Recently, at a senior executive forum, a CEO asked me to share my experiences of how companies measure the return on investment of their training and development spend. To begin, training is basically the formal activity that generally occurs in a classroom or elsewhere whereas development is broader.
For example, one of the key functions of managers is to develop people. That development may manifest itself in different ways. It may occur through on-the-job coaching, performance appraisals or development planning discussions.
Development and traditional classroom training go hand in hand. Before an initiative is planned, a company should start with development planning, collecting facts and data about a person’s performance, competencies and other related behaviours.
Based on the data then one should set stretch targets based on the desired performance standards and behaviours. Training then, is an activity or a solution (among others) to address the gap between current and desired performance standards and behaviours.
Many companies don’t measure training effectiveness/impact because they find it too difficult or don’t have the bandwidth in house. We often refer to Donald Kirkpatrick’s model, which classifies various ways in which you can measure the effectiveness of training. Kirkpatrick identifies four levels.
The first level focuses on attitude. Often we perform this type of evaluation by handing out an evaluation form (happy sheet) at the end of a training programme. From this we can assess how participants felt about the training.
The second level is to measure knowledge or skills acquisition and this is fairly simple. For example, at the end of a product knowledge training programme we can have people undertake an examination to test their acquisition of knowledge.
Similarly, we can use role-plays to assess whether people have developed the required skills during a training programme.
The third level of evaluation really concerns the way the behaviour of an individual changes after completing a particular programme. Companies often perform level one and two but stop there. However, evaluating training effectiveness at level three is not as difficult as it may appear. Companies are now beginning to identify, measure and develop competencies to drive performance standards. They look at people who do well in their jobs and identify and observe the behaviours that they demonstrate, rather than focus on knowledge or skills alone. In other words, a person may be very knowledgeable and/or skilful, but may not apply the knowledge and skills on the job in the required way.
That leads us to competencies. In general competencies involve the behaviours, or the application of the knowledge and skills in ways that drive desired levels of performance. For example, some companies train their sales managers to observe their sales people in the field. They look specifically at the way that sales people behave when conversing or working with customers and how this differs with the past. They can look at the improvements in their behaviour and how that behaviour has changed as a result of the training.
Finally, level four evaluation focuses on the rupee impact that the improved behaviours have had on the business.
However, many companies still rely on traditional lecture-style training and have not built internal capacity to move beyond stage one or two.
Therefore, if companies want to get the best out of their training money they need to set standards for their T&D interventions, the way in which it should be provided, as well as the appropriate frequency. Training should not be seen as something that the company was providing because the money allocated had to be spent and therefore passed around like a football among departments, i.e. training for the sake of training.
In the final analysis, by taking the time to value how different training methods are impacting the business’ bottom line, a company would get great insights about the payoff of their training investments and also provide useful signposts to develop effective learning techniques, deliver it effectively and to acknowledge that all skills – no matter how soft – have a clear purpose and will impact business results in a specific way.