Demonstrating return on investment (ROI) is notoriously challenging—here’s how.
Industry insights
Margaret Chiu, Senior VP, Group HR, AIA, points out that despite the difficulties in measuring training success, traditionally there are four basic criteria that HR can utilise to help them measure the effectiveness of their learning and development programmes:
- Reaction—whether the participants are happy or not
- Learning—the learning of knowledge or skills
- Application—how people can apply the knowledge or skills learnt to their work
- Results
AIA focuses on the ‘learning’ and ‘application’ aspects when measuring training effectiveness. The HR team at AIA frequently check to see if employees have learned the required knowledge or skills to conduct specific tasks, and if they have they applied these to their work. To achieve this they conduct post-training assessment one, three and six months after the training, to follow-up the relationship between ‘learning’ and ‘application’ and monitoring results with a view to continually improving and enriching our training curriculum. AIA has also recently applied the ‘net promoter score’ to help gauge training effectiveness, and participants are now asked if they would recommend the training to others—which provides a useful indication as to how participants view the quality and effectiveness of the training. In terms of metrics that companies might adopt to help measure the success and sustainability of training programmes adopted, Michael Fraccaro, Head of Learning, Talent, Resourcing and Organisation Development, Asia Pacific, HSBC suggests three key strategies that he utilises. Firstly, and most obviously, analysis of the training event itself in terms of the level of satisfaction and how individuals feel as the result of attending a particular programme. Secondly, analysis of the impact a training and development solution has on the businesses bottom line; and whether the training solution actually met the original design objectives—both learning and business objectives. Thirdly, by conducting an annual employer attitude survey that measures the extent to which staff feel training provided by the organisation is effective in helping them do their jobs.
Academic insights
From an academic perspective, Dr Ardeshir Geranpayeh from the Department of Applied Linguistics at Cambridge ESOL, also admits it is very difficult to relate the success of training to a percentage increase in profits, but himghlights that successful benchmarking can help HR save money in the long run by enabling their companies to target training where it will be most effective—ultimately making the organisation more competitive. If you can show objectively, using an independent system, that you’re getting staff with the right skills, and that your training programme is improving those skills—measured against internationally recognised benchmarks—then you are demonstrating a clear return on investment. In this very challenging economic climate the challenge for all managers is to demonstrate that budget is well spent to ensure that no further cuts are actioned. HR managers have a particularly difficult task as cuts to training budgets imply that accountability has increased even more for training spend. However, at Cambridge ESOL we have found that assessment requirements within global organisations continues to increase.
Organisations have recognised that it is important to ensure that employees have the language competency to compete efficiently in the global market especially during challenging economic times and using a tool that is well researched can provide them with the confidence to make effective decisions for recruitment, promotion, placement and employee development needs.
Benchmarking can ensure that organisations make the right decision about language levels required for particular jobs and do not place employees on training programmes that are not needed or train employees in skills not required for the job they are doing. The approach Cambridge ESOL has adopted enables you to identify the correct level needed for a job, assess employees and then place them on appropriate courses. It is a well-researched tool that enables HR managers to measure the effectiveness of decisions being made.
This is also complemented by learning packages and the BULATS assessments that are cost effective, and meet global standards enabling HR managers to make accurate decisions for training and development programmes. Trusting professional systems is key—in the same way as companies use HR specialists to help them handle complex specialised HR issues, HR professionals can also make their lives much easier by working with experts in language to develop a solution that meets their needs quickly, economically and reliably.
Dr Chris Chan, Associate Professor in Accounting and Finance, Faculty of Business & Economics and Assistant Dean & Director of MBA Programs, The University of Hong Kong points out that training and development are highly visible costs and ROI can be very difficult to measure. However he stresses that, “Human capital should be seen as a strategic asset, rather than cost centre.” He added, “This can be done through the HR scorecard that helps policy implementation and enables a shift from cost to value.” He divided the HR scorecard into strategy, operations, internal processes and customers and finance. He recommended the identification of HR deliverables so that managers understand and are therefore willing to pay.
To measure or not to measure…
Tom Armstrong, Head of Human Resources, Asia/Japan, Aon Corporation reminded HR at AmCham’s Human Resource Conference 2010 that anything can be measured, but what is important is whether or not it is of value. When measuring human capital firstly you must decide how to measure. HR strategy and metrics must be linked to the business strategy and have input from stakeholders—find out how they want it published and keep it simple and transparent. He stressed the importance of what he described as being, “Joined at the hip with the CEO.” HR Directors must speak the language of business and understand what a CEO needs from HR, for example if they are fire, you should be water. HR must resolve people issues, sensitively and completely so they do not reoccur and channel corporate HR and to keep those pressures away from the CEO.
Paul Arkwright
Publisher
