How to Design Training and Education Programs that Achieve a Measurable Return on Investment, Part 1: Corporations
Introduction
Most organizations fail to identify the factors that could enable their training, education and talent management programs to achieve a measurable and meaningful Return On Investment (ROI). Program sponsors and advocates can avoid this issue by following a few simple guidelines. The types of programs that organizations should invest in must be oriented to support the organization’s purpose or mission. For example, corporations are generally bound to provide their shareholders with a return on their investment. It would follow, that any investment in the corporation’s training programs should support this objective. Associations and most non-profit organizations provide a meaningful service to their constituents or customers. Their training and education investments should directly support this mission. Educational institutions generally seek to provide the highest possible value to the entity/entities that are paying the bills and to advance their fields of endeavor. While potentially more opaque than the mission statements of corporations and associations, educational institutions have a fiduciary responsibility to invest in programs that achieve these goals.
The Checklist for Corporations
Review the following questions to determine if your programs are designed to achieve an ROI:
Without at least one of the above criteria being met, your program will be unable to achieve a measurable return on investment.
Continuous Assessments
Continuous testing of individuals critical to the success of your organization provides the means to improve quality, customer satisfaction and profitability. Instead of completing generic individual performance evaluations, augment your performance management solution with objective analysis data and prescriptive testing, training and remediation programs. You would not want to go to a CPA that has not kept their certification current to ensure their understanding of new regulations and laws. You would not want to go to a doctor that was not maintaining their expertise thru required continuing education. Nobody understands your business better than the people in your organization. Striving for excellence requires that individuals critical to the success of your organization be the best in your industry. Prescriptive testing, training and remediation programs are the easiest method to achieve this goal.
Programs that Achieve Executive Management Support
Learning, performance and talent management programs that focus on generic qualifications (education, general skills, completion of regulatory requirement training) to assess and enhance talent are missing the opportunity to provide their organization with a measurable return on investment. Instead, organizations must identify and enhance the knowledge, skills, techniques and processes of the people that sell, produce and service the organizations products and/or services.
"The most common mistake that corporations make with regard to investment in employee training programs is assigning this responsibility to an organizational entity that is not capable or not focused on solving business issues."
You can have the most comprehensive corporate university on the planet and still fail to provide any ROI to your organization. Said another way, generic sales training programs do not measurably increase sales; generic quality programs do not measurably increase product or service quality; generic customer service courses do not measurably improve customer service. If you want to produce an ROI, the programs that the organization invests in MUST be specific to the company’s products and services. Their success must be directly measurable in business terms. The sad truth is that most corporations spend greater that 80% of their training budget on programs that produce no ROI.
Solving Operational Issues
Most corporate training programs rarely work to identify the “low hanging fruit” that could substantially improve their organization’s success in terms of growth, profitability and employee performance/satisfaction.?A shift in focus to areas including increased sales, reduction in cost-of-goods sold, reduction in product/service defects and increased customer loyalty will provide a measurable ROI. Instead, many organizations spend their limited resources on doing the minimum and thus guarantee a minimum return or a loss on their training investment. It only takes one successful program to convince executive management to increase the training budget. Having a program that costs the company $150,000 and produces a return of $10M will get upper management’s attention and support.
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An example of “low hanging fruit”:
A business had a high employee turnover rate in a department that provides call center support. Hiring, training and supporting the constant churn of new personnel was expensive. Customers were also affected by the inexperience of the personnel responding to their requests. The department has always collected a myriad of performance indicators on everything from support personnel response times to customer satisfaction. This performance data is collected for each employee and is one component of their employee review process. These indicators clearly showed the negative effects of the employee turnover problem for the company’s customers. Interviews were conducted with department staff and the primary issue uncovered related to the inability of the support personnel to fully leverage the company’s information systems to quickly and accurately respond to customer requests. This issue created customer frustration resulting in significant job dissatisfaction for the personnel responding to customer requests. This issue was also captured during exit interviews. New employees were being provided with initial training on the company’s information systems; however their proficiency using the systems was not being tested. These systems are frequently updated. The updates come with documentation, but not supplemental employee training or testing.
Issues like this can have a tremendous impact on a business. They also present a significant opportunity achieve extremely high ROI with a training program intervention. In the example above, a series of simple process simulations that mimicked actual customer request scenarios were implemented with a three-phase architecture; walk thru each scenario, accomplish the correct response sequence under supervision and test each student without instructor support. The simulations were included in both in-class and virtual classroom training programs. The simulations could also be accessed for stand-alone use and for performance support via the company’s LMS. They were architected to enable customer support software revisions to be cost-effectively incorporated. Update training for existing support personnel could be accomplished using the company’s LMS. This particular intervention reduced employee turnover by 50%, increased customer satisfaction by 30% and achieved an ROI of greater than 1000%. Click here for more information.
How to Get Started
If your company does not have the expertise, technology or resources to get moving, there are several companies that provide what is needed to help you implement training and talent management programs that will produce a measurable ROI. KMSI has been providing these solutions for over 20 years. We have documented programs that have produced ROIs greater that 5000%. We have assisted our clients with implementation of programs in each of the areas of improvement discussed above. Our solutions tend to have three major components:
The processes involved are actually not that difficult to master. The issues that arise include achieving executive management support, having technologies available that are geared to provide ROI-based solutions, and getting the first success under your belt. Of course we would love to work with your organization, but the more important issue is taking the first step towards improving the success of your organization for all stakeholders.
Coming Soon
In future editions of this newsletter, I will address ROI as it applies to associations and educational institutions. In many cases the issues and solutions are similar. The major differences include how ROI is measured and how investments in new programs support the organization’s primary mission.
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About KMSI
KMSI provides learning, talent and performance management software solutions, Internet application hosting and professional services. Our service teams are managed by industry leaders implementing proven processes designed to be leveraged across practices. KMSI has designed performance improvement strategies for many of the largest organizations in the world. KMSI provides training development, instructional content conversion and other specialty and implementation services. Visit?www.kmsi.com?to learn more.