ROI - Begin with the end in mind

Famously said by Steven Covey "Begin with the end in mind". Very true... the first step towards implementing the ROI process is to begin with what exactly are we looking forward to from our interventions and training. Do we have clarity? If yes, have we set quantified objectives?

For sometime  now I get calls from HR professionals to understand how soft skills training initiatives can be measured. For people who find it challenging to set quantified objectives, I suggest, you first start with setting quantified objectives for a sales training program. Organisations invest heavily in a Sales training program - be it training or coaching. All industries including IT, Pharma, Retail, Consulting, Finance and every company irrespective of the industry invest in sales training.

Below is a case study to set objectives for a sales training program. The case is based on Phillips methodology of ROI process.

Objective Setting for ROI – Sales Training Programme

Traditional Objectives for a Sales Training Programme

After participating in the programme, participants should be able to

• Increase revenue by 25 % 
• Lead from the front
• Be flexible with different leadership styles

Revised Objectives as per ROI Process

Levels    Objectives

1                     Reaction level

s  Obtain a positive reaction towards the programme

s  Relevance of the programme

s  Action plan

2                     Learning level

s  Thoroughly understand the sales process

s  Steps used for cold calling

s  Methods used to close a deal

s  5 methods of handling objections

3                     Application

s  Conduct 25 cold calls daily

s  Convert the 25 cold calls into appointments

s  One appointment scheduled per day

s  One follow up appointment scheduled per day

s  Complete action plan

4                     Business Impact

s  One deal of minimum Rs. 50,000 to be closed per week

s  Customer satisfaction index to rise by 20%

s  Generation of repeat business for Rs. 1,00,000 per client

s  Retention of key sales personnel

5                     ROI

     s ROI  - 30 % increase in revenue 

The above case study represents the ROI objective setting for a sales training program. The method used for isolating techniques is estimation and control group. One can also use nominal group technique if need be as a isolation technique.

Once the above is implemented it becomes easy to implement the same in a coaching, leadership, emotional intelligence, conflict management, management development programs and so on.

I suggest you can try setting objectives for software implementation, coaching, building trust and  leadership. Its easier said than done...My experience.

Challenge yourself and the trainers. Only thing you as a HR should remember and do everything under the sun to add value which is valued....

Can HR be a PROFIT CENTER?

Hi!

Here goes the popular statement in the corporate world that 'HR is a cost center'.  I am sure most of the HR professionals would agree to it. Atleast my research says that.

Recently a VP HR mentioned, But HR is a cost center, isn't it?

The word BUT gave me a feeling that HR professionals have more or less convinced themselves  that indeed, HR is a cost center.

How many of us have passionately felt that HR is a profit center?

Yes you heard me right HR is a profit center unless we provide the same with factual Data.

During my recent visit to US to meet the Jack Phillips team, I realised that in US, HR professionals are THE HR Professionals and command credibility. Unlike here where HR people are more of coordinators rather than Strategic decision makers.

The answer is simple - we ourselves are to be blamed. I remember in my earlier organsiation my boss used to frequently mention the job of a HR is to cut cost. I failed to understand if cost needs to be cut then hire auditors why HR personnel.

Like the Legendary CEO of GE Jack Welch  was named Neutron Jack as he believed in Cut cost and grow. Cutting cost was not the essence, the essence was to not only cut cost but grow. And grow exponentially. Its history, A truly task oriented yet a peoples person, Welch took GE to new heights.

HR people need to have that deep earning towards results.

Below is an excerpts from my research interview with a VP HR from a Multinational company

Me:  Do you do training in your company
VP HR:  Yes we do and we invest around 30 lakhs per year in training technical as well as behavioural.

Me: Oh that is nice. How do you know that the training has impacted.
VP HR: We definitely take the Kirkpatrick's model. We do take the reactions post training to understand how the training was, the trainer's knowledge. 

Me: But that is only the reaction level in the Kirkpatrick's model. How does the reaction measure the impact for which the training was conducted.
VP HR: We can see the impact.

ME: How do you measure it?
VP HR: We donot measure it. Infact there is no need to measure it. It is visbile.

ME: That is nice. But how do you prove to the management that the training was justified.
VP HR: QUIET

VP HR: I get what you are saying.
ME: Absolutely no data means no impact. Unless you are able to support your impact claims with data it doesnot make sense.
Look at finance and sales professionals why can they claim that they are the drivers of the company.

VP HR: I know because the numbers speak for themselves.
ME: Now you got the point. So to claim an impact HR professionals need to back up any process or training implementation with numbers.

So my friends, post this interview the VP HR realised the value of data and the need to make HR a profit center.


Currently we have two models of ROI running successfully the first Kirkpatrick's Model and the second Phillips Model. However, there is a significant difference in both of them. My favourite is the Philips model as it is more practical to implement

It is extremely vital to prove HR as a profit center. So next time you are implementing a process or an intervention or a training, begin with the end in mind.

Ask the question to yourself How can I quantify the results? Don't just be satisfied with reaction and learning level.

For that setting quantified objectives is the key...

If you have any queries you can mail us on contactus@exponentialadvisory.co.in

Till then think how you can make HR a profit center...

ROI on Training a Myth or a Reality

Dear HR Professionals

Last year I received numerous calls for more technical HR specific interventions.
It was a great year to see that HR is gaining strength year on year.

More importantly HR people themselves are owning and are self driven.

Interventions related to competencies, benchmarking, best practices with respect to company culture, need to train employees, how HR can be linked to Finance were some key areas on which we researched last year.

Our open workshops gathered a good feedback. Some of workshops included
1.   Pre appraisal interviewing
2.   ROI on Training
3.   Appraisal and KRA setting
4.   Compensation and Benefits

 To begin with I want to detail the process of ROI on Training

The first step to begin with the ROI process is being mentally prepared for it. ROI cannot be implemented in isolation, it has to be imbibed as a part of culture and there is where HR plays a key role. Once this is implemented as a part of culture then, everything falls   in place.

The next step is deciding "the objective: of any training programme".  Many a times executives tell us that we want to conduct leadership programme - situational leadership programme. When we counter question them as to what is the outcome and how are they financially going to measure they are puzzled as they themselves seem lost.

They further mention it is a part of their KRA to conduct a training on Situational Leadership and so they are in the process of looking for a good Trainer.

Thats one major reason why training is not taken seriously by the management. As HR professionals fail to quantify HR training. I do agree that there will be intangibles but of course they can be taken care off; only when we are clear on the objectives and our training process is transparent and measurable.

About the Training Process Later...
Till then work on the training objecetives

ROI on TRAINING - INDIA

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

1. 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.
2. Setting quantifiable objectives. Preferably objectives should not be more than three.
3. Identifying the costs/ Investments done for any training. Remember it is a big list. With minor  investments taken into consideration.
4. Analysing the costs. If it is worth that investment?
5. Data collection tools and questionnaires in place to assess the knowledge transfer.
6. Now comes the implementation.
7. Isolating the factors that may affect the post training impact.
8. Converting data into monetary value
9. Calculating ROI
10. 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