Training: Investment in the future

HR needs to focus on ROI to show a real value for training and development investments.

An estimated $750 billion is spent annually on training around the globe, representing an average of almost two per cent of the payroll of many organizations. In North America alone, companies and governments spend about $150 billion annually on training programs.

Measuring the actual return on this investment (ROI) has traditionally been difficult for many organizations, and they have relied simply on feedback from trainees. A 1999 survey, completed by 244 of the 894 members of the American Society for Training and Development, identified the top four barriers to training evaluation as cost, difficulty, lack of training and lack of experience. The survey was conducted as part of a doctoral program at the University of Texas.

The training industry has tended to focus on measuring the reaction of customers and employees to training and learning programs. That trend is changing as companies, governments and organizations are now demanding measurable results based on organizational change and financial return.

This is particularly true in training and development, where the ability to measure the effectiveness of training initiatives adds real value for HR professionals. It can help determine how training and development impacts on employee turnover, sales performance and customer or employee satisfaction. Companies that train employees well traditionally have stronger acquisition and retention successes.

Brian Howard, manager of integration at the Toronto-Dominion Bank, says the ROI process helps the bank’s training managers understand how training can be turned into lasting increases in revenue and profitability. The TD, which has 1,500 branches, 45,000 employees and 30 different businesses within its organization, adopted the process in 1996. “We had been trying to improve our evaluation process for about a year and then adopted the ROI process because it provided a framework that we could work with and it made sense,” says Howard.

There were challenges in putting the ROI process in place at the TD. These included building an understanding of the process within learning and development, a function of human resources, as well as within the larger organization. Processes also had to be developed internally to measure the results of training. The TD Learning and Development group also had to find ways to do things differently to improve the probability of earning an ROI. This included different approaches to needs analysis, design and delivery of training programs and evaluation.

“It is an iterative process,” Howard says. “You learn and make changes along the way. There are challenges but the rewards of implementing it are very high if you can do it effectively.”

Training programs were aligned to management’s key business strategies. The likelihood of increased revenue could be improved by providing training specifically geared to the key strategies of individual business units at the bank. Comprehensive design and cost efficient delivery of training also had a positive impact on ROI.

Measuring for ROI kept training focused on the achievement of business results. For example, the ROI process helped to keep trainees informed. Previously, while the achievement of business results was built into the training program, trainees were not necessarily told exactly what results they were expected to achieve when they returned to work — now they are.

Howard says the TD uses the ROI process on a “front-end basis” to help to ensure that training programs achieve bottom-line results. “We talk to the customer (business units) to determine what business results are to be achieved and then determine what on-the-job performance is required to achieve those results. Then we need to make sure that everyone who needs training gets it. It’s important that performance objectives are matched with the training objectives. Once you have established the training objectives, you have the basis for measurement.”

In 1997, the bank was meeting an urgent need to train 4,000 personal bankers at 1,000 locations. Acting as “financial relationship” managers, the personal bankers would provide financial advice to key customers. With the focus on achieving an ROI, it was recognized that it was costly and time-consuming to rely on the TD’s traditional classroom delivery method. The bank decided to deliver the training through a combination of self-study, a satellite-communications link and limited classroom. The interactive satellite link enabled two-way conversations between trainers in Toronto and trainees at about 75 sites across Canada. As a result, travel and lodging cost were slashed by about two-thirds and trainees could freely move between their local classroom and their jobs.

Distance-based learning for the personal bankers effectively reduced total training time to three years from five years, yielding millions of dollars in added revenue to the bank, Howard says, because a full contingent of trained personal bankers were in front of customers two years sooner than planned.

“The satellite connection allowed us to train 200 people at a time, rather than 15 people at a time. Essentially, we could train three times the number of people on the same budget.” Another benefit was that for about 90 per cent of trainees, the training location was located within a 20-minute drive from their home bases.

To evaluate its distance-based training, the bank used the ROI process model to introduce measures to determine the effectiveness of the learning and whether it was being applied on the job to generate business results.

The TD has utilized ROI process for other initiatives, including the training of 30,000 employees involved in the integration of the bank and Canada Trust. The full integration of the two institutions’ branches started in March 2001.

Doug Duke, who recently succeeded Howard as manager of measurement and evaluation, says measurement has an impact on the training process. “People’s behaviour changes when they know they’re being measured, as long as it is a positive experience.”

Coaching is included in the bank’s measurement process to provide feedback that will help employees improve their performance on the job.

Howard sums up the importance of the ROI process: “It helps us stay proactively focused on ensuring that training aligns to the business needs of our corporate customers and making sure that it generates an ROI for these businesses. For each new training initiative, we have to challenge ourselves continually on how we can improve things to increase the likelihood that we will achieve that result.”

According to Franklin Covey’s Jack Phillips Centre for Research (Salt Lake City, Utah), the TD experience is a reflection of 10 specific trends in the training industry:

•evaluation has become an integral part of the instruction system design process, a part of every model;

•evaluation is shifting from a reactive to a proactive approach within the training function;

•measurement and evaluation are more systematic and methodical, often built into the training process;

•technology is significantly enhancing the measurement and evaluation process;

•evaluation planning is becoming a critical part of the measurement and evaluation cycle;

•the implementation of a comprehensive measurement and evaluation process usually leads to increased emphasis on training needs analysis;

•without comprehensive measurement and evaluation, training and development budgets have been reduced or eliminated;

•with comprehensive measurement and evaluation, training and development budgets have been enhanced;

•there are many successful examples of comprehensive measurement and evaluation applications; and

•a comprehensive measure and evaluation process can be implemented for about four to five per cent of the direct training budget.

Today, ROI is providing the bottom-line payoff on training. It is helping to raise the credibility of HR professionals by proving that training and development programs are an investment rather than an expense.

Sandra Carrigan is a training solutions consultant with Cambridge, Ont.-based Franklin Covey Canada, Ltd. She can be contacted at 1-866-742-2487 or

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