “wrong” issue due to “perception” and not proof or knowledge of the real problem than employers will continue to see training as a waste of time and money. As it has been said trust plays an important issue for any organisation. I dont believe having trust in your employees makes any manager a “softie”. I believe its the only way to build confidence in the employee and the employer and of course that trust will have to be earned by both parties. (thats just my opinion).

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  • #41578

    Des Squire
    Participant

    Hi Miro
    Calculating ROI can work in any area or aspect of business if applied correctly. I must therefore disagree with you statement that it “does not work in traing”. Some feel it does not and cannot be applied to training for the simple reason the incorrect assessment of the training needs are made and the real problem is not dealt with. There can be no percived improvement where a symptom is being treated instead of the illness.
    Isn’t the formula you publish just anothe means of measuring return????

    Miro Bagrov said:

    Good Day Everyone,

    I am disapointed too see that companies (both sellers and buyers of training) mostly look at an ROI when considering training. I do not believe that anyone can quantify training in Rand Values exactly. The idea of comparing various returns to asses the best option, which works so well in investment, does not work in training.

    Since there are many ways to make “Profit” – one is to Increase Returns. Another is to decrease Costs.

    If you are training staff to work safer:
    % Decrease in Risk = (New Injuries – Old Injuries)/Old Injuries– The above formula can measure a decrease in overall “loss” which has to push up the company’s return. The decrese in risk should also be addressed not only the increase in returns.

    Training is Tax Deductable:
    – Very simply training decreases company costs (wheather or not it even works).

    The Efficiency of the worker can be measured by the change in what he produces… (his personal labour) MEANING IN LABOUR UNITS NOT IN REVENUE.
    – Because revenue of a company arises as a diference between Sales and Cost Of Sales, even if you increase their sales, their management of costs might make them a loss anyway. Therefore, if you can prove that the worker did more work, even if the company made a loss, you are still doing good training.
    Efficiency = …….

    Ofcourse we know that training DOES work. If a new user of Excel comes to work and is not trained, he will be 0% Return and R-unlimited costs. However specifically what training will create the the most production relates to the company’s goals – as Mr. Des Squire pointed out.

    It is by including NEW ways of measuring training, you are not being ordinary, you are being extraordinary.
    That must add to the competitive advantage of your training firm.
    I urge an investigation into new measures of NON-FINACIAL rewards of training which POTENTIALLY LEADS to financial rewards.

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  • #41577

    Hi Miro,

    You do indeed speak the language of the HR and HRD practicioners of the world… the challenge here in lies with translating that into the language that the CFO’s of this world understand and want to hear… unfortunately that is Rands and Cents….

    I guess it boils down to the age old quest of pleasing two masters….
    My challenge to all the training and service providers out there with a vision of truly adding value is to incorporate ROI (whatever that is and however you deem that to be possible) into your service offerings! And challenge us companies who call you in with our list of “problems” and see whether or not we’ve accurately identified the need!!!

    Miro Bagrov said:

    Good Day Everyone,

    I am disapointed too see that companies (both sellers and buyers of training) mostly look at an ROI when considering training. I do not believe that anyone can quantify training in Rand Values exactly. The idea of comparing various returns to asses the best option, which works so well in investment, does not work in training.

    Since there are many ways to make “Profit” – one is to Increase Returns. Another is to decrease Costs.

    If you are training staff to work safer:
    % Decrease in Risk = (New Injuries – Old Injuries)/Old Injuries– The above formula can measure a decrease in overall “loss” which has to push up the company’s return. The decrese in risk should also be addressed not only the increase in returns.

    Training is Tax Deductable:
    – Very simply training decreases company costs (wheather or not it even works).

    The Efficiency of the worker can be measured by the change in what he produces… (his personal labour) MEANING IN LABOUR UNITS NOT IN REVENUE.
    – Because revenue of a company arises as a diference between Sales and Cost Of Sales, even if you increase their sales, their management of costs might make them a loss anyway. Therefore, if you can prove that the worker did more work, even if the company made a loss, you are still doing good training.
    Efficiency = …….

    Ofcourse we know that training DOES work. If a new user of Excel comes to work and is not trained, he will be 0% Return and R-unlimited costs. However specifically what training will create the the most production relates to the company’s goals – as Mr. Des Squire pointed out.

    It is by including NEW ways of measuring training, you are not being ordinary, you are being extraordinary.
    That must add to the competitive advantage of your training firm.
    I urge an investigation into new measures of NON-FINACIAL rewards of training which POTENTIALLY LEADS to financial rewards.

