Improvement or optimisation?

Does investing in training deliver a return on investment to your organisation?

Training return on investment or not?

As with most questions like this, there are many schools of thought. The first difference is between those who promote measuring training return on investment and others who argue that trying to measure it is pointless.

The mainstream view holds that measurement can help evaluate some kind of return on investment (RoI), although factions argue about the best way to achieve this. Another perspective accepts that, while evaluating RoI may be training’s holy grail, trying to measure it may be pointless. According to Personnel Today, they argue that trying to measure RoI on learning is not cost-efficient, the formulae aren’t robust and most organisations are not even interested in the topic.
Possibly the best-known mainstream approach to training evaluation is Kirkpatrick’s four levels. Essentially the levels are a sequence of levels of evaluation for training:

1. Reaction – participants views often recorded on simple multi-choice questionnaires (often referred to as “smile sheets” or “happy sheets”) – usually at the end of a course or session.
2. Learning – the increase in knowledge, skills, or competence. This is usually assessed during the course, either in practical work or tests.
3. Behaviour – how well delegates transfer learning to their work. This stage seeks to assess changes in behaviour due to training. It may form part of a wider culture change initiative. This usually happens a few months after the training, possibly by interview but more usually some type of observation.
4. Results – the final outcomes from participation in a training program (usually financial, time or performance-based. Particular industries might focus on specifics such as safety for example)
Some practitioners find it difficult to move beyond Levels 1 and 2 when the most valuable information might exist at the later levels. Kirkpatrick-certified consultants “start with the end in mind,” moving back from Level 4 to start with the desired results before designing and developing the programme.

JJ Phillips proposed the addition of a fifth level, to measure RoI which is achieved by putting a value on the achievements that are found at the fourth level and comparing them to the total cost incurred in providing the training.

A provider’s view

From our point of view, as training providers, those in the second school of thought who think measuring RoI is pointless, might only be interested in how well a training course is received by the trainees, so evaluation will typically be based on questionnaires that ascertain the delegates’ perceptions. The mainstream group, however, may ask a training provider to demonstrate a return by using metrics and formulae that they approve of, and these might be different for each organisation, which is a bigger challenge.

Which school of thought is right?

The answer is probably that both viewpoints are valid to some extent and a more specific answer will depend on a combination of factors that are unique to your organisation; however, let’s consider some of the evidence that is available.
An important issue must be the quality of any training. With mandatory and vocational courses, the content and syllabus will be well established, so any questions of quality will tend to be focused on the method of delivery. Management training is different, however. The delivery is still important, but several authors have argued that the content of management training is influenced by fads, fashions and theories peddled by management gurus that aren’t supported by any evidence that they work. Even top business schools such as Stanford and Harvard have been criticised for teaching pseudo-scientific management models.

Investing in existing talent is a strategic issue for organisations, according to research by the University of Portsmouth on behalf of the Chartered Institute of Personnel and Development. Their report explores both qualitative and quantitative metrics and introduces the idea of moving from measures of return on investment to return on expectation, which could be difficult to define.

The Oxford Handbook of Evidence-Based Management contains a simpler example of how the return on investment of a bank’s leadership development programme was measured. Half of the sample of managers were randomly assigned to receive the leadership development and the remainder was left as a control group with no training. The people who worked for the managers were surveyed and the results showed increases in the charisma, intellectual stimulation and consideration of the managers who were trained compared to those who weren’t.

As suggested at the beginning the answer to whether investing in existing talent improves skills and loyalty is not straightforward, but it becomes clearer by using an evidence-based approach.

This is an update of an article that appeared in the New Statesman magazine in 2014.

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