Measure Training ROE, Not ROI

Measure Training ROE, Not ROI

Training is an investment. And normally when we invest in something we expect returns, or what we call Return On Investment. Otherwise, why would you invest all that money in the first place?

But training is a bit different. In some ways it is possible to measure ROI, but the level of complexity and poor accuracy in results mean it’s pretty much pointless to do so.

Probably the easiest type of training to measure ROI is Sales Training. It’s quite simple really:
1. Measure sales people’s sales figures before the training
2. Measure their sales after the training
3. Compare the difference

We could also do the same using control and test groups. One group takes the training, the other group doesn’t, and we compare their sales figures over time.

That might seem reasonable, but both approaches make a lot of assumptions.

Firstly they assume that the value of training can only be realised over a specified period of time (e.g. 1 year or 6 months etc.). But the reality is that the value of training can last a lot longer than that, and in some cases may not even be fully realised until much longer after the training.

I once met the GM of a small distribution company here in Shanghai. He told me that the best training he ever attended was a time management course he took back in the 1980s. He said that to this day he still uses the lessons he learnt from that course. He was still gaining value from that course even decades later.

But the time period for gaining value is not the only thing ROI measurements assume. They also assume that there were no other variables.

For example, maybe sales did increase after the training. But what other factors might have caused that? Maybe the economy in that particular region was good, maybe there was a promotional campaign, maybe those sales people were more motivated because of a bonus their boss said they would give them. There could be loads of other variables that our ROI measurements might not factor in.

And another downside to ROI measurement is that it focuses far too much on certain things. A lot of the value people get from a decent training is not in being able to use a new skill, it’s in the unique insights they gained about their circumstances. Maybe that new insight helped them solve a problem that was not related to the training, but was still valuable to the business.

A far more effective measure is Return On Expectations. It’s simple really. Just find your stakeholders, ask them what they expect, deliver the training, then check afterwards it if it met their expectations or not.

And frankly, more relevant to training. Learning is a soft and mushy thing. So much of it is unconscious and invisible. It comes out in ways it wasn’t intended to, and in multiple ways as well. Learning even leads to more learning.

And the reasons stakeholders request training tend to be quite subjective. Maybe they notice a lot of complaints from their customers. Maybe they notice tension in the office. Maybe they feel their staff need to be more professional. It can be hard to quantify these expectations into measurable forms, and sometimes not even worthwhile.

So the next time you hear a request for training, take a short while to sit down with your stakeholders. Ask them two simple questions; “What do you hope to change?” and “How will you know if its been successful or not?”. And then base everything on the answers you get.

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