MEASURING ROI WITH A TRAINING ADMINISTRATION SYSTEM

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1 MEASURING ROI WITH A TRAINING ADMINISTRATION SYSTEM Proving ROI is now a standard expectation across most business functions. This paper will look at how best to use a Training Administration System to prove ROI for your own training business, and for your customers using your services.

2 Background Now more than ever, pressure to prove Return on Investment (ROI) is constant across all business functions and efficiency around reporting of ROI is of the utmost importance. This paper will consider which data you should be analysing, and providing to your customers, to ensure is highly valued within their organisations. If you are not measuring the right success metrics, customers may struggle to determine the ROI of your services, which may put your professional relationships at risk. Training providers can use this paper to help retain customers, improve profitability, increase customer satisfaction, and ensure competitive advantage. Introduction Training is a highly competitive marketplace and to stand out, providers need to work strategically with customers to ensure the service they provide meets customers needs now, and in the future. When buying training, savvy purchasers will be looking out for more than just the commodity of within their supplier/provider network. They will also be looking for providers who support the Learning and Development (L&D) department to work strategically within their own organisation. L&D departments often have their own internal struggles defending an L&D budget, and if, as a training provider, you can t help them prove its worth, you could lose out in the end. Purchasers of training are faced with the ongoing challenge of maintaining traction within an organisation, and as L&D rarely has a seat at The Board, the L&D team s voice to the HR Director has to be loud and clear; they need to communicate clearly, and demonstrate with reportable proof, that the training they deliver helps the organisational objectives become realised. Successful training providers will actively support this demonstration. Identifying Key Performance Indicators: Training & Development So, what can be put in place in order to assist customers with this ongoing dialogue around value and investment? It s important to establish clear business Key Performance Indicators (KPIs) in order to set out measurable business objectives. Consider which analytics the management team or stakeholders may consider critical to the health of a business, and which are relevant to build Training and Development KPIs. Depending on the being offered, this may include sales, profits, employee turnover, retention, audit compliance, or incidents. It is helpful to classify Training & Development KPIs into the following types, in order of value and effectiveness:

3 KPI Goals: These are KPIs which directly measure performance against the stated training, and development outcomes OR the business objectives themselves. For example: Enhanced skill levels (e.g. versus competency levels) Improved performance vs. budget / reduced costs Increased sales / market share (e.g. where there was targeted product knowledge training) Shorter processing times Reduced error rates / re-work Improved exam or qualification results / pass rates Supportive measures: These are KPIs which measure the efficacy of the Training & Development function, for example: Trends and average increases over time based on participant satisfaction scores both immediately after a event and 3-6 months later. Support this analytic further by adding the manager score trends. This helps support whether the was retained. % occupancy rates on events vs. optimal numbers Individual cancellations / chargeable course cancellations, if applicable Costs Not useful: These are KPIs where the link to training, & development is too far removed to be traced, for example: Share price performance Overall company profits / profitability OR KPIs which do not relate to an optimum position or meaningful target, for example: Training days Total training spend (although spend per employee can be relevant for discrete programme elements - see above) Mapping Deliverable Objectives Preparation is key. If organisations don t clearly define and map out their objectives early on, they will fail to measure success rates later down the line, and it is more difficult as a provider to assist them with their analysis. The best way to ensure training is strategic and designed around improving the business, is to map deliverable objectives to organisational objectives. Of course, training providers need the opportunity, through post-course evaluations, to ask the questions they need in order to manage their own continual improvement e.g. Instructor ability or whether the course covered the outline.

4 However, real ROI statistics for the customer will only come from analysis as to which of the customer s organisational objectives the is mapped to and whether it helped achieve that objective over time. The goal is to link the impact of training to actual business results. Easy to say, harder to deliver. Or is it? Some might shy away from trying to establish this link, particularly because there is often a cost involved especially in time but with the right preparation it can certainly be done. Links like these need to be drawn up at the outset and during the Training Needs Analysis (TNA) stage and with the support of the provider and customer. How? Good L&D departments will use HR strategy processes to draw up an impact map. An impact map is a process used to illustrate the relationship between organisational objectives, intermediate objectives, and the skills and behaviours required by individuals to do their jobs and achieve the organisational goals. As a simple example, consider a team working on an IT helpdesk, who are provided full training on certain specialisms, so are then more likely to offer more confident support, which in turn leads to happier, better customers, which ultimately can help bring in referrals. This shows how the behaviour of each employee can affect the business. Remember, don t try and cover all the business objectives in every training session just the ones that can be directly impacted. Helping customers through this process isn t something only bespoke training providers can assist with. Even providers of off-the-shelf content can help their customers map specific objectives and track these through post course evaluation or in course assessment, or both. The LMS used by the customer, and/or the Training Administration System (TAS) used by the provider, should support this. Technology shouldn t be a reason to not track KPIs, in fact, it should enable and simplify the process. A good TAS should have the facility for Client portals and customer bespoke evaluations and report, where you can provide log-ins to the customer and make the procurements and evaluation of as simple as possible. Added-value such as this, customer dashboards and selfaccess reports, will strengthen your relationships with your customers and give you the competitive edge. What questions should you be asking your learners? Consider which questions to ask learners pre- and post- course delivery. If you are a provider with a generic Happy Sheet post-course, then you can definitely do more! Purchasers are demanding more of their suppliers and their systems, and their employees. Employers providing training to enhance employees career paths should make completion of post-course feedback mandatory in order to ensure the best data analytics and consequently get the most from their L&D budget year on year. Encourage your customers to do this; the better the data you can collate and provide, the stronger your relationship with your customers. Good evaluation data should ask the right questions, and assist both the supplier and purchaser of training in order to define ROI at a later stage. Ultimately, the best source of KPIs is from the

