How can I measure the business impact of employee learning and development?
Continuous learning is essential to the ongoing success of any organisation. It allows employees to cope with and also excel at increased job demands – allowing businesses to achieve excellence and maintain competitive advantage. So it comes as some surprise to find that many organisations don't measure the impact of their staff training and development on performance.
The reasons include lack of resources, confusion about what should be measured and lack of staff who understand measurement methodologies. Many simply don't think it matters to know which training is working best or having most impact. Also, many managers in charge of training simply don't see measurement as a priority.
However, as the saying goes; if you can't measure it, you can't manage it. And if you can't measure or manage it, you may well ask yourself exactly what the point is in investing in it.
The arguments for evaluation of training are compelling, including: validating it as an improver of performance and profitability; justifying its costs in times of belt-tightening; improving future training design and to help in selecting the most appropriate training methods for your needs.
So where to start measuring how successful your ROI on training is? Here's our ‘how to' guide.
- Measure your average training time for each employee
Start by totalling your previous year's training time costs. Then simply divide this by the number of employees to find training costs and times per person.
- Check the training given against the capabilities your organisation must prioritise to improve performance
The drivers giving rise to training needs will vary widely with each organisation and may include: strategic priorities; legislative demands; qualification and certification requirements; customer satisfaction surveys; stated staff needs and feedback from appraisals. Is the training you offer giving you the best results in terms of business performance?
- Choose your criteria for measuring training success
Depending on your business, these can include any combination of the following:
- Direct costs incurred as a result of a training programme e.g. trainer fees and travel expenses.
- Indirect costs such as hiring rooms and equipment, providing temp or freelance cover for staff attending training.
- Trainee feedback , usually in the form of question sheets. Their positive feedback is essential because if they had a negative experience of the course, they will be unlikely to apply anything they learned to their work.
- Examination success . If the driver for the training was qualification or certification requirements, obviously its success can be measured objectively using a test or exam passes.
- Performance change or enhancement. Depending on your field of operations, you can analyse an array of indicators to measure the impact of training on performance: cost per lead, cost per converted lead, pitch success rates, call out times, productive hours, enquiry response time, customer complaints and so on. To be certain that positive improvements are attributable to training, take a baseline measurement of the same criteria before training, or with a control group of employees who have yet to be trained.
- Increased productivity. Is additional output being achieved with the same or decreased levels of effort after training? Is your staff turnover rate dropping? Retention of staff, for instance, is influenced by many factors. Use exit interviews to measure whether training was a factor. Again, it would pay to take a baseline measurement before training or with a control group. Consider tracking the success or otherwise of employee training by creating a scoring system whereby employees are graded by supervisors in live situations before and after.
- Improved income generation. Depending on the type of training, it may lead to new income generation such as increased sales or an enhanced success rate in winning competitive pitches. Once again, it would be advisable to take a baseline measurement before training or with a control group.
Measure at employee and business levels
Employee level: with the input of relevant individual managers, draw up development plans that describe the core competencies required in any job and enables measurement of the individual against this. This is a vitally necessary part of the appraisal process. 360 degree measurement should combine the individual employee's perceptions as well as those of their managers and colleagues. This could then be used as a straightforward measure of before and after success relative to a specific course.
Business level: this is undoubtedly a more tenuous measure, perhaps relying more on inference than actual stats. The challenge is to turn it into something more concrete. You can achieve this by taking your training spend as above and expressing it as a proportion of your wage expenditure. For instance, you may be investing the equivalent of 3.5% of your wage bill on training, while achieving a 40% improvement in competence. The challenge for each succeeding year could then be to increase your organisation's competence development without spending more on training.
Finally, calculate your ROI
Assuming that training benefits will accrue over time, decide over which period you wish to measure your percentage return. This may be a time period that fits with your planning cycle e.g two years. Or you may prefer the period to match the lifetime of the benefit i.e. the time the employee stays in the role where they apply the skills taught. In the final analysis, it is perhaps easier and more powerful to look at payback period as a measure of ROI. Here, you calculate how long it will take for the training benefits to match the training costs. This means no arbitrary benefit period needs to be set.