Training

What’s Your Training ROI?

I had a great meeting with a training company today. We discussed many topics but one of the points that really hit home with me was when they stated that companies want to measure training ROI during economic downturns. Many times training gets cut much like marketing and the investment in the future opportunity is lost.

TrainingI’ve worked for many companies in my career and only one sticks out in my mind that got training right. I was the Marketing Director for Huffman Corporation a small manufacturer in Clover, SC, about 30 miles southwest of Charlotte. Huffman made multi-axis, superabrasive machinery that made parts for aircraft engines, turbines and other heavy metal parts. Huffman had a training policy that allotted and required each employee to take 40 hours of training each year.

At prior employers training was only mandated if there was a new product or service purchased and no one knew how to use it. Usually it required so much approval to get funding for training that either the dates passed or you got tired of explaining 17 ways to Sunday why it’s important for you to take the training. So when I heard that my company would give me a week of training I was ecstatic and a bit skeptical. However there were no tricks to this gift. The training had to be relevant to your work.

So I took two classes that year, one in HTML and the other in Microsoft Access. Both classes gave me the basic understanding of the technology and applications that I needed to build new tools (remember this was 1998 and web sites and CRM were new). Within a few months I had built a ROI database to measure all of my marketing leads and redesigned some pages for the company site. The training was not expensive, probably around $600 total.

My excitement came when I showed the company president my lead tracking reports generated from my database. He asked where I generated it from and I replied that I created the database using Access after my training. His eyes lit up because this was exactly why he created the training policy in the first place. The ROI was right in front of him.

Now many people view training as time to get out of the office. I’ve even heard it mentioned as vacation by some. These are the people who will end up asking you how to use the new technology once it’s implemented since they did not embrace the educational opportunity. These are the people that are checking email and surfing the web during training.

Other times I’ve had company management ask me to take training and then come back and train the rest of the team. This usually fails due to several reasons. I’m not a corporate trainer and I tend to get frustrated when people don’t learn as fast as me. With software I tend to quickly grasp the concepts and dive into the tools features and functionality. Those who are slower will drown in my wake!

Another reason it failed is because I usually don’t have time to customize and prepare training materials. Having examples to demonstrate how the tool works is vital to showing users standard approaches and best practices. Either way going cheap on training will cost you in productivity, quality and important customer engagements.

Therefore you’re ROI in training for important tools and technology is the same as your ROI in marketing. It’s an investment in your people; infrastructure and processes that managed correctly will pay dividends for years to come. If you expect a quick return on training you are only looking at half of the picture. Yes your staff comes back from training ready to use the new tool but initially there is some time investment in starting or changing the process.

How do you measure ROI for your training? Do you have to approve staff training or does it go through HR? Does your company have a training policy?

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  • Requiring 40 hours/year (and letting employees choose how they use it) reminds me of Google’s “20-percent time” policy, where engineers can work on personal projects of their choice.

    It takes a brave company to let employees do something so open-ended, but as you illustrate, it can pay off. I’m skeptical when a company doesn’t offer *any* training incentives — it suggests a lack of long-term vision.

  • Sean

    I’m a freelance trainer and project manager of large-scale training implementations. Your post really resonates with me and is a long standing concern of mine. How do you measure training ROI?

    One thing that I think you highlight in your post with the story of the company in South Carolina is something that Ann Herrmann-Nehdi of North Carolina-based Herrmann International describes as Return on Intelligence. The idea here, more or less, is try to measure training in four key areas: investment (the quantifiable), implementation (the execution of a process), interaction (human performance), and innovation (the possibilities).

    I think what you achieved from the courses you took and what your company at the time recognised and received from you was a combination of all four.

    I have to say that I’ve used this method a lot in my planning and in numerous conversations with senior stakeholders at the start of a project or training implementation. I think you’ve just given me another fantastic example to use.

  • Sean,

    Thanks for your comment and kind words. I will check out the Return on Intelligence model.

    bmcd

  • Of the 10 companies I’ve worked for I’ve only had a few even be gracious with training budget. Many companies tend to only engage training methods when they purchase new technology and have to deploy training to get their staff up to speed. Another challenge is when they want to only send one person to training and then have that person train everyone else. Great idea if your one person knows how to train others. Bad idea most of the time.

  • What a great article, Brian! This is such an important topic. It goes hand-in-hand with what I was trying to say in a blog post I just wrote about implementing social media strategies at large companies:

    Basically, you may end up wasting your marketing efforts is you don’t follow through with proper employee training.

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