5 customers you serve - why not ask them to give you specific, measurable outcomes that will help them decide for themselves the extent to which you are helping them improve their own performance? The KPIs you decide on and measure should support HR through performance reviews, CPD and ultimately appraisal and talent management. In essence, well-planned KPIs can help every aspect of the business and cement the value of the L&D department. How best to approach evaluation and establishing KPIs? Since 1959 when Donal Kirkpatrick first published his ideas discussing Evaluation Training Programmes, his theory has become the most widely used model for the evaluation of and training. The four-level model is now considered industry standard. Here is a re-cap of those four levels: Kirkpatrick Description Example Relevance & Practicability Reaction How the delegates felt and personal reactions to the Happy sheets Post training surveys Immediate Easy Learning Measurement of the increase in knowledge or capability Test pre and post Interview or Observation Simple but required more thought and investment Less easy for attitudinal development Behaviour Extent to which trainees applied the and changes their behaviour sustained over period of time Assessment not a snapshot as people change in different timescales Line Manager questionnaire. 360 degree observation Only feasible with a well-designed system Challenging but feasible

6 and interview over time Results The effect on the business or environment resulting from improves performance Assessments with specific KPIs and criteria Process should overlay normal and good management processes Very challenging over an entire organisation. Should be tied in with ROI Since Kirkpatrick established his original model, other theorists (e.g Jack Phillips), and indeed Kirkpatrick himself, have referred to a possible fifth level, namely Return On Investment (ROI). ROI could easily be included in Kirkpatrick's original fourth level 'Results'. The inclusion and relevance of a fifth level is therefore arguably only relevant if the assessment of Return On Investment might otherwise be ignored or forgotten when referring to the 'Results' level. When looking at Kirkpatrick s model, it s easier to really see how the processes and structures in place to support analysis are the key to being able to demonstrate and development ROI. When designing the LMS and TAS at Enterprise Study, one of the key features of both systems is a sophisticated but easy to use reporting mechanism. This allows for reports to be generated across a number of different spend areas therefore allowing more accurate spend (ROI) analysis. Building a ROI Toolkit To build a toolkit of processes and functions that support ROI consider the key elements of the spectrum.

7 Support application of skills in the workplace Manage effectively Align Learning with the business Evaluate Learning and Develoment Provide approprate options Integrate with HR and other business processes Create a Culture The systems that support your back-office functions as a training provider should also assist in providing a tool kit for ROI analysis for your customers. These systems should support as many areas as possible, rather than only training delivery or evaluation. Check how many areas your TAS can support for a fully functional and measurable L&D provision. Consider the below: Testing and Assessments One of the best ways of achieving quality ROI metrics is to furnish your training, from start to finish, with effective ways of collating relevant metrics that don t just rely on the post-course evaluation which can be all too easily forgotten or under-prioritised. Consider for example, whether you could implement tests and assessments to support, which could evaluate how behaviours taught transferred to actual working practice. Coaching programmes Consider coaching as an effective method to embed. People often fall back into their old routine, irrespective of the quality of the training delivered. By providing coaching programmes to support training delivery you will give individuals the best chance of changing behaviour or processes. Utilise your TAS to ensure the impact of coaching is also measureable and use this as part of your ROI toolkit. Measurable Specific Outcomes These could measure specific outcomes, such as an increase in sales following sales training, or a decrease in incidents following Health and Safety training. Additional support services similar to these can be added to your delivery programmes and add value and innovation to your customers as well as increase your profitability.

8 About Enterprise Study To get to grips with ROI, for yourselves and your clients, consider the full spectrum, building an impact map for and measuring outcomes against KPIs using evaluations and reports. If supported by your TAS, this will ensure you have all the data to hand to provide valuable KPI statistics which can be used by clients to support their own and development strategies. At Enterprise Study, we work hard to understand the specific challenges of each customer we work with. Our LMS and TAS solutions help support training companies and L&D departments in managing all elements of the process. Our client list includes training providers with as few as two members of staff, to huge organisations such as QA and Sopra Steria. Our scalable systems can accommodate the needs of organisations of any size, and feature award-winning functions designed specifically to meet the queries explored in this paper, as well as many more. If you d like to discuss your ROI challenges with us, arrange to have a free trial of the systems, or just chat through the content of this paper, mark.baldwin@enterprisestudy.com or call If we don t think our systems can help or benefit you, we ll say so. It s only by doing this, and operating in an open and honest way, that we are able to offer sophisticated, efficient and effective solutions to improve the provision of and development.