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    July-2014  


How to Determine the ROI of Training Programs

As today’s business environment grows increasingly complex, forward-thinking leaders realize that creativity, candor, authenticity, and relationships are among the most important competencies needed for any organization.

According to Halley Bock, CEO and president of Fierce, Inc., HR executives are looking for training programs that teach courageous, transparent, and relationship-enhancing communication and leadership skills.

To implement these programs, leadership must deliver proof of the return on investment (ROI), just as they would for any other expense. While proving ROI for leadership development and training is complicated, it is possible when a clear and practical process is put in place. It is a matter of measuring the impact of the training on already existing benchmarks, such as customer satisfaction survey results or the rate of employee turnover.

Successfully measuring training ROI can seem more difficult than it is for hard expenses, like a new piece of equipment or a recent hire. One key reason is that uncertainty exists around what to expect from the training program in concrete terms that directly relate to the organization’s strategies and goals. In addition, organizations often have no base against which to measure the changes training will bring about.

To overcome these obstacles, a successful ROI process needs to have four key components:

  1. Evaluation planning – a clear understanding of what will be measured, including hard and soft data.
  2. Data collection – a solid, specific action plan for gathering data, e.g., sales or production data, employee or customer surveys, etc.
  3. Data analysis – a practical model for measuring the data that makes sense for the organization.
  4. Developing ROI – converting data to monetary value, as well as accounting for intangible measures.

All of these phases are crucial, and they especially rely on careful attention to the first component: evaluation planning. It is during this phase that an organization defines the ways that training programs can enhance business results.

Here are three examples of ways to measure tangible ROI from skills learned through training programs:

  • Better delegation increases productivity: After learning stronger delegation skills, a senior leader of a global Fortune 500 company gained 30 annual hours of returned time when she delegated a task to which she no longer provided any value. If 75 other senior leaders in this global corporation achieved the same results, the company would gain an additional 2,250 hours per year.
  • Skillful coaching boosts efficiency: After a manager of a global manufacturing company realized she was stuck in “advice-giving mode” and learned how to coach more effectively, she had saved more than four hours a week. That means she saved 208 hours a year.
    If this manager earns $70,000 a year, or about $33.65 an hour, she redeemed time equal to ten percent of her total salary.  
  • Candid conversations lead to financial rewards: During a training program, a well-known senior living facility learned a new way to hold team conversations, providing an inclusive approach to conducting meetings and ensuring all members participate and offer their perspectives. An executive director reported that the newly learned conversation skills saved the company more than $321,000 in the first six months alone.
    Prior to the training, teams were not working well together and weren’t capturing all possible reimbursements. This new communication model allowed employees to delve into problems, gather more ideas, and find cost-effective solutions.

Research continues to show that engaged employees – employees who trust leadership, feel valued, and have authentic work connections – drive higher customer satisfaction ratings and boost the bottom line. As a result, more and more companies are going back to the basics and recognizing the benefits of training programs. Brushing up on key competencies, like transparency and candor, will build trust and enrich relationships – leading to better business results.

Halley Bock, CEO and president of Fierce, Inc., a leadership development and training company that drives results for businesses by improving workplace communication. www.fierceinc.com

 


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