Measuring the return on investment of training is one of learning and development’s holy grails. The good news for unbelievers and RoI laggards is that it’s probably a waste of time.
Whisper it not among metrics obsessives and seekers after training’s holy grail, but it seems there are heretics who believe that measuring the return on investment (RoI) of training is largely a waste of time.
Why? Well for starters, there is the argument that it is not cost efficient: the time and effort spent trying to use complex formulas to calculate metrics is too much when compared to the value of knowing the RoI of training and learning and development.
Second, there are some serious doubts over the robustness of RoI formulae – with too many variables, some argue that calculations are not worth the paper they are painstakingly printed on.
The third, and perhaps the most compelling, argument is that most organisations are not interested in learning and development RoI figures anyway.
This point is backed up by a study in December 2004 by IBM and ASTD Research, where business executives in 26 organisations, across 11 industry sectors, were asked how learning departments should be held accountable for adding value to the business.
Bottom of the pile
Improving outcomes and productivity came out top, with RoI seen as one of the least important factors. Indeed, those surveyed were more interested in seeing stakeholder perceptions and correlations between factors such as role competence and business impact than they were in hard RoI figures.
Charles Jennings, global head of learning at Reuters, believes these results provide a compelling argument. “Learning managers spend a lot of time trying to measure RoI to justify their own existence, but metrics are not the key thing that people such as the chief executive and financial officer are interested in.
“You can’t expect people to be interested in the results of measuring learning, but they will be passionately interested in how it impacts performance. A customer services manager will not care about RoI, but they will want to understand how learning improves customer satisfaction,” he says.
Instead of focusing on metrics, Jennings says that learning managers should be concentrating on building relationships with stakeholders.
“You need to create trust with senior managers so they believe that learning is adding value without needing to measure the exact impact. If you focus on very detailed metrics, you could end up in a situation where you are perfecting the irrelevant and caught up in the complexity of the process. You have to look at the effort versus the value you are getting out of it.”
Another RoI doubter is Donald Taylor, strategic alliances director at management software company InfoBasis, and chairman of the Learning Technologies conference.
“With strict RoI formulae, you have to adopt a very rigorous approach to decipher the value. In most cases, it’s not worth it – it’s a very difficult way of showing value. What you need to find out is the business value. You can show that as a monetary expression, but there are other ways and these are about reaching business goals. This is the feedback that line managers want to hear about,” he says.
Indeed, Taylor says that as long as costs are “not out of control” and training is aligned with organisational objectives, there should be no need to justify training spending in monetary terms.
But Andrew Mayo, director of Mayo Learning International, says RoI calculations can be worth doing, but often fall down because they are rarely done thoroughly. He says that reasons for this are time, skill, and even a reluctance to know the answer.
“More often than not, I think there is a psychology of ‘but it’s history now anyway – people liked it – what’s the point?’. But there’s no doubt that a lot of training has a very questionable RoI.
“The real problem is that it is quite often very difficult to attribute any bottom line financial benefit to a particular intervention, and often when tried it has little credibility. The truth is that a lot of training and development is not aimed at the financial bottom line, except very remotely. So no wonder it is difficult to prove,” he says.
On the other hand
Paul Kearns, director of HR consultancy PWL and author of Evaluating the RoI from Learning (CIPD, 2005), has his say on why measuring RoI on training is worth the effort:
“First, there is a total misconception that RoI means doing lots of measurement, takes lots of time and money – that’s nonsense. Anyone spending a lot of time doing RoI studies is most probably wasting their time.
“The ‘too many variables’ and ‘too many other factors affecting performance’ are both red herrings – there are equally too many variables for any other department to ‘prove’ that it is making a difference.
“An RoI formula can be perfectly robust – it’s just that it demands monetary figures for ‘benefits’ which most trainers and especially management development people are reluctant to specify.”