People in HR and L&D departments sometimes hear stories about how when someone presents a training budget proposal to the finance department and senior leaders, the executives will sit with their arms crossed and a skeptical look on their faces that makes it clear they believe there’s no way training is going to add value to the organization.
But this isn’t true, says Paul Leone, senior ROI consultant at Verizon and author of the book Measuring and Maximizing Training Impact: Bridging the Gap between Training and Business Results. In Leone’s experience, financial executives are receptive when anyone in an organization shows that money being spent is producing a return.
“Senior executives just want to make sure money is well spent. They are not necessarily looking to reject the proposal. If it will generate results, it’s in everybody’s interest for the organization to do it.”
It’s important for HR and L&D professionals to realize that they are not the only ones coming in with proposals based on assumptions, says Leone. Even the most tangible projects are based on best-guess scenarios.
“Let’s suppose marketing is proposing spending budget making a commercial. They have to ask for budget just like any other department. So they do some predictive analytics and some research, but in the end they are making an educated guess that the commercial will produce an uptick in sales.”
L&D professionals shouldn’t feel that everyone else is going in with rock-solid assumptions and metrics, says Leone. Everyone is in the same boat more than they realize.
“Maybe it’s because we come from the social sciences or a more academic background. Maybe we tend to be harder on ourselves or hold ourselves to a higher standard—almost as if we think we need to write a thesis or a dissertation. That’s not the case. We just need to show value.
“I can honestly say that I think it’s safer to bet on a training experience to improve performance than to take a chance on a commercial. We are adding bottom-line value with training—it’s just that we never measure it.”
When Leone looks at the typical measurements organizations can use to measure the impact of leadership training—employee retention, customer satisfaction, and employee productivity—he recommends a rank order on how to use each of these common measures to make the case for training.
“Productivity is the best and most immediate indicator of training impact. If you send someone to training, increased productivity can happen as fast as the next week or the next month. That’s where your business case should focus. Key in on performance indicators that produce revenue, cut costs, or avoid future costs.
“Customer satisfaction is also good to show, but it’s second down from productivity. In many organizations, there’s not a dollar value assigned to customer satisfaction.
“Employee retention is number three because it is long-term. By the time you show that your training had a positive effect on employee retention, so many other things over the same period of time could’ve happened in the business that could take credit for that.”
When measuring programs designed to increase the effectiveness of leaders, Leone reminds practitioners to focus on improvements made by the direct reports of the leader in question.
“A leader’s productivity is really an accumulation of their direct reports’ productivity. I’m not talking about the leader’s ability to make better presentations, better speeches, or better contributions to teams—even though those things could be counted as gains in productivity. I measure the impact of leadership training performance by looking at increases in direct reports’ performance and productivity. I look to see how these leaders are impacting their frontline people who have the tangible Key Performance Indicators we are tracking every day—sales, repeat calls, phone-ins, customer satisfaction, and the like.”
Leone is also passionate about what he calls Level Six measurement—identifying factors that lead to high levels of ROI.
“After a training event, certain factors in a training participant’s immediate work environment can make or break your training initiative’s overall impact. These factors have nothing to do with your training content, or your trainers, or with how well you planned out your delivery. This is about the manager that the training participant is returning to in the workplace.
“We conducted a recent training where the overall return on investment was about 6 percent—a modest positive return. But when we focused on a subgroup of 50 people who reported to one specific manager, we found that group had an 1800 percent return on investment! This was directly attributable to what the manager was doing with participants after the training—things like bursts, boosts, contests, and sit-downs, with the manager shadowing people to see if they were handling the calls in the way they had been trained.”
For leadership, learning, and talent development professionals still on the fence about including projected impact numbers in their training proposals, Leone offers encouragement.
“You always get the biggest bang for your buck with leadership training, because you’re sending one person through and influencing the ten people who report to that person. You’re paying for one person and influencing so many others.
“Don’t be afraid to measure the impact of your training. If you don’t, people will never know the value you bring to the organization. Speak up and show your value!”
Would you like to learn more about calculating ROI and measuring the impact of training? Then join us for a free webinar!
Leadership Training—Calculating ROI and Measuring Impact
November 29, 2017, 9:00 a.m. Pacific Time
Improving leadership skills is one of the best ways to impact your organization’s bottom line. Still, many leadership, learning, and talent development professionals struggle to identify the expected return on investment for training expenditures and to measure impact after an initiative.
In this webinar, David Witt, program director at The Ken Blanchard Companies, teams up with Dr. Paul Leone, author of the book Measuring and Maximizing Training Impact: Bridging the Gap between Training and Business Results to show you how to identify anticipated fiscal impact of a leadership training initiative and how to measure it in a cost-effective manner after the training is finished.
- How to calculate the return on investment for your leadership training initiative using Blanchard’s Leadership Training ROI Worksheet. (The worksheet will be provided to all registrants.)
- How to measure the impact of training using the methodology outlined in the book Measuring and Maximizing Training Impact
- How to improve the adoption of new leadership practices from the classroom to the work environment
Don’t miss this opportunity to learn how to quantify the impact of leadership training in proposals—and how to set up your training to deliver on expectations.
3 thoughts on “Leadership Training—Calculating ROI and Measuring Effectiveness”
very informative post American state|on behalf of me} as i’m perpetually craving for new content that may facilitate me and my data grow higher.
Pingback: Leadership development ROI
Pingback: Top Leadership Development Blog Posts this Week: 12/1/17