ROI gives way to ROE

In the retail sector, as in many other industries, the effects of training are being measured in new ways. The classic return on investment or ROI is being supplanted by return on expectation or ROE.

ROI is a difficult thing to measure reliably. An effective attempt to understand the degree to which a single training event affects the bottom line directly is a costly and complex affair involving not just the learner but also instructors, supervisors, managers and accountants.

The process can take a year or more to complete, and when it’s over, the results are questionable since the improved performance could just as easily have been due to a shift in the company’s competition or market share.

ROE on the other hand, seeks to understand the impact training has on forwarding business goals and the degree to which training is meeting the defined expectations of the organization. Organizations employing ROE consider the following measures:

•Time to competency: This is the reduced time and cost to bring someone to competency because of a well-designed learning system.

•Time to market: The speed with which someone can be up and running on a new product or process.

•Achieved competencies: The increase in the number of demonstrated competencies by employees after training.

•Return on expectations: The degree to which the training meets job performance expectations.

Proponents of ROE take a holistic approach to measuring the effects of training. They presume the organization has only one goal for its training departments: to build an effective workforce. Given that expectation, why not measure the degree to which training is succeeding at creating that workforce. Ultimately, a more effective workforce will contribute to a successful bottom line — a good thing regardless of how you measure it.

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