Speak to any CEO in just about any industry and they will tell you about the fast-paced change sweeping their industry. It is a transformation coming in many guises: the need for agility, greater creativity, a customer centric approach to business….
Skilled leadership and accountability across the organization supported by effective training has the potential to unleash vast untapped potential within your team members and help future-proof your business. In today’s results-driven world, it’s imperative for your HR team to be able to measure and report on the efficiency increases that align with the overall business strategy. You’ve probably heard it before: Numbers don’t lie. That’s why it’s so important to see a discernable return on investment (ROI) from your training programs.
In the scope of training programs, ROI is the extent to which the benefits (output) of training exceed the costs (input). It’s not enough to simply set goals for improvement. Instead, it’s important to leverage data to supplement your training programs. Measuring the ROI behind training and development programs not only validates your efforts and illustrates resource allocation, but it also shows what your HR department is doing well and what they can improve on.
To help illustrate what the C-suite really wants from HR when they ask for the ROI behind training programs, consider the following.
Establish Actionable Metrics and KPIs
While it’s important for HR and other departments to track metrics such as total payroll, total compensation, and benefit costs per employee, it’s equally important to evaluate training programs beyond cost. In this regard, it’s important to link training ROI with results. To ensure success, establish actionable, measurable key performance indicators (KPIs) that go well beyond cost. Keep in mind that C-suite managers are concerned with HR tracking performance-driven metrics that display organizational efficiency and organization.
Here are a few to focus on.
- Time to efficiency for employees and management
- Cost per turnover
- Recruitment cost per employee
- Training spend per employee
This is entirely possible for organizations, no matter the industry. For example, highly regulated industries such as healthcare or finance may track training completion rates to ensure that employees are up to speed on compliance and safety measures. Sales teams can track quotas to ensure that employee development efforts are effective. Finally, quick-service restaurants and retail companies can track customer service metrics such as response time and case resolution to ensure that training is working. Ultimately, the key metric to reference against is this: Will the actions resolve a pressing business problem? Measure and show improvement against this and the person allocating the budget will love you for it.
Set the Stage for People Feeding the Business Future
No matter what metrics you track, the C-suite is interested in data that outlines the overall effectiveness of training programs. To gain a comprehensive overview of training programs—and to maintain long-term effects—measurement should align with overarching business goals and KPIs, not just individual progress. Ultimately, the goal of your training programs should be to set the stage for the future success of your employees.
To identify training ROI, it’s important to first identify core competencies that your training programs address. Outline exactly what these programs entail for front-line employees, mid-level managers, and senior leaders and management teams. What are the core competencies and skill sets that are to be expected following completion? Next, analyze where your employees currently are, followed by the desired end state, and how training can positively alter their behaviors and performance. Finally, remember to compare the desired results with both quantitative and qualitative returns.
By outlining core competencies and expected progress by job title and responsibilities, you’re standardizing the training process, quantifying the ROI of your programs, and setting the stage for future success.
Identify and Measure Signs of a High-Performance Culture
High-performance corporate cultures embrace change, develop strong leaders, and fuel growth and success. Change is central to growth, and the future of most businesses is contingent on your team’s ability to identify how to evolve, learn, and grow. To link training efforts to your overall company culture, it’s imperative for HR to align cultural goals and training programs.
Signs of a high-performance company culture include lower turnover, clear career pathways, and high employee engagement, all of which are within HR’s purview. Engaged organizations realize that setting their people up for success results in continuous improvement and growth for both employees and their overall organization. High-performance cultures view talent as an asset, and they customize training and development around the organization's overarching objectives and direction for talent to translate into results.
It’s important for HR to align with other key stakeholders so that everyone is on the same page about organizational goals and your strategies for making them come to life. HR should work to determine what training resources are necessary, how they will communicate with the C-suite throughout the process, and the various roles and responsibilities of those involved in these programs. Create a timeline with milestones to ensure accountability so that you can measure success along the way.
Building a high-performance culture takes work, but a positive, proactive program that links actionable metrics with quantifiable training ROI will produce positive results for the life of your company.