In India though HR is aware of the ROI process, implementation has always been a challenge.
ROI on Training is a technical HR subject. This has also been neglected in Business Schools.
Implementing the right ROI process, answers the following questions
- How can I add value to my organization?
- Can I make HR as a profit center?
- How can I implement ROI on training in my organization?
- How can training be measured?
- Can I attach a value to learning?
- How do I gain expertise in ROI calculation?
- Can I measure tangibles as well as intangibles
With reference to Indian Context following are the steps that need to be taken into account. Though Jack Philips Model is advisable
- Pre-training analysis of participants. Where do the participants stand interms of their understanding of the subject. Eg. If it is a Critical Thinking Training, what exactly is the HRlooking forward to in-terms of impact should be quantified.
- Setting quantifiable objectives. Preferably objectives should not be more than three.
- Identifying the costs/ Investments done for any training. Remember it is a big list. With minor investments taken into consideration.
- Analysing the costs. If it is worth that investment?
- Data collection tools and questionnaires in place to assess the knowledge transfer.
- Now comes the implementation.
- Isolating the factors that may affect the post training impact.
- Converting data into monetary value
- Calculating ROI
- ROI report.
Once this steps are followed it is all the more easy. Yes setting quantifiable objectives is the KEY. Once this is done correctly implementing ROI is all the more easy.
Challenges for implementing ROI processs
1. Lack of awareness of ROI process
2. Setting quantifiable objectives
3. Management interviention
4. Training not getting due importance
5. Thinking shorterm
6. HR may not be technically sound
ROI on training FAQs
Q. How
will ROI benefit my organization?
Understanding the ROI processes a
big eye opener as to how much we have deviated in setting training objectives
in a training programme.
An ROI on Training implementation addresses the following
a. To understand if the training is
worth the investment
b. Will be able to calculate ROI per
training invested
c. How can the training impact be
measured
d. To understand how each individual
undergoing the training programme contributes to the revenue/ profits
e. For budgeting
Q. But
are HR averse to calculate ROI?
Calulating ROI is a technical HR
subject. ROI requires organization wide understanding. However, once the
detailed process of calculating ROI is understood it become easy
Q. Can
I measure the financial implications?
Calculating ROI gives the training
manager an opportunity to
measure the financial value of a training programme. This helps the training
manager to improve his or her credibility in the organization by being able to
talk the language of line management in showing the tangible benefits of
training.
Q. Is
it difficult to calculate ROI?
It
is not difficult, yes it is challenging. All you need to do is some form of a
pre- and post measurement of performance, as well as determining all your costs
as well as the financial benefits of training.
Q. Can
ROI be calculated for soft skills training?
While it is certainly more difficult to calculate ROI for soft skills training than for technical or other training, it is indeed possible to calculate ROI for soft skills training. The challenge is to determine the cost items and benefits of training. The solution does not lie in the "skills", but in the outputs achieved in terms of the financial benefits as a result of the training.
Q. Will I be able to calculate the ROI on sales training
programmes?
Yes
you will be easily able to do it once you follow the ROI process
Q. What kind of costs will I be able to
calculate?
You
will need to calculate all type of costs that go in a training programme. It is
a myth that training means cost. In fact it is a great investment which reaps
heavy benefits.
Q. Do I need to know statistical concepts to
understand ROI on training?
Basic statistics is required. Concepts such as averages, standard deviation
and correlations are necessary. Also
it is important to capture the correct data.
I am sure implementing ROI for one training (as a pilot) gives the immense confidence to implement it across the organization. For this HR needs to be technically sound....
HAPPY IMPLEMENTATION ...
Dr. Sonali Wagle
