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Training ROI or Training ROE?

Submitted by  on August 10th, 2012

Business man hand writing 100%Workplace training is (or should be) a business function, yet management often does not treat it as credible – for good reason in an overwhelming number of cases. For trainers, instructional designers and Learning and Development (L&D) folks housed in HR, it is imperative that they start with how to align training results and organizational results.

While no one likes a poorly organized, demotivating lecture that does not sustain the motivation to learn (Level 1 evaluation), it is important to move far beyond the learner satisfaction level of evaluation. If the L&D folks cannot demonstrate skill/knowledge learning, retention and application over the long term for the benefit of the organization, then it will be impossible to have a shred of credibility that prevents training from (rightly) being seen as merely a cost-centre. Meeting strategic business objectives is central in business and therefore tantamount to where the rubber meets the road in L&D.

While the Return on Investment (ROI) Methodology, developed by Dr. Jack Philips, takes some effort and time to seek the data and calculate, ROI should be something to strive for, especially when training investments and stakes are high. Only roughly 5% of organizations actually conduct ROI on their training programs, and there should be a lot more effort to tie efforts to business results (i.e., organizational level performance and the bottom-line). But to throw up one’s hands and say ROI, or even Level 3 evaluation (application of learning), is too difficult or can’t be done is a “cop out.” Jim Kirkpatrick’s new twist on the Four Levels of Evaluation, developed by his father (Donald Kirkpatrick), is a clever retooling of the 50+ year old model. I enjoyed reading Training on Trial, Jim’s recent book on the new direction and energy for capturing training program results and tying them to valued business results.

The Four Levels now wisely begins with a business results focus (Level 4), yet highlights “ROE” or Return on Expectations (*not to be confused with the C-suite term “Return on Equity”). Of course, meeting stakeholder, and particularly sponsor, expectations should be a given in any engagement – internal or external. This new take on “ROE” will confound senior managers, such as CFOs, who know it as Return on Equity. Trying to pass the new ROE term off as legitimate for strategic learning partners seems foolish. It amounts to little more than a return to the much maligned smiley sheet or Level 1 measure of participant satisfaction or reaction. A colleague of mine is presenting on what he sees as The Lie of Training ROI. To me, throwing out Return on Investment (i.e., unofficial Level 5) in the name of convenience in Kirkpatrick’s new “ROE” is absurd.

“Return on Expectations” is noble in principle and yet a banal client or sponsor expectation for all internal or external projects. To ignore the numbers (i.e., ROI calculation) by ignoring them in favor of this new take on “ROE” will not sit well with executives or help legitimize L&D practitioners as strategic business partners who deserve a seat at the table. Trainers, business analysts, consultants and others should continue to strive for higher levels of evaluation in their work – ideally Levels 3 through 5 (application through to ROI). The thought of shaking off the responsibility to evaluate the efforts of instructional designers and trainers alike, in the name of a vague and less measurable concept (ROE) is nonsensical at best, harmful at worst. Jack Phillips wrote an article, titled Beware Vague Learning Jargon, stating his position on the ROI vs. ROE debate.

I recently met several high qualified, experienced evaluators and performance improvement practitioners at the International Society for Performance Improvement conference, who also hold membership in evaluation societies (American Evaluation Association and Canadian Evaluation Society respectively). These evaluation specialists support evidence-based practice, agreed that the new Return on Expectations concept is not so new after all and will never replace tangible metrics for training’s value-add to the organization. Personally, I side with the competence of Jack and Patti Pulliam Phillips, founders of ROI Institute, who developed the ROI Methodology, which they have written about in 35 books and translated into over 30 languages.

Training Evaluation Toolkit

Is your CEO asking you to measure quantitatively the effectiveness of your training programs and demonstrate the results in financial and non-financial terms? Check out our comprehensive Training Evaluation Toolkit. Whether you are a novice or experienced professional, this guide and toolkit will walk you through planning your evaluation exercise, collecting all relevant data, isolating non-training factors and then analyzing and reporting the results convincingly to your key stakeholders. The toolkit is packaged with a full set of reusable and customizable Microsoft Word forms and Excel calculation worksheets for all of your measurement and reporting needs. Find out more about our Training Evaluation Toolkit and download the free introductory chapter today.

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