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Keys to Measuring ROI from Training for a Change Project

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by Karen Lacour

Although employee training is a key component of any major change initiative, enterprises often struggle to measure the return on investment (ROI) for change-project training. The fact is, you definitely can measure the results of training, and you should. For one thing, measurement is essential to ensure employees are really adapting to the change, rather than reverting to the old way of doing things. Moreover, measurement can quantify the benefits of training in relation to the overall project investment.

When starting a large-scale change project, it’s important to establish the metrics and expected benefits of training up front. Metrics help to quickly pinpoint and address problems, and measuring actual benefits is necessary to calculate the training ROI. Since training departments are often under scrutiny for budget cuts, demonstrating that these departments can be a strategic partner in operational effectiveness is essential.

Any enterprise involved in a change project should design a training strategy and program based on its specific needs. An assessment of the company’s current state and an analysis of the end users’ learning needs are essential components for developing a program to address the hard and soft skills needed to fill the skill gaps. Foundational education — a series of programs aimed at increasing end-user knowledge over a period of time — helps employees prepare for the new system and/or roles, depending on what the future state entails. Employees need information they can act on to build their confidence, skill and will to embrace the change.

Measuring the ROI of these efforts revolves around a relatively simple number: net benefits derived from training as a percentage of the total training costs for the project. While the specific calculation is based on individual circumstances, the table below outlines considerations for potential benefits and costs:

Benefits

Training Costs

  • Improved employee retention and less turnover
  • Customer satisfaction resulting in fewer lost customers
  • Avoidance of lost revenue due to lack of employee skill in the new system
  • Avoidance of employee morale loss and time adjusting to the new system
  • Business growth
  • A percentage of the expected project outcomes, such as increased sales and cost savings from greater efficiency
  • Training design and development costs (including staff and consultants’ time)
  • Training delivery costs (hosting and/or cloud-based solutions)
  • Materials
  • Training hardware/software
  • Training venues
  • Learner time spent training and traveling to training
  • Potential loss of revenue due to training instead of conducting normal business activities and logistics support

 

 

Clearly, the benefits are more sustained and crucial to the business than the one-time training investment costs. The indirect cost of not investing in training, meanwhile, can be long term and more difficult to manage than this one-time investment.

Because not all the benefits and costs of training are realized or captured in the same time frame, making multiple ROI calculations in the short, medium and long terms can help address the challenge of calculating the full ROI of training. For example, maintaining good employee morale can be a significant benefit of training. Though this may not yield a monetary gain in the short term, lowered employee attrition rates can be monetized as a hard cost saving over the long term. Remember that benefits can include the avoidance of negative impacts or additional costs that would be incurred without training. Productivity is another consideration: an untrained user can take more than four times as many hours to achieve the same skill level as a trained employee.

In today’s demanding economy, many companies rely on very lean training organizations even for large change projects. In this environment, making the most of every dollar invested in training is imperative. Contact me to discuss how we can help.

About the author

Karen Lacour is a training practice manager with 20 years of consulting and IT industry experience, including more than 15 years as a management consultant leading large-scale training and education projects for Fortune 1000 companies. She worked the other five years as a technology industry executive responsible for oversight of major managed-service contracts and operations in the United States and Latin America. She focuses on the design, development and delivery of training and educational materials in a wide variety of formats and has industry expertise in numerous sectors, including energy, telecommunications, retail, healthcare and manufacturing.