Dr Phil Rutherford
Return on Investment
 
HomeConditions of useAbout MeMy philosophyYour BrainAbout CBTAbout VET systemsAbout ROIAssessment and RPLPublicationsProjectsFavorite LinksContact Me

How do you know training works?

A question that I am often asked is how trainers and organisational development specialists can determine the impact that training has on an organisation's bottom line. In particular I am asked how any return on the investment made in training (and education, development or self-development) can best be quantified. These are very good questions, and for those people anxious to ensure that their role in an organisation is seen as making a vital contribution. But the trouble is that we can't quantify organisational achievements against training activities. There are simply too many factors which contribute to whether or not an individual or team makes a positive impact on the achievements that an organisation makes - and not all of them have anything to do with the training that these people receive.

Despite the many gurus and government sponsored researchers who contend that training results in a positive return that can be measured in large percentages or thousands of dollars returned to the company, there is no way in which a training course can be seen as anything more than a factor in such outcomes. 

Sure, turning a widget better, or more often, or to a greater tolerance, might result in an immediate effect which could be measured in dollar terms, but so what? Who is going to stick their neck out and say that the trainee will continue to do this after the training staff have gone home? Furthermore, who is going say that turning this widget to the required tolerance or whatever is not going to cause further problems down the track?

For example, teaching somebody to clean up after themselves might save the company money in the immediate term, but if the cleaner's union takes their members out on strike as a result then where are the long term savings?

The thing is, training only works in the immediate term. Over the longer term there are any number of events, factors and influences which either change the way the trainee does things (including the warning, heard too often, when they return to the workplace that: "That's okay in training, but this is the way we do things around here!"), or sees no change occur at all. And if this is the impact you're trying to achieve, and you can prove that your training course has achieved it, then you've come up with a positive ROI. But somehow I think you are the kind of trainer that is looking for positive, real, observable and therefore measurable, results.

And when you think about it, the solution is so obvious that it could be termed a BGO (Blinding Glimpse of the Obvious).  And here's why . . .

There are two issues often overlooked in the literature about ROI: Firstly there is a failure to point out that quite often change comes about in an organisation when no training has occurred, or even when the wrong training has been conducted and people get on and do the job correctly anyway. The second issue is the question of what, exactly, has been the catalyst for change? Is it the training event or is there some other element responsible for what goes in an organisation?

First things first: Does training cause positive change?

We know that negative change can occur when the right people are trained to do the wrong thing, or the wrong people are trained even though they may be trained to do the right thing. We also know, thanks to the Hawthorne Experiments, that positive change can occur even when the focus is on some other part of the organisation. In other words, change occurs even though the right people received the wrong training, or the wrong people received the right training, or people who were not part of the group being trained take it upon themselves to do their work differently. It can be either positive change or it can be negative, but change happens and often for the darndest reasons. The question is, why?

Because change - positive or negative - occurs regardless of what you do it is difficult to pin down exactly why it occurs and how it was caused by training. Furthermore, unless your aim is to have a person do something differently at the end of a training course (note - 'at the end', not 'as a result of') then neither you nor I, nor any of the so-called experts, can guarantee that this person will have any far reaching impact on their employer's bottom line. We can't even guarantee that they're going to apply their newfound skills and knowledge back on the job so how can we have any confidence that we're going to have an impact on the financial aspects of the organisation as a whole?

The answer can be found in whether or not the purpose of the training has been achieved. The ‘purpose’ of a training event is not the desired training or learning objective. The ‘purpose’ of training can be something as simple as giving staff something to do during quiet periods, or (as is too often the case) carrying out the training because it is legislated that the organization does so. Most often, however, the ‘purpose’ of any training is to enhance the organisation’s bottom line, its profits if you prefer. And it is this bottom line that is measured when we conduct an ROI. The trouble is, the traditional approach to training and ROI analyses can’t show a link between training/learning objectives and the training purpose and here is why so many of these approaches don't work - regardless of the fancy numbers the analysts display during their PPT presentations.

When the link between the two is severed the purpose of the training won't be achieved even though the learning objectives may have been. For example, if the purpose of the training is to increase profitability then unless the people who can actually impact upon that profitability, or the skills that they are taught are those which have such an impact, then nothing will change. Of course smart people will know where the shortfalls have been in their training and they will teach themselves what they need to do to achieve the overall purpose of the training (and, remember, the training objectives may or may not have been achieved) so profitability may occur anyway, but this has not been as a consequence of achieving the training objectives. In fact research has shown that in some professions up to 60% of the skills and knowledge needed in the workplace have NOT come about because of training - they've been learned, on the job and to the standard required in their particular workplace. It is for this reason that many organisations are successful even though their people have never been trained (by the organisation).

