Dr Louise Suckley is a researcher with Sheffield Business School who focuses on the field of organisational behaviour and undertakes impact evaluations of training programmes.
All too often when times get tough, staff training is the first thing to get cut. However, corporate training and development is a hugely important element of business growth. The difficulty for most businesses, as I see it, is justifying the cost as many see it as being too difficult to quantify your return on investment.
We know that every business leader recognises the importance of employee engagement and workforce development training programmes are a valuable tool in engaging and motivating staff. Vocational training courses not only inject fresh skills into the business, but also help to generate new ideas and revenue streams while inspiring staff to achieve more.
I realise that in the current climate there has to be a measurable return on investment for all staff training programmes. But the big question is how can that be evaluated?
In a guest blog for Sheffield Business School, Sue Blight, Head of Learning and Development at Dairy Crest, the UK’s leading dairy company, argues the financial return from training can easily be measured, but adds that the real value is the increase in confidence in the team.
Seeking an ROI from training goes beyond the corporate world and is a major issue in the public sector, given that they are justifying the use of public funding. In the NHS, which has been under intense scrutiny over recent months because of budget cuts and a number of high profile patient care scandals, staff training and development is high on the agenda.
Deneise Dadd from the Open University Business School explains the various NHS approaches to measuring ROI in her blog post for the Health Service Journal last year.
The ROI approach to measuring training and development
The Phillips ROI/abdi model is the one we have based our ROI/Evaluation approach on here at Sheffield Business School. The model was applied to learning and development first within the corporate context, before being used by international development and healthcare organisations.
This ROI approach to measuring training and development is highly regarded as one of the most comprehensive methods, as it draws on a number of established theories and evaluation models, including Kirkpatrick’s learning evaluation model and Phillips’ ROI methodology, theories of change and the logical framework approach.
This model is about building a chain of impact to create a link between the specific learning/ training activity and the impact or ROI, which could work equally well for coaching as it does for a more traditional staff training programmes.
Measuring impact with the ROI model of training and development
As Paul Stokes explains in his blog post on measuring the success of coaching programmes, the measurements are unique to each organisation, as their strategic objectives from the coaching will differ.
The approach we use is about building a chain of measurements to try to demonstrate that impact. This can arise from any type of training intervention from leadership and management programmes that develop coaching skills and workshops that develop customer service skills or machine operation, to those that develop advisory skills in health issues such as weight management or diabetes.
In the example of building coaching skills in managers, a business could use this as a development tool, which will result in the coach or coachee being more confident to take on more leadership responsibility or making decisions themselves rather than escalating them to the next level of management.
All of these different impacts have organisational-wide financial implications attached. For example, in the case above, a consequence would be that recruitment to leadership roles can occur from within the organisation, rather than externally (saving on external recruitment consultancy fees), and the organisation also saves senior leadership team time from decisions not needing to be escalated.
The five levels of impact for the ROI model
(1) Our model starts at the lowest level with Engagement – checking that the individuals feel the training or coaching is worthwhile. We speak to them to ensure they are learning something new and that they see it as relevant to their role. We also make sure they are committed to taking actions from what they have learned.
(2) Following that is Learning – checking or testing that they have developed new knowledge, skills, attitudes and that they have the confidence to apply it: this could be through a pre- and post-skills audit or a scenario/simulation test of their coaching skills.
(3) Application and Implementation is next - Are they demonstrating changes in behaviour? This could be done through pre- and post-360 feedback (interesting discussion on 360 feedback on Training Zone) or evidence that they have completed the planned actions from their coaching sessions.
(4) Business Impact is next. These measures are agreed with the business before the programme starts and can involve HR, Finance, IT departments (as Paul Stokes suggests – this is about the involvement across the organisation). Credibility comes from using the measures collected by the business already rather than starting from scratch, and reaching an agreement about what can be tied to the programme. If work based projects are used in the learning solution, the financial impact of these can also be included at this level. The hard impacts are reported at this level where a financial figure can be applied so it can be used to calculate the ROI. Soft measures are reported separately. Isolation tools are also agreed upon with the business and applied to the impact measures before the ROI is calculated (which also ties in with what Paul has written).
(5) Finally, ROI is then calculated. Fully loaded costs of the programme are gathered (cost of programme, participants’ time and on-costs) and the Net Programme benefits are calculated: (Benefits – Costs)/ Costs x 100
Developing talent and your business
By employing a robust evaluation model, you cannot only ensure you maximise the return on your investment, but you can also ensure your business is improved way beyond the actual training programme.
An evaluation model like ours forces a business to take stock and identify its needs. In addition to highlighting the skills it is lacking, this process can also help to identify new opportunities.
The added bonus of assessing participants’ skills as a baseline measure means the training can be tailored to suit your needs and also makes sure the people who take part in the training are engaged and determined to succeed.
I’d welcome your thoughts on how you identify your training needs and how you measure the return on investment.
Sheffield Business School has just reworked its ROI and Evaluation offer for our Corporate L&D programmes. If you’d like to find out more about our service offer for businesses, click here.