Tuesday, October 7, 2008

ROI And Training ... Again

A very interesting post by Jay Cross about ROI … it got me thinking. A question which has been coming up time and again in discussions I have been having with friends is about the extent to which we measure ROI has been responsible for the crisis the markets are facing. Or is it, at all? Hey … I am not a management guru, and hence, I don’t even claim to know whether it does or not.

There is, however, something which I have been thinking about, and this post actually brought this out quite well. Especially the part where he says …

Making strategic decisions is fundamentally different from making operating decisions. Senior leadership uses gut feel, informed judgment, and vision to set direction. Managers at lower levels decide what projects to fund by describing the logic of how they will help carry out the strategy; this is where running the numbers is useful. ROI hurdles help identify the projects with the greatest potential return. They don’t address the big picture.

This is an interesting thought, if we take this forward. When we talk about vision, we are not talking about this quarter, or the next. We are, instead, talking about a process of reaching from point A to point B, whatever these points may be. Question is, if, in this process, some of the measures take a hit for a quarter or two, sort of giving up on some short term gains for more long terms gains, do these trade-offs actually come into the radar, or the intelligence dashboards of business leaders?

Consider this … There are a number of construction projects going on in Delhi these days, in preparation for Commonwealth Games, 2010. Now, these project sites are not a pretty site as of now, but by the time these are completed, its going to be a different picture altogether. Should one give up on a not so pretty near-term picture in order to attain a nicer picture in the long term?

In this context, lets look at training. Lets remember … training is usually work in progress. When people come out of a training, they have learnt some things, and they are yet to learn some things more, which is where the experience of applying the concepts of what they have learnt on the job comes into the picture. The first question, hence, is what is the point at which we should measure the ROI of training? Traditional means are feedback forms which participants to trainings fill out at the end of the training, when they have no idea how relevant the training has been, and how well it has equipped them to deliver work on the job. So does this mean that effectiveness should be measured at a later point? Here, the question that comes up is, what is the extent that operating improvements can be attributed to training, and to what extent can they be attributed to experience, on the job learning, or collaboration?

Lets look at it this way … you could train someone to swim … or, they could learn to swim by themselves once pushed into the deep end of the pool (with the lifeguard around, of course …). The person who was trained to swim wouldn’t be able to appreciate the effectiveness of the training because he never experienced the effort required in learning to swim on your own, while the other person never really got trained, so again, he is not the right person.


Rakesh Poddar said...

Insightful analogy, Atul!

Being an organizational learning professional, I too have to often grapple with the question of ROI of training. My two cents: A training program is aimed at achieving some business objectives, such as increase in sales, improvement in quality, etc. These business results, however, do not usually accrue from training alone. In most cases, there are other contributors to these business results, for example, some financial incentive to workers, technology upgradation, changed market conditions, etc. Therefore it is difficult to calculate the contribution of training alone for the business results, and thus the ROI of training.

Atul said...

Quite agree with you Rakesh ... it is so difficult to isolate this, that the next step of measurement must be an exercise in futility.

Anonymous said...

I agree, Atul, that ROI of training cannot be assessed through post-training learner surveys.

I showed in my recent blogpost that it should be assessed in the workplace, and it is easier done if the training design/framework is linked to business objectives from the very beginning.


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