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  • #41576

    What an interesting discussion! This is a problem that has been inherent in the “training industry” for quite a while, if not since its very creation.

    The word “measurable” is guess is among the key words in this discussion, not only on this board, but academics around the world. How can we measure performance accurately and more than accurately, in a useful way. Nowadays, the problem is not really capturing data, but capturing the right data and making proper sense of it.

    Depending on the reason for training (ranging from simple “skills training” all the way to “team building, executive coaching, mentoring skills, interpersonal communication, etc.), I would propose different approaches to evaluating the effectiveness of the training – both quantitative (in terms of Des ROI formula) as well as qualitative (interviews, peer reviews, etc.).

    That the current business culture is highly focused on immediate solutions that will improve the earnings of the next quarter (or even for the next day, as today we seem to be even shorter sighted) does not necessarily make soft skills training any easier.
    Des ROI measure seems to come straight from the management books of Taylor. Sometimes, time spent in coaching or mentoring employees might cost money now, but will pay off in the long term, yet will your measure reflect that, or simply show that someone is spending time talking that he should be spending making immediate cash!

    I think that as much as possible, training evaluation should happen on qualitative and quantitative levels, as well as including the variable of time. To truly appreciate the impact of training (especially soft skills), you need to measure for several months after training what is happening, and to check the sustainability of the initial results. E.g. Motivational day sessions might have an awesome impact for a week, but what about the next month, or 3 months later – the initial results might just be a little deceptive.

    If the only thing you own is a hammer, then everything looks like a nail to you. Depending on the training issue, sometimes a measure of performance in terms of ROI will be the best measure, sometimes, the only way to truly find out if your training had the desired effect, interviewing individuals and their surrounding environment will be the best approach, I believe.

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  • #41575

    Des Squire
    Participant

    Good to see you understand what I am saying. Measuring the outcome over time is essential as is the need to monitor improvement. What is important is that each particular problem or issue dealt with may need to be monitored differently. So yes, in some cases interviewing the individual may be appropriate in other instances not. Once again, I stress the need for correct analysis of the problem, correctly identifying the correct and appropriate solution, measuring performance before and after training and establishing the correct and appropriate assesment tools. Enjoy your weekend.

    Thomas Hartig said:

    What an interesting discussion! This is a problem that has been inherent in the “training industry” for quite a while, if not since its very creation.

    The word “measurable” is guess is among the key words in this discussion, not only on this board, but academics around the world. How can we measure performance accurately and more than accurately, in a useful way. Nowadays, the problem is not really capturing data, but capturing the right data and making proper sense of it.

    Depending on the reason for training (ranging from simple “skills training” all the way to “team building, executive coaching, mentoring skills, interpersonal communication, etc.), I would propose different approaches to evaluating the effectiveness of the training – both quantitative (in terms of Des ROI formula) as well as qualitative (interviews, peer reviews, etc.).

    That the current business culture is highly focused on immediate solutions that will improve the earnings of the next quarter (or even for the next day, as today we seem to be even shorter sighted) does not necessarily make soft skills training any easier.
    Des ROI measure seems to come straight from the management books of Taylor. Sometimes, time spent in coaching or mentoring employees might cost money now, but will pay off in the long term, yet will your measure reflect that, or simply show that someone is spending time talking that he should be spending making immediate cash!

    I think that as much as possible, training evaluation should happen on qualitative and quantitative levels, as well as including the variable of time. To truly appreciate the impact of training (especially soft skills), you need to measure for several months after training what is happening, and to check the sustainability of the initial results. E.g. Motivational day sessions might have an awesome impact for a week, but what about the next month, or 3 months later – the initial results might just be a little deceptive.

    If the only thing you own is a hammer, then everything looks like a nail to you. Depending on the training issue, sometimes a measure of performance in terms of ROI will be the best measure, sometimes, the only way to truly find out if your training had the desired effect, interviewing individuals and their surrounding environment will be the best approach, I believe.

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  • #41574

    Hi Des

    Valuable discussion. ROI is often overlooked by HRD Managers. Quite frankly I think they are often scared to implement ROI, because they themselves are not always optimistic of results achieved. But indeed by implementing ROI measurement is the only way an HRD department can be seen as a strategic partner.

    In my opinion the only way ROI can be implemented is by running constant quality indicators in a company. Why do we want to fix something if it aint broken? Only when a discrepancy is investigated and it is established that it is indeed a training problem, should a training intervention planned. The quality indicators will then be used to measure ROI.

    I must admit that I see this very much outside Learnerships and even Skills Programmes. Maybe linked to unit standards, but in my mind training should address a specific problem and add value.