Good people just get on and do good things - include reviewing on an ongoing basis what they know and can do, what their job demands that they know and can do, and how to bridge the gap between the two. The thing is, is this what we teach them when we run training events? Sadly, the answer is quite often no which is why some organisations never progress even though their training budget is well stocked each year. 

It is an historical fact that good organisations have gone out of business even though they have invested heavily in training. Look at the automotive industry in Australia. This industry has been one of the largest contributors to the national vocational education and training system since its earliest days but over the years has laid off so many people that it is a small wonder that we have an industry left. Even now there is talk of protecting the industry through 'encouraging' consumers to trade in their cars every 10 years. Clearly the training that has been conducted in these industries has either been wrong or it has been aimed at the wrong people. Either way financially they are going backwards even though they are strong supporters of the national VET system and spend hundreds of thousands of dollars each year on training. Other industries can benefit from heeding this leasson. 

Second point: What exactly is the catalyst of change occurring as a result of training?

Something that ticks me off in every discussion about training ROI is the way people concentrate on the effectiveness of the training event and not the trainer. It is almost as if they're saying that to be trained is to be competent, and it really doesn't matter how the training comes across. If the training or learning objectives are achieved then that is all we need to know.

This is bunkum. In fact, by concentrating on the training event is to overlook the critical role played by training functions - that is, the collective competence of the training manager, learning supervisors, trainers, mentors, coaches, training environment, admin staff, training resources, handbooks, manuals, libraries, etc. etc. And yes, scoff if you will, fresh biscuits at morning tea time and air conditioning that is ‘just right’ do play an important role in whether or not trainees are capable of acquiring and implementing new skills and knowledge back on the job.

We just have to understand the role that all these play in changes that occur in the workplace and the positive return that organisations can achieve through their intervention.

Up until the advent of the competency-based movement in the late 1980s I used to struggle with a way of more accurately identifying the link between training/learning objectives and the business and strategic objectives of the organisations for whom I worked. It was while I was working in the UK on their NVQ system that I was hit by a BGO (see above) after which the link between the two was so obvious that I'm surprised I couldn't see it before then.

The link is not direct (which was the problem I was trying to grapple with) and unless you're experienced in strategic planning you might not see it at first, but it is there. And, yes, it is observable and therefore measurable, but more on that shortly.

What I found then, and what I work through with my clients now, is the way in which training/learning objectives can be tied tightly to an organisation's vision and through this to its business and strategic aims. This means that once the training/learning objectives are being achieved then achievements in the business and strategic plans follow, and these can be observed and thereby evaluated and measured. It is all in how the training/learning objectives are defined and the role that the entire training function plays in achieving them.

The simplicity of this system really surprised me - but not as much as the fact that all of the discussions on ROI overlook it. What's more, it isn't as if this approach is a state secret or anything. When I was pursuing my Ph.D I found mountains of information about it, but not in the literature which discusses training or education. And that came as a huge surprise. It is as if trainers and educators forget that their client group doesn't read the same material as they do - just as, for example, a dentist who doesn't take any notice of what his/her clients eat. (But, then again, modern and so-called ‘world best’ training for trainers today doesn’t encourage this anyway.)

I started applying this system at both national and organisational level and was pleased to find that being more careful about the way in which training/learning objectives are written (and, in VET systems, the competency standards which provide invaluable guidance for the development of such objectives) I was able to both directly align them with the business and strategic objectives of governments and businesses, and demonstrate where and how they were being achieved. In other words, I was proving that there is an ROI in training - it is just that it can only be proved by ignoring the traditional ways of doing it. 

I'm not going to reveal any more here about what I do because, after all, I am a consultant and get paid very well for providing guidance on this. What I will say, though, is that the traditionalists (ie, those who continue to stick to Kirkpatrick's and Phillips' models) are very quick to raise objections about the way I've gone about doing things. They try, generally using quantitative research methods and data analysis, to prove that Kirkpatrick's Four Levels of Evaluation and Phillips' ROI can generate numbers to prove that a positive ROI is being achieved as a result of training. And the business accountants might be greatly impressed ('cos they all love numbers), but if the bottom line isn't improving and the company isn't moving forward then nothing has been achieved. Worse - if the company isn't moving forward as fast as, if not faster than, its market rivals then it is actually moving backwards. Just ask the Australian automotive industry.

But fortunately, for me and my clients, we have been able to conclusively prove how my approach works and their's doesn't. I’ve also been able to save – or generate – many millions of dollars for my clients while doing so.

Then again, I am very rarely asked to prove that my approach to training works. The results are so obvious.

Now, if I can just get more people to listen Smile.



*************************************** 

If you would like to learn more about how I can help your organisation save money or generate greater profitability then please give me a call on . . .

Mob: +61 (0)413 310 818

Email: phillipr@3gpm.com

Copyright P D Rutherford 2009. All rights reserved.