The fallacy of ROI in L&D?

Through the life of an L&Der, there inevitably comes the question, what’s the ROI of training? It’s an interesting question, because something which is typically about behaviours and personal development is being forced to conform to conventional measurements a business is used to. And, importantly, it’s a valid question. A business needs to know they are gaining benefit from the overhead cost that someone (or team) is paid.

But I think what’s typically put as the ‘proof’ is a fallacy. Here’s what I mean. What’s the value you put on the relationships you build at work? When most companies will encourage a collegiate work ethic, there’s no actual evidence to suggest this makes a difference. Not really. Employee engagement surveys may suggest a workforce is happy or engaged or feels listened to. But there’s little to suggest having a collegiate atmosphere is any better than having a workforce which is mercenary. As long as the job gets done, and no one dies, and environmentally things seem to be amenable to helping people do good work, isn’t that what you need?

Abdi Ltd have a robust system of working out ROI, and it’s a strict methodology you have to follow to show the true cost of training and what this means for the business. It’s certainly a useful tool and system, I just don’t think it gives a true and full picture of what needs to be considered.

So why the focus on collaboration, sharing, learning and development, and all things intangible? Because if the self-help books are anything to go by, these are the things we should be focused on, right? And in particular, the books from the successful millionaires/billionaires seem to suggest it’s the soft things in life that make the difference. You know, listening, coaching, advising, etc. Same old, same old.

The question that L&D needs to be ready to answer is what are they doing to help the business achieve its company goals. That’s how it wins. That’s where the ROI comes from. Not from the number of training courses it delivers. Not from the number of people who have attended external events. Not from the number of managers who have had training. Not even from the tens of thousands (in some cases hundreds of thousands) of pounds spent on trainers, consultants and facilitators. They’re just figures which anyone can improve.

If I can’t tell you how I’m helping the company to achieve its goals then I’m not giving ROI. What that means is I have to be so explicitly a part of the business that managers know I’m a source that can help something get delivered. That may be an L&D event, it may be paying for an event, it may be facilitating a workshop. That’s where L&D makes its mark. Not through happy sheets, monthly training reports or budget reviews. Yes, they’re important. No, they don’t reflect what is actually done in any way whatsoever.

My old boss made the team fill out a set of activities which ‘measured’ what we do. This covered a range of activities we were meant to do which effectively became a list of ‘delivery’ items, and ‘non-delivery’. And every month we’d have a look at how we set our time against it. And it used to be fascinating. Most of the team would average 60%-80% delivery activity. That could sound scary for some people, and encouraging for others. Ultimately what it helped him to show the HR Director was how the team were using their time. I’m not suggesting L&D needs to be monitored via timesheets, but it does offer a better indication of the actual things done as opposed to broad figures and broad numbers.

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>Do you understand ROI?

>This week I attended my first L&D 2020 workshop courtesy of the Training Journal (http://www.trainingjournal.com). The workshop was focused on the need for L&D to talk and understand the language of business in order to be successful.

The first talk was given by Tony Sheehan from Ashridge Business School (http://www.ashridge.org.uk). This was a great talk about current trends in L&D and where they may well be headed. Some of the highlights for me were around attitudes to L&D and how technology is influencing how people learn. They provided a 10 point sliding scale which was interesting, and I’m hoping to see the results of this survey. The sliding scale had factors such as Theory or Practice, Information or Resources, and I don’t remember the rest. It was fascinating all the same.

We then had a talk from Jack Wills, head of British Institute for Learning and Development (BILD – http://www.thebild.org) about what businesses actually want from L&D. Some keen insights around CEOs looking for profit, return on investment (ROI), and those are the key things. This really helped me to think about am I getting it right when I think about and what I understand about how the business operates.

The final session was with Jane Massy who is the UK leading practitioner in ROI. She is the CEO of abdi (http://www.abdi.eu.com) which is the only certified professional service in the UK who provide consultancy and training on the ROI method headed by Jack Phillips. Now this was the piece de resistance for me. Jane provided in the short time she had a very insightful look into how you can ensure as an organisation that you are working to a disciplined method which guarantees that ROI is at the core of what you do in L&D. Some of my learnings are below.

The first learning I had was about whether or not the L&D initiatives are linked directly to the business plan. I already know this is what an effective L&D function has to do. The learning was whether or not you could confidently draw a line of sight from the activities and initiatives you do in L&D and how they link directly to the business plan. So, I already do the normal stuff like talking with managers regularly, stay abreast of what’s happening across the business, and through general curiosity and keeping my ears alert, I develop a sense of and understanding of what the business needs are. I then draw up a plan, present it to a few people to validate my idea, then run ahead with it. The part I miss (and if I’m honest often) is taking a moment to think how does this new and exciting initiative fit in with the business plan. Learning no.1.

The next learning I had was about if my L&D initiatives focus on what the learner is expected to do, not what they’re expected to learn. Hmm ok this one is a bit tricky. I will design my courses based on what I think the learner needs to learn. But am I looking at what they’re expected to do once the training is complete? I may think I’m focusing on that, and I may be facilitating conversations to that effect, but is that the result I have in mind? I’m not sure. On reflection, it’s not as explicit as it probably should be. Learning no.2.

The third learning I had was about knowing the full cost of sending someone on a course – be it internally or externally. I know about actual costs associated with people attending training, but this certainly wasn’t a focus of mine. I don’t look to factor the opportunity cost, expenses, admin costs, on costs of someone attending training as being the full cost of them attending. And that’s a pretty big oversight. Someone attending a £2000 5 day course may actually be costing the business somewhere in the region of £6000-£7000 – WOW. How did I not think of that before?

What’s the importance of that though? Well essentially, there’s a bigger expectation about the ROI on that person than was initially considered. Initially I may have thought after 2 months of project work, that knowledge gained has been utilised effectively and we have recouped the cost of the training. Actually now I have to think bigger than that. It may be a lot further down the line this may be the result. And what happens if this person leaves? What happens to that knowledge, time and investment made? So there needs to be some follow up activities that ensure we don’t lose that – documented learnings, wikis, blogs, presentations, workshops, etc.

Aren’t I doing that anyway? Again, I’m kind of doing those things, or encouraging staff and managers to do those things. But that’s not explicit and we are not getting the ROI we would expect if people don’t take the time to do these activities. Learning no.3.

So where does this live me? With a very positive attitude to ensuring I don’t forget the importance of ROI and what it means for the business. From looking at the training needs analysis, to the L&D initiatives, to the ROI expected. These are things I could have spoken about before – I can now talk about them more intelligently.