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  • #41573

    Des Squire
    Participant

    Hi Malcolm
    (For clarification purposes let me jus say – This is the first time I have posed the Question!!!! It just happens to be on the home page and in the HR Group)

    Your points are valued and are relevant. Let me summarise however what I am suggesting
    1.There is a need for pre course assement to identify specific problems
    2. There is a need to look at alternatives before deciding on training
    3. The real problems must be identified – we must treat the problem and not the symptom.
    4. We need to consider and decide on the outcomes we require and desire
    5. We need to assess over time the rresults of the training and establish whether or not change has taken place – consider the before and the after.
    6 If desired results are not evident then we need to ask why. This may well assist in identifying an underlying problem
    7. Calculate the ROI over time.
    This may not be an exact science and it is not intended to be. The objective is to assist those who would like a track to run and to offer assistance thos thos with an interest. As of your statement “it is obvious that there are only two vital factors that dictate the value of training. The level of commitment of the people attending and the value of the content Personally I could not disagree more.

    Malcolm A Birkin said:

    Hi Des
    You posed this question before, and I gave the reply that I am repeating below. The basic problem is the attitude towards people in SA companies. We are along way behind the real world. We continue to use very hard, mechanistic approaches that put people into little boxes so preventing them from reaching their full potential. As before the resoponses were varied and the question remained unanswered. Maybe the gap is just too big ?
    I suggested that attempting to measure the ROI on training is an exercise in futility.

    I It is an after-the-event measurement. What do we do if there is no ROI, do we ask for our money back and try to sue the training company for employees wasted time?

    2. lf we exclude all but very basic training, the value of higher levels of training (therefore the more expensive), do not reside in any particular piece of training The true value occurs ONLY when we combine that training with what has gone before it, and above all we can only realise the full value of that training when it is fully integrated into the daily operations of the company. When it is integrated and producing its maximum value, we cannot isolate it to measure it, and why would we want to try ?
    We know that the ONLY reasons why companies send people for training is to improve the bottom line so why try to measure bits of it when we want to upgrade the whole?

    3. Suppose that the training received was very good, but the ROI on investment showed a nil benefit. The cause was not the training, but poor levels of people management skills and the generally low levels of company development. So we are not measuring training at all in this case, we are measuring the company.

    4. We cannot order people to learn and we cannot order people to apply what they have learned. They have to WANT to do this. People who want to learn and apply what they have leaned will have high levels of commitment and those not wanting to do so will have low levels of commitment. So we have to ask ourselves whether we have created high levels of people commitment in our company, and if we have not done so, then why send people for training at all -to do so will be a complete waste of money.

    5. The second most important aspect of training is the value of the content. We need to know how up to date it is, does adequate proof exist of the value of the content globally not just here, is there adequate information given on how to implement what is being taught etc.
    So it is obvious that there are only two vital factors that dictate the value of training. The level of commitment of the people attending and the value of the content.
    Both can readily be assessed BEFORE the event so why on earth would we want to carry out a post-mortem after the event that is of highly dubious value ?
    Malcolm Birkin SCGI (Pty) Ltd consult1@lantic.net

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  • #41572

    Des Squire
    Participant

    Hi Bea
    The comments are relevant and appreciated. I agree the solution to a problem must be identified as a training need. However what if the problem is a skills deficiency, Would’nt this require skills training? A learnership may also be the approprite solution. So it may well apply here depending on the specific situation.

    Bea Coetzee said:

    Hi Des

    Valuable discussion. ROI is often overlooked by HRD Managers. Quite frankly I think they are often scared to implement ROI, because they themselves are not always optimistic of results achieved. But indeed by implementing ROI measurement is the only way an HRD department can be seen as a strategic partner.

    In my opinion the only way ROI can be implemented is by running constant quality indicators in a company. Why do we want to fix something if it aint broken? Only when a discrepancy is investigated and it is established that it is indeed a training problem, should a training intervention planned. The quality indicators will then be used to measure ROI.

    I must admit that I see this very much outside Learnerships and even Skills Programmes. Maybe linked to unit standards, but in my mind training should address a specific problem and add value.

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  • #41571

    Craig Woodward
    Participant

    Hi Tricia

    Thanks for your input.

    Your view is spot-on… Fact is it can be done however, my experience both in SA and UK has been that businesses struggle with this concept and aren’t necessarily interested in adding any calculation of ROI of training into their workload… and I hasten to add that too many HR & Training people are too scared of factoring it into their service offering. Because of it being too ‘new’ a concept (not understood), yet too often referred to in trying to be smart in the sales process.

