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ROI 1 - The Case For Training ROI
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Measuring ROI of Training
“Not everything that can be counted counts, and not everything that
counts can be counted”Albert Einstein
Best Practice in Terms of ROI• Training magazine’s 2003 top 100 companies found that linking training to specific business metrics requires evaluation before, during, and after training initiatives;
• Many of the Top 100 companies ranked by Training magazine tie training initiatives directly to retention efforts;
• Also use other metrics – sales; production etc;
• ROI used as basis for continued improvement of training function;
• Forecast ROI.
The Case for ROI ?AccentureAllstate InsuranceApple ComputerAT&TBristol-Myers SquibbBritish TelecomCaremarkComcastCoors Brewing Co.Deloitte & TouchéDelta AirlinesDHL Worldwide ExpressFederal ExpressGeneral Motors
US Department of DefenseUS Department of LaborUS National Security AgencyUS Department of Veteran AffairsUS General Accountability OfficeUS Office of Personnel ManagementNASA
The Value Hierarchy
Paradigm Shift
ROI -Delivery on the Value Promise
ROI -Delivery on the Value Promise
The promise is in the
way we determine
training needs
The promise is in the
way we determine
training needs
Moving from input (activity) to output (results) based
training
Moving from input (activity) to output (results) based
training
A Quick Diagnostic
How does your company determine
training needs?
Question – we develop and implement training that
Absolutely Un True= 1 ; Absolutely True = 5
Link needs to business solutions 1 2 3 4 5
Based on assessment of current vs. desired performance
1 2 3 4 5
Isolate application and business impact objectives
1 2 3 4 5
Ensures communication of expectations to stakeholders and participants
1 2 3 4 5
Ensures the work environment supports reinforcement of implementation and application
1 2 3 4 5
Builds partnerships with managers 1 2 3 4 5
Measures at more than reaction and learning level
1 2 3 4 5
Communicates the results to all stakeholders
1 2 3 4 5
How Does Your Organization Score
8-15 Activity based
Little Focus on Results
24-31Significant progress
To Results Based
16-23Moderate shift
Or Shift in Certain Areas
32- 40Fully Integrated Results
Based System
Which Individual Areas Do You Need to Address?
Activity Results
No established business need Business case
Little relation to performance Focus on improving performance/change behavior
No/little focus on objectives/competencies
Demonstrating competence over time
No/Little focus on preparing the environment
Prepare environment to ensure transfer and reinforcement
No/Little focus on measuring impact and value
System geared to preparing and proving the case
Mainly input focused Sound balance between input and output
We need to move towards a results
based approach
But what should we put in place?
What Should Be In Place?
Lead project
Evaluation Approach
1. Reaction, Satisfaction
2. Learning3.
Transfer/application
4. Business Impact
5. Return on Investment
6. Intangibles
Element Description
Reaction Happiness with learning interventions
Learning Changes in knowledge, skills and attitudes
Transfer/application Changes in on the job behaviors over time (competence)
Business Impact Changes in impact variables
ROI Intervention benefits in relation to cost
Intangibles Intervention benefits in relation to policy and/or strategic direction and related factors
Evaluation Approach
Evaluation Approach
Customer
Focus
Data
Availability
Value of Case
(relative)
Intangibles
ROI
Business
Impact
Application
and
implementati
on
Learning
Reaction
Element Assessment
Complexity
Limited/Low
Wide/High
Consumer
Client
Readily
Research
Limited/Low
Wide/Complex
Administrator
Business Partner
Intervention Planning Framework
Reaction Evaluation
General need
General need
Learning OutcomesLearning
Outcomes
Learning Material
Achieved?
Assess
More
First Order Analysis and Definition of
Business Need
Identification of Performance
Need
Business Context(Internal and
External)
Competence GapSolution
GenerationIntervention
Strategy
Presenting Problem/
Opportunity
Non Training Solution
Program Design Event PlanningEvent
ManagementEvent Outcomes
Intervention
Planning Framewor
k
TO BE
Data Gathering Approach
Process Framework
Isolation Framework
External Factors
ManagementAttention
Incentives
Systems/ProceduresChanges
LearningProgram
TOTALIMPROVEMENT
AFTERPROGRAM
EFFECT OFLEARNING ON IMPROVEMENT
Calculation
Benefit/Cost Ratio =
BenefitsROI =
Program Benefits
Program Costs
Net Program Benefit
Program CostsX 100
1