How to demonstrate that training is a worthwhile investment

by Bob Colclough on May 24, 2012

Introduction

This article aims to help you justify your organisation’s investment in training.

The challenge

You’ve put together your training plans. You really believe that the training will help the individuals or the business.

Then the holder of the purse strings asks “Where’s the payback”.

Of course this is an entirely reasonable question. No private sector employer can (or should) invest in anything – including training – without a rational reason.

Types of Payback

Questions of payback can seem so distant from the day to day realities of training. Where can you start to justify your plans?

It may help to view a business as benefiting the stakeholders in the business. For a private company, stakeholders mostly fall within these groups:

  • Shareholders
  • Employees
  • Customers
  • Environment
  • Funding Bodies
  • Suppliers

Your budget holder may just be interested in “bottom line” payback and so he or she will tend view the training costs in the same way that a red blooded capitalist might.

But there is a chance the budget holder has an eye to other types of payback. So how are  these other stakeholders involved and can the impact of training form part of your justification?

Possible payback Potential real impact
Employees Feel valued so do not leave Reduced recruitment costs
Better at job with customers More business
Helps colleagues more effectively
More productive Reduced future new staff costs
Customers Trained staff give better service Increased customer loyalty
Trained sales staff recruit more customers Increased revenue
Environment Aware staff create or support ecological initiatives (waste etc) Impact on the ecology
Suppliers Better support and communications so suppliers more accurately meet needs Better revenue

These are just a few initial ideas. You can probably find more.

When looking for tangible savings, remember to include both additional income as well as reduced costs that might result from additional training.

Is the bottom line the only way to measure the impact of training ?

No, there ways to assess that your training is having a real impact.

Donald Kirkpatrick provided perhaps the most well known model that assess the impact of training. He put forward the idea that the impact of training can be measured in four ways.

Kirkpatrick’s Model

Level 1

This measures what the learners felt about the training. Did I feel relaxed? Was I able to learn new things? Was the topic relevant?

This is often measured by the end of course feedback sheet or “happy sheet”. These are often criticised as too imprecise – often learners are reluctant to criticise.

However they can be useful for spotting trends. Also a bad level 1 experience as recorded by delegates means it is most unlikely there will be real gains at levels 2 to 4.

Level 2

Level 2 evaluation involves a test that the delegates have increased in knowledge, skills or attitude. Ideally this requires a “before” and a second “after” test at the end of the training.

A few trainers do this. It needs careful planning and should really take account of the learning outcomes that are part of the training. Blooms Taxonomy is a great help in deciding these planned outcomes and how to assess the results.

Please search on the web for further information on Blooms . We’ll have a separate article in the near future.

Level 3

At this level we measure whether and how the improved skills have affected learners’ actions in the workplace.

Ideally the after test should take place weeks or months after the training so that temporary new learning is not included.

Not many companies do this as it involves quite an effort.

  • It is easier with more specific skills:
  • Using a pivot table in Microsoft Excel
  • Using a safety harness correctly

It is more challenging with soft skills:

  • Communicating assertively, not aggressively
  • Listening carefully as part of a sales process.

Level 4

At this level the aim is to assess the impact on the business. This can include:

  • Increased production
  • Improved quality
  • Decreased costs
  • Increased sales revenue
  • Higher profits

These results are harder to measure. The typical challenge is to link any change in say quality with the prior training.

So what does this mean for my business case for training investment?

There are two gains.

First simply showing that you understand that gains from training can be measured at several levels will help convince most decision makers that you are on top of your game.

Second, you can work through each level and identify what tests you might be able to do to assess the gains from your learning programme.

At least you will be able to say, this is what we plan, and here is a way we can measure results. It sounds so much better than “It’s a great idea”

What do other organisations gain from training

A November 2008  IOD Research Paper reported that IOD members identified the principal benefits of investing in training as:

  • improved staff morale (76%)
  • improved productivity and/or profitability (74%)
  • improved customer satisfaction (69%)
  • improved staff retention (62%).
  • improved market share (37%)
  • improved staff recruitment (21%)

This not prove that your specific training plans will improve business results. However, it does show that Directors believe it is worth investing ion training.

Perhaps even more significant is the reported determination for hard pressed companies to maintain their training investment despite the 08/09 worldwide recession.

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