    Fact is that it can only be considered when the business is prepared to work with the provider in trying to determine these measures. Des’ approach (discussion) is the only way to begin that process, by not only seeking to identify where the actual ‘areas of pain’ are; rather too, how they’re impacting the entire business. The ‘people cost factor’ can only be applied when dealing with one area of any business, but is rendered pretty irrelevant when looking at what the knock-on effects are for the rest of the business.

    I can go on-and-on here, but suffice to say, it’s largely the businesses attitude towards training and the measuring thereof that influences (to a greater degree) whether or not this measure is truly meaningful. In many cases, unless you’re (business and provider) serious about measuring ROI, talking ROI is just wasting time… for the sake of sounding clever…

    I do seek to introduce these measures wherever I can, because even though soft-skills is where my expertise lies, how they affect the business and what the overall outcomes should be is critical to my (our) programme success.

    The ‘warm and fuzzy’ mind-set needs to be removed from all corporate training and the focus needs to be on what it delivers, both for the individual as well as the business…

    Have a good day

    Tricia Jones said:

    Craig, you obviously have experience in trying to measure ROI in a “performance based culture” challenged company and that is why I really appreciate your view point! I whole heartedly agree with your statement about this whole thing being too warm and fuzzy for these guys to really appreciate the value add! At the end of the day though, I guess that’s what us HR/Training people are about and therefore inherently are by the very nature of what we do… Change Agents!!

    I’ll be honest though I’m still desperately in search of someone who has mastered the application of ROI withing a medium to large enterprise and even more challenging is to source a provider who offers true ROI measurement…

    Craig Woodward said:

    Hi Des,

    Your methodology makes absolute sense and is the approach we take (more or less).

    This does assume however that the decision makers are able to get to identify the actual problem (the truth), when it can be a compounding of small (knocked-on) faults? Tricia makes a valid point that in many cases it’s a perception and the degree of the perception varies according to how close (responsible) the person/people involved is/are. In most organisations, there’s so much protectionism, that to actually acknowledge this is to actually acknowledge that something is failing in the business and that means there’s responsibility (blame) that needs to ‘come out’. It’s then when self-preservation tactics kick in and all the difficulties arise.

    It’s here where third-party evaluation is most valuable and where the outcome (corrective interventions) should become the focus, focusing on the issue as apposed to who? Sadly, because of how businesses have been and are managed, getting to the truth means that you have to almost dismiss the ‘fear’ of any reprisal, something very unlikely in ‘dysfunctional business cultures’.

    This gets me back to our other discussion and where I believe many businesses should be focusing right now; on the creation of performance orientated cultures and thereby, performance accountability. This would allow for faster diagnosis and faster corrective action. So once again, it’s up to the business leaders to take responsibility and seek ways of ensuring their business is ‘functional’ and a place where everyone works toward the greater effectiveness of the organisation and where everyone benefits by this.

    Trouble is, this means changing mindsets and building trust… and that’s too soft and fuzzy for too many business people… and where ROI is even more intangible for the accountants…

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  • #41570

    Craig Woodward
    Participant

    Hi Malcolm

    Your comments are valid, however the world is moving in a direction that is motivated, or rather controlled, by ‘earnings’ and most shareholders want to see what they’re getting in return for every penny spent. This too means that the window to achieve such a return is getting shorter and shorter as expectations get greater.

    You are of course very right in saying that if you ‘sell’ on the ROI, then perhaps the reciprocal expectation would be that should be some refund on contract breach…

    If practitioners are going into companies on this, then some degree of trade off would I think benefit the relationship however, it’s again the organisations ability to measure (accurately) that determines whether or not there has been a return. Bottom line is that we’re not there yet and any real scientific approach would not benefit all applications or situations.

    The level of commitment you speak of is, I think even less tangible, as most training is deemed a day off (or at least a day out), until the value of the content is determined by the individual – horses and water stuff.

    I maintain that the effectiveness is not in ‘post course evaluation’, but ‘post course application’… maybe that’s what we should be measuring… but then we’re talking SETA stuff and in many cases the application can be different person to person.

