Article: Really! ROI on Training?

Learning & Development

Really! ROI on Training?

Training is not an investment. It is what you have to do to run a successful business
Really! ROI on Training?

Don’t make training a reward. Training is a need to do a job, to excel - not a reward for having performed well


The training expense should be determined by targeted business results and not just budget-related factors


Every HR manager worth his/her stripes will be asked this question. So, what is the ROI on training? There are reams of articles and a few books on this subject too. Really!!!? Did you ask your parents what is the ROI on sending you to school? I asked my dad this and here’s what I got.

Me: Dad, did you think of what your ROI is on sending me to school?

Dad: No, I thought of what will happen if I didn’t send you to school and you stayed at home!

Here is another conversation I overheard once:

Business Leader: I am not sure if I am going to retain this person long enough to invest in him and get him trained.

HR Leader: Why would you hire someone in whom you have so little confidence?

The above conversation also reminded me of a message that someone shared with me on whatsapp, of a conversation between a CFO and a CHRO

CFO: What happens if we train all these folks and they leave?

CHRO: Yeah that is a worry. Have you thought of what would happen if we don’t train them and they stay?

Ha ha! Damned if you did and damned if you didn’t! But that is the prevailing wisdom; somehow training is treated like an investment in the equity market or in a business.

Wake up folks, it is not an investment. It is what you have to do to run a successful business that your customers are willing to pay money for. For too long, we have treated training as a discretionary spend, as a nice thing to have. Every time someone thinks/asks you this, please think of the conversation between the CFO and CHRO.

Now, I am not asking you to just throw the money there and not ask for results. All I am requesting is don’t ask for returns. Most organizations track reaction and learning, but few collect or utilize any data related to behavior or results — the things that really matter to organizations. Results, not returns, are the key.

Here are some suggestions that I have for making training result-oriented and not just a nice thing to have:

1. Be clear of what the essentials are: For me induction, culture training, core skill development, yearly value roll outs and role relevant programs are absolute essentials. Cut this expense only when you want to shut the business down.

2. Stick to the basics: Training professionals and CXOs too tend to go overboard with peripherals. For example, your induction doesn’t have to be in a five-star hotel. A quiet corner in the office, a well done e-learning module with just the right personal intervention is good enough. You don’t need to get the latest guru for a few hundred thousand dollars, your CEO or your product specialist doing a one day session is more relevant.

3. Don’t make training a reward: I absolutely hate this attitude. Training is a need to do a job, to excel - not a reward for having performed well. I have had so many conversations around leaders wanting to send their best performers to an overseas AMP (Advanced Management Program) as a reward! No- No- No- please don’t do it.

4. Leverage technology: With Skype, Google Hangouts and other such technology platforms, expensive travel, hotel rooms don’t matter. But be cautious that you don’t make this your only way to do training. Every training program is different. There are different objectives, audiences, budgets etc. Hence, it is important to remember that every training program is unique and cannot be addressed in a similar manner. Do a judicious mix of options available.

For instance, here are some questions you can ask yourself that may help you make a decision:

  1. Is the topic ultra-specific and complex?
  2. Are simulations necessary?
  3. Is the training only needed once?

If the answer to all three of the above is yes then go with live, classroom training. On the other hand, if the target audience is large, and the training is of a repetitive nature, eLearning may be a better option.

5. Be creative: Using a blended approach is the best option one can design and go ahead with. For example, one good strategy is to use e-learning to deliver preparatory courses prior to a live training event. This is a good way to present high-level concepts and field questions earlier on.

6. Keep your spend consistent: In many organizations, training budgets are solely a function of whether the company is enjoying an economic upswing or enduring a downturn. In good times, companies tend to spend money on training that is not significant to the organization, and in bad times, the pendulum swings to the other extreme and training is eliminated altogether.

The training expense should be determined by targeted business results and not just budget-related factors. To be consistent in your approach, sit down and assess organizational training and development needs once or twice a year to identify business needs and brainstorm on how to achieve the desired results effectively and efficiently.

Since employees are the principle business assets, one has to invest in them thoughtfully and strategically in order to reap rewards that pay off now and in the future as well. In a nutshell, don’t be extravagant when the going is good and cut to the bone and the bone even during downturns. Stay sane and stay consistent.

7. Keep training role based, need based and organization based: Let me explain each with an example – role-based examples are supervisory skills training for new managers and new hires, quality process training etc. Need-based are project based, maybe a technology, product or skill required for a particular project. Organization based will be induction, culture, value roll outs … you get the drift hopefully.

8. Training is not entertainment: This is the same difference as exists between going to a spa and going to a hospital. Though we call both treatments, we know which is what.

So, what do you do when somebody asks you this ROI question next time?

Understand what they want this answer for. If it is your CEO asking the question, look for another job, they are not going to create a learning environment. Remember they sign the cheques and if they don’t get it, no point in wasting your time. If people really are your organization’s greatest asset, your management will look at training programs as investments in your organization’s human capital and not just as an expense.

If a colleague is asking, work with them by solving a problem for them through a learning intervention. Let me share a personal example. Many years ago, I had a big derailer, a super star technology manager who derided training at every opportunity. He would not let go of any opportunity, executive meetings, town halls etc. He was relentless and I was really getting frustrated. I complained to my managers but they turned a blind eye, he was their super star. I realized that he was seriously denting the image of training across the organization.

Fortuitously, his HR leader pointed out that he was having trouble with a team. They were missing deliverables and the client was threatening to withdraw. I stepped in, did a team diagnostic and suggested that this was not a technical issue but a team dynamic issue. I think he was so desperate and was willing to do anything to get things back on track that he agreed to let the training team go at it. We went at it hammer and tongs and things did turn around for the team. While he didn’t become an advocate and evangelize immediately, he did stop beating us up publicly and started actively seeking counsel.

The proof of the pudding is really in the eating.

What’s your ROI for the time and energy you have spent on reading this article? Am hoping your biggest take away has been- Stop worrying about Returns and focus on Results. Good luck and do write in!

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Topics: Learning & Development, #HRInsights

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