Project connects dots between T&D, profit

Showing return on investment convinces employers of T&D value
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 04/17/2008

Business Development Bank of Canada (BDC) has always been a big believer in training, investing about five per cent of payroll into learning. Now the Crown corporation hopes to further the cause by participating in a government-sponsored project to substantiate the return on investment of training and encourage Canadian companies to invest more heavily in skills development.

“We know there’s a declining investment in training overall in Canada. And we know that has a big impact on growth productivity, so it’s sort of a win-win type of project to learn ourselves what a return-on-investment (ROI) project is all about,” said Jacinthe Higgins, director of learning strategies at Montreal-based BDC, which offers financing, business loans, consulting and venture capital to businesses.

“This is a great opportunity to learn what the methodology is all about, to demystify it, and to talk about it at the C-level, with statistics and financial wording, and make the connection between the investment you’ve done and the return you’re getting.”

Providing new tools, case studies and, ultimately, a set of best practices, Investing in People is a three-year project sponsored by Human Resources and Social Development Canada (HRSDC). Focused largely on small- and medium-sized organizations in the manufacturing, services and retail sectors, the $1.3-million initiative was awarded to the Canadian Society of Training and Development (CSTD) and is being implemented by Learning Designs Online.

“It’s funding to do 12 return-on-investment studies in 12 separate workplaces, to have a look at the impact and value of training that went on with the same set of instruments,” said Lynn Johnston, president of Toronto-based CSTD.

“We need the evidence to convince employers to invest more, to say it works, it makes an impact to your bottom line. As it becomes harder and harder to poach talent, (smaller companies) may have to do a little more investing.”

There have been a couple of popular tools available for years that measure the impact of training and learning — the Kirkpatrick Model and the Phillips ROI Methodology — but these are reactive, measuring what has been done, said Alan Bailey, chief executive officer of Learning Designs Online in Mississauga, Ont. That’s why this newer, made-in-Canada version is emerging, with proactive tools to help organizations as they develop training.

“It’s completely turning the evaluation world on its head,” he said. “It’s actually able to capture the best practices, to drill down into the program, whether it’s successful or not.”

Investing in People is a good opportunity to learn new methodology tools, said Higgins, while the outcome of the study will also impact BDC’s customer base of small- and medium-sized enterprises.

“It’s an opportunity to work with experts who could actually pinpoint if there are some issues, as you’re implementing,” she said. “And they’re tweaking the tools as we’re discovering some red flags or things to pay attention to.”

BDC, which has 1,700 employees, has chosen to evaluate a comprehensive sales management program for 200 managers.

To start, it had a full-day session with CSTD to discuss course details (such as content, learning objectives and metrics) and receive training on the process. Investing in People participants are given a questionnaire to evaluate the impact of a learning or training program immediately following delivery, and another questionnaire evaluating a program’s impact on job performance a few months after the training.

“You have an immediate impact tool that gives you a sense of how well the training is going,” said Bailey. “Then there’s a followup tool to measure how well they’ve adapted the new learning to the job, two or three months later.”

BDC’s program will take up to eight months to finish since it is staggered and each course runs for about two to three months. Throughout the implementation, there’s an assessment being done.

“If there’s a little slippage, you catch it, you get it and you can address it,” said Higgins. “It’s very well monitored.”

Once the training is done, Learning Designs will work with each organization to isolate the impact of training from other factors, such as learning initiatives or new bonus programs, said Bailey.

“So we’re only measuring the business benefits that resulted from the training and we’re not taking credit for other kinds of initiatives ongoing in the organization,” he said.

Then it’s a matter of capturing the costs of the training — including materials purchased, location, travel expenses, fully loaded costs per employee — and calculating the business benefits, such as time saved, fewer rejects or greater sales, and how they connect to profit.

“You have to convert the training data to monetary value and then you can calculate your ROI by comparing the total benefits to the total costs,” said Bailey. “It’s not rocket science but it’s sufficiently involved and there’s a lot to it and a lot of organizations don’t have that kind of skill set.”

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