Many conversations between managers and leaders stem from necessary organizational changes when facing new demands of the business environment. They discuss renewed thinking in generational transitions, flexibility, engagement, and new expectations for employee performance, as well as the urgent need to accelerate the development of leading talent for self-directed teams to create more value for the client.
Similarly, investors, shareholders, and entrepreneurs expect more results in less time and with higher returns. They know efforts to revitalize the organization and build new skills within a team take time. Yet, they also know that, if they don’t respond quickly to changing customer needs, then customer loyalty will be harder to uphold…and, along with it, the survival of the company.
At this highly challenging juncture, talent development areas are looking to present better training proposals to empower employees on smaller budgets and in the shortest timeframe possible. Productivity and profitability in training are, of course, here to stay. Human capital needs to improve the assessments of training benefits in order to justify new investments in talent to the management team.
Indeed, the task of correctly isolating the returns on training and assessing its tangible results has become even more important. Below is a practical five-step guide that makes it easier to measure the real impact of training when recommending training proposals:
1. Take advantage of the company’s current indicators.
Your organization likely has some parameters for assessing employee performance and some key performance indicator (KPI) tables that measure an area’s contribution to the company’s performance. Evaluate results before and after the talent training without creating new indexes as you go. For example: sales, profits, collections, savings, costs, productivity, defects, customer satisfaction, complaints, new products, cycle times, delivery times, flexibility, accidents, working environment, turnover…
2. Work as a team with the leaders of the training area.
Much of the information about critical development will come from the business area of the employees who are participating in the training process. Work with their leader to detect subtle changes in the participants’ behavior that can only be observed through daily interaction. Help the area leader to correlate changes in attitudes, new conversations, opportunities for improvement, and proposals against quick hits or for preliminary results.
3. Work with a pilot group, isolate benefits, and measure results.
In coordination with the area leader and based on identified development needs, form a preliminary group to monitor the training process. Directly observe qualitative and quantitative benefits in the different layers of the Kirkpatrick-Phillips model—reactions to training, initial and final diagnostic assessments, behaviors before and after the training, area KPIs, and business project impact.
4. Select a reference group to compare effects.
Define a control group, preferably among employees with the same role who will participate in the training or, if applicable, with a competency level that is similar to that of the pilot group. The intention of establishing a reference group is to match, as much as possible, environmental conditions and circumstances between both groups so we can isolate and measure the real effect of the training, discounting inertial benefits of previous training efforts, ongoing projects, organizational changes, self-development, or the company’s organic growth, among other factors that influence the result.
5. Evaluate the net benefit of talent development and calculate its ROI.
According to the ROI process, measure both the pilot and control groups for their reactions, learning achievements, behavior, and results in the chosen indicators. Find the net quantitative benefits of learning by subtracting the performance of the reference group from that of the pilot group (change in sales, change in productivity, change in turnover, change in savings, change in quality, change in response times, etc.). Then, divide the financial value contributed by the investment made in talent to get the ROI of the training. Extrapolate this result to the training’s target group and justify your talent development proposal in financial terms.
About the author:
René C. Rangel Colmenero is a project director and business consultant at IDESAA. He specializes in developing business and innovation projects focused on improving competitiveness and promoting profitability and sustainable growth. He has participated in executive diagnostics and worked on leadership and management development programs. He offers management consulting and business coaching for the strategic planning and professionalization of commercial, service, and manufacturing companies.