Measuring ROI: A Lifeline for learning and development managers (2)
The process of measuring ROI can be summarized in these 6 steps:
Define the business need
Whether it is to improve the skill of the sales force in closing new deals or their ability to manage existing relationships, it is important to ask; what business challenge do I want to address?
Determine the programme solution
There are a number of different interventions that can address business needs, only one of which is training. To achieve a positive ROI, it is important to determine that the business need can indeed be addressed by the intended L&D intervention and that training, for example, is the appropriate solution.
Determine the training outcomes
Always refer to the business need the training is intended to address. Identify the outcomes the training should accomplish and ensure they are in line with the business need. Ask yourself: what will the training ultimately achieve? What will be the outcomes for the trainees and for the business?
Design the training programme
Irrespective of whether you are designing and delivering the training in-house, using consultants to develop the programme, or sending an individual or group of employees to an existing online or in-person course, you need to understand what type of training is compatible with your target audience, what type of activities should be included, what support is available or should be in place after training to ensure learning is transferred to the workplace and finally if the design would achieve the outcomes you need to achieve.
Define measurement metrics
This is the all-important question; ‘How will success be measured?” In defining metrics, you need to revisit the training outcomes in step 3 above. For example, if the intended outcome of a training programme is to close new sales deals, the metric to measure success could be: the number of new sales deals closed. Beyond defining metrics, it is just as important to determine how the metrics would be tracked.
Execute the training and Measure ROI
After the training, track the metrics defined in step 5 above. However, keep in mind that results would not be immediate as participants need time to apply the skills and knowledge acquired. Results could be measure at predetermined intervals, say quarterly, or even monthly, depending on the programme.
It is also important to consider that business results would not be solely a direct outcome of the training, there are other factors that contribute to business results in the period after training hence the need to carefully isolate the real programme effects on the business outcomes.
A New Paradigm
The ROI methodology is process driven and is in itself relatively straightforward. However, implementation could be a major paradigm shift for many organisations; hence Learning Managers must take care to incorporate key steps that will assure success.
Create awareness for ROI in the organisation
For a successful implementation, it is important to create awareness and carry all stakeholders along, this forms part of the cultural change process.
Build ROI Capacity and Expertise within the organisation
To ensure sustainability, it is important to build internal capacity of the L&D team on ROI competence. There are 9 skill areas for building competence in implementing ROI and these are:
Planning for calculation; Collecting evaluation data; Isolating the effects of training; Converting data to monetary value; Monitoring programme costs; Data analysis and ROI calculation; Implementing the ROI process; Providing internal consulting on ROI; Teaching others the ROI process
Allocate resources for ROI Measurement
Implementing ROI has to be deliberate and not accidental. It involves serious planning and dedication of resources. Typically organisations allocate 3-5% of the training budget, as well as a significant amount of time, implementation of ROI measurement.
Start with a pilot
Implementing ROI is a delicate process; hence it is advisable to pick one learning programme e.g. a training course as a pilot to test the implementation methodology. This ensures the L&D team is not spread thin and no step is missed along the way.
Communicate ROI results to the entire organisation
Communicating the results is important, even if it were a negative ROI, to reinforce a paradigm shift in the organisation and lock buy-in. What is more important is that people are carried along and know the outcome of the process.
Flesh up plans for future training programmes with a view to calculating ROI
ROI implementation is a process improvement tool meant to improve design of learning programmes with a focus on the business outcomes. Upon successful implementation of the ROI methodology, the ROI process should be infused into the L&D Standard Operating Procedures (SOP); by so doing we would have better designed programmes that will achieve better business results.
Take action
Measuring ROI may very well be the lifeline many L & D departments need. The extent to which organisations will be willing to fund learning, and the regard in which it is held, will depend on the extent to which L&D professionals can convincingly demonstrate that learning initiatives deliver on management’s expectations for improved performance.
Bolaji Olagunju