Donald Taylor asks why anyone bothers with ROI – TJ: The Publication for Learning and Development.

Who actually wants to know the ROI of training?

We are often told that it is necessary for the learning and development function to demonstrate the ROI of its work. Who says so? Is it the organisational leadership? If so, does it also ask elsewhere? Does the finance department have to demonstrate an ROI? Does fleet management? No. why is training different?

The truth is that training is not different, and there are only two reasons why anyone ever asks for an ROI study.

The first is to kick a conversation about a learning plan into the long grass. A true ROI study demands at least the following: good historical data about the trained delegates’ performance before training, as well as after it, a control group which is not given any training, and a monetary value for the results of any performance improvement. Practically, it is very difficult to produce these three, and so the reason you may be asked for an ROI is to send you off on a wild goose chase to find the unfindable, while the budget discussions continue in your absence.

The second reason behind the ROI question: ignorance about what a real ROI study requires. Here, ROI is the wrong answer to the right question. The question is: “How do I know this training is valuable to the organisation?” to which the answer need not be: “Because I can show you, through this exhaustive ROI study, the increased value of each delegate’s output.”

Does this mean that the Kirkpatrick/Phillips model is irrelevant? No. It only means that there is more than one way to measure value.

What your organisation needs is training (where training is the best solution) that makes the organisation more effective. What exactly does that mean? I don’t know, because I’m not in your business. If you don’t know, ask. Ask the person in charge of operations where the pinch points are, and what they key operational issues facing the organisation are. Almost certainly, there are some clearly defined problems. Not all of them will have training as the sole solution, or even part of it, but it will help in some areas.

If you operate projects frequently, are there particularly scarce skills that are slowing project start-ups or completions? That’s a straightforward training solution. The benefit: faster project completion time. In almost every case that benefit outweighs any cost of training, a full ROI study is unnecessary. Is there a staff turnover problem with new recruits leaving too early? If so, you have a classic case for an induction training solution for new joiners. Again, the cost of staff turnover far outweighs the cost of training. The CFO will love you.

This sort of business value proposition that relates directly to a perceived organisational issue is where the training department can make a real, clear difference. If you can solve any of these issues, I can guarantee that you will not be asked to provide an ROI analysis of what you are doing. Instead, you will be welcomed with open arms.