RoI On Training: 3 critical questions to help you get the maximum benefit

While employee training is a crucial part of running a successful people strategy, cost can become a major barrier. This often results in organisations allocating resources elsewhere.

Business and HR leaders want to know whether or not the money spent on training will be worth investing in ? This means gauging financial returns and aligning training objectives to organisation’s goals.

Return on Investment (RoI) will help determine the tangible benefits of training, and also help them understand how to optimise training investment – i.e. which training will yield maximum returns and allocate funds accordingly

YellowSpark had a free-wheeling chat with domain expert, Payal Gaglani Bhatt, the Founder and Director of The Little Gurus – an HR and L&D consultancy in Dubai, UAE.

She rightly pointed out that before any organisation gets into a conversation about training – the main question to ask is WHY?According to Bhatt, training can no longer be seen in isolation. It is a critical piece of a larger jigsaw puzzle.

Imagine visiting a doctor and demanding headache medicine. Ridiculous, right? Bhatt compares this to trainers who immediately agree to training requests. She argues that understanding the “why” behind the request, like a doctor diagnosing the cause of a headache, is crucial for effective training.There are 3 specific questions recommended by Bhatt which should be asked to maximize ROI on training. Let’s explore these further:

What problem will the training resolve?

“Any kind of learning intervention, whether we call it a training or a workshop or a skill enhancement we are still looking at what is the pain point,” Bhatt insists.
This expands the scope. It’s no longer just the world of training. The training piece is very very small. And in training, you’re just transferring something from the minds of a trainer into the minds of a learner, which is okay if it’s knowledge but it doesn’t work if it’s skill, because skill needs to be practiced, it needs to be rehearsed, she explains.
“You need to give someone a chance to fail, receive feedback, correct, tweak and then enhance. It hinges on the purpose of it,” she says.
Sometimes, the answer is when you need a particular knowledge enhanced, or a particular skill set, it is just about getting your systems right or process right.

Where is the value?

For a lot of learning and development (L&D) consultants one of the biggest issues is proving value of the training. So if you have attended a training it doesn’t necessarily mean you become a better communicator. “One can’t learn leadership by going on a training programme – all it does is open my mind up to something. So we keep going back to what is it you want to do, what is the problem you’re trying to solve, where is this issue coming from? What would make you feel like yes I’ve achieved this?,” she said. A lot of what you can offer as a solution is a whole range. It could be skills, it could be knowledge.
In a crux, the three ways training can add value:

1. Increase revenue
2.  Reduce costs.
3. Avoid costs – by way of law suits, noncompliance, penalties or fines.

Training should be able to link back to at least one of the above in order for the organisation to be able to see the benefit.

What are the quantitative ways to assess skill improvement or performance?

For this, Kirk Patrick’s model of evaluation is effective to show the impact of training. Different stakeholders will want to see different impacts. There are three stages.

1. The first layer is to collect reactions to assess impact, and how you try to make improvements. “The initial level is to assess people’s reactions – very basic, but leads to improvement. For instance, if the trainer was not good, what do we do to improve it? If the venue didn’t work, how do we enhance it?,” Bhatt said. This doesn’t test learning at all. “All it tests is whether people are happy with things or not, and this is where basic hierarchical needs come in – was the food good, temperature good, venue convenient etc.,” she said.
2. The next layer is a little more detailed – what the trainer wants to know. Did learning take place? The ideal way to do this is either to have interactive sessions during the workshop – giving them quizzes, small tests, case studies etc, that demonstrate their ability to apply that learning. “The second stage tests the impact of learning. The idea is people should be able to demonstrate the knowledge they have gained.
3. The third stage is what companies are interested in as they have a clear monetary investment. For them it is a transfer of learning and whether they can apply their learnings to the actual workplace. Are they seeing behaviour change? If people go on an accounting course, are they making less errors while computing? Transfer of learning is both qualitative and quantitative. “You want them to make fewer mistakes or demonstrate sales. That transfer of learning is where the organisation really cares. This layer determines the return on investment,” Bhatt explained. “It is very difficult to be exact – human beings and organisations are quite complicated so you can’t isolate training and relate it to RoI.

