Organizations in the U.S. alone spend over 150 billion dollars on
training and employee development every year.
With that type of investment, coupled with the intense focus and
unflinching scrutiny most businesses place on the bottom line, one would
naturally assume that the “payoff” or ultimate benefits (e.g. increased
productivity and revenue) of all these training programs are being rigorously
measured and monetized down to the last penny.
Surprisingly, this assumption could not be further from the truth. One of the biggest conundrums in the
corporate world today is why organizations are not measuring the business
returns on these colossal training expenditures. Even the most
bottom-line–minded businesses, the ones that pinch and squeeze every penny to
show profitable growth year over year, seem to be oddly accepting and
complacent with their inability to demonstrate an aggressive return on