    Des Squire said:

    Hi Malcolm
    (For clarification purposes let me jus say – This is the first time I have posed the Question!!!! It just happens to be on the home page and in the HR Group)

    Your points are valued and are relevant. Let me summarise however what I am suggesting
    1.There is a need for pre course assement to identify specific problems
    2. There is a need to look at alternatives before deciding on training
    3. The real problems must be identified – we must treat the problem and not the symptom.
    4. We need to consider and decide on the outcomes we require and desire
    5. We need to assess over time the rresults of the training and establish whether or not change has taken place – consider the before and the after.
    6 If desired results are not evident then we need to ask why. This may well assist in identifying an underlying problem
    7. Calculate the ROI over time.
    This may not be an exact science and it is not intended to be. The objective is to assist those who would like a track to run and to offer assistance thos thos with an interest. As of your statement “it is obvious that there are only two vital factors that dictate the value of training. The level of commitment of the people attending and the value of the content Personally I could not disagree more.

    Malcolm A Birkin said:

    Hi Des
    You posed this question before, and I gave the reply that I am repeating below. The basic problem is the attitude towards people in SA companies. We are along way behind the real world. We continue to use very hard, mechanistic approaches that put people into little boxes so preventing them from reaching their full potential. As before the resoponses were varied and the question remained unanswered. Maybe the gap is just too big ?
    I suggested that attempting to measure the ROI on training is an exercise in futility.

    I It is an after-the-event measurement. What do we do if there is no ROI, do we ask for our money back and try to sue the training company for employees wasted time?

    2. lf we exclude all but very basic training, the value of higher levels of training (therefore the more expensive), do not reside in any particular piece of training The true value occurs ONLY when we combine that training with what has gone before it, and above all we can only realise the full value of that training when it is fully integrated into the daily operations of the company. When it is integrated and producing its maximum value, we cannot isolate it to measure it, and why would we want to try ?
    We know that the ONLY reasons why companies send people for training is to improve the bottom line so why try to measure bits of it when we want to upgrade the whole?

    3. Suppose that the training received was very good, but the ROI on investment showed a nil benefit. The cause was not the training, but poor levels of people management skills and the generally low levels of company development. So we are not measuring training at all in this case, we are measuring the company.

    4. We cannot order people to learn and we cannot order people to apply what they have learned. They have to WANT to do this. People who want to learn and apply what they have leaned will have high levels of commitment and those not wanting to do so will have low levels of commitment. So we have to ask ourselves whether we have created high levels of people commitment in our company, and if we have not done so, then why send people for training at all -to do so will be a complete waste of money.

    5. The second most important aspect of training is the value of the content. We need to know how up to date it is, does adequate proof exist of the value of the content globally not just here, is there adequate information given on how to implement what is being taught etc.
    So it is obvious that there are only two vital factors that dictate the value of training. The level of commitment of the people attending and the value of the content.
    Both can readily be assessed BEFORE the event so why on earth would we want to carry out a post-mortem after the event that is of highly dubious value ?
    Malcolm Birkin SCGI (Pty) Ltd consult1@lantic.net

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  • #41569

    Des Squire
    Participant

    Hi Malcolm
    I was responding to your comment that “measuring ROI was an exercise in futility”. Over and above the committment and the content there are many other factors that must be taken into consideration. The various points were summarised for ease of reference. I also state that measuring ROI is not an exact science but it most deffinitely is possible if correctly approached, but that is only my humble opinion. If we want to live and work “in the real world” as you put it, then we must start somewhere and not just cast the suggestion aside. Is this not in itself an education process???

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  • #41568

    I am somewhat suprised by the attitute of some business executives and HR practioners towards the subject of ROI in training. My own point of view is that training is a strategic issue hence the strategy is based on the goals of the organisation of which to achieve some of the goals may require investment in training. There are many competing investment areas in the business and each must be linked to acieving the objectives of the organisation.

     

     If entrepreneurship and management excellence is “shifting resources away from an area of low into high productivity and reward” then we need to measure such movement of resources. Departments must demostrate their contribution towards the bottom line and the best way for a training department is to undertake and show the results of ROI in training.It must be seen as an opportunity for improvement when results show negligible contribution/return and not be seen as a failure. Surely if we dont measure what we do, we can not improve or at list have a reason to improve. Many just dismiss the ideea out of fear of the truth being revealed. The HR Practictioners need to champion the cause for chnage. This requires a mindset shift. It seems as it always take a very long time for “new” international concepts to be accepted in SA. It seems like we have above normal fear of change.

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  • #41567

    I certainly like the articles you’ve ( Des Squire)  written on this topic of ROI and I am still not getting it as to why there is so much reluctant to do the ROI? One of my company’s values statement reads”We are expected to be measured on what we do and what we say as much as how we do it” to this end, we try and measure as much activities as possible, including but not limited to training interventions. I just wish more companies can reject the fear of the unknown and embrace this seemingly straight forward principle “be measured”

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