What you can do is, for the entire company’s training budget see what impact you’re having – all the training and learnings put together,” she said. So, at each stage, the layer of impact changes, what you’re measuring changes, why you’re measuring at each stage also changes, and the timeframe for each one also changes. Reactions can be taken straight away – on the day of the training. Learning too, can be assessed immediately or an assignment can be sent within a week. “Ultimately, for long term RoI on investment, the L&D department of a company will have to show some more evidence of how the work you’re doing is adding value,” Bhatt said.

Learn through example: Intended benefits vs actual benefits

Bhatt narrated that one of her clients, a company that sells point-of-sale (POS) machines – credit card machines at malls, super markets and so one, wanted to run a training on the sales negotiation process for their 18-member team. They believed their team was not good at negotiating and were keen to improve sales.

“They said in a client-customer transaction they wanted to get better profits. So, we started the training, which was entirely to improve negotiation skills for people who are in the front end of sales. As we started, we found they were all brilliant salesmen who were all hitting their targets – the problem was the target was not correctly set. This was a fault of the managers,” she said.

While the sales team got a lot of orders, the rest of the team didn’t know what was promised at the end of sales, which led to customer dissatisfaction. So, the business was not getting repeat customers. Essentially sales was not an issue, but the completion of sales was an issue so they needed to have better communication.

“What started out as a sales and negotiation training with an objective to improve profits ended up being a series of training interventions – about 10-12 of them – where we spoke about how to build a team, how to communicate openly, what assertiveness means, how to resolve conflicts, how to trust. None of these were part of our original conversation on sales and negotiation,” Bhatt ironically pointed out.

“Within the first three sessions they were so much closer as a team, talking more clearly, language use was consistent, terminology was stabilised, so all these things are benefits of having been on a training – but was it a sales and negotiation training that achieved it? Probably not,” she inferred.

A lot of times the intended benefits and actual benefits may vary significantly if you haven’t zeroed in on what problem you are trying to solve. In this case the benefits are many – not only were they able to get what they wanted, which was to improve profits but so many issues were sorted along the way. They became leaner, more efficient, better communicators, more trusting, which are all softer skills.

Risks and challenges

1. Study of a cost vs benefit analysis of a learning and development programme is essential. People tend to be short-sighted and narrow-visioned when it comes to training. A lot of companies don’t look at longevity.
2. Companies often see training as an isolated intervention, whereas it is never isolated – what happens before and after is as important as what happens during the training. A lot of benefits come only afterwards so sustaining and continuing to build on that learning is key.
3. A poorly conducted needs assessment doesn’t address actual skill gaps. It is therefore important to carry out a robust need assessment even before addressing the gap. Applying a systemic approach is essential.
4. Logistical issues, inadequate training facilities, scheduling conflicts can hinder smooth delivery of training programmes.
5. Making sure that the training ties into organisational goals ensures securing training budgets

Understanding the risks and challenges can enhance the RoI of training programmes and achieve better outcomes for both employees and businesses.

Ultimately, companies that offer L&D opportunities, career pathways, growth, will have people who are more motivated and engaged, and will therefore tend to stay with the company longer. Otherwise, people are more likely to see this is a one way street, where there’s only giving and not getting anything in return. And they will switch off. It is something an organisation can measure in the fourth layer of Kirk Patrick’s evaluation model. While this could be one of the important factors, retention and engagement are not solely driven by L&D. But it can definitely have a positive influence.

At YellowSpark we customise, design and implement suitable L&D interventions. To know more write to us at contact@yellowspark.in

In Conversation with: Payal Gaglani Bhatt is the founder and director of The Little Gurus – an HR and L&D consultancy in Dubai, UAE, with over 20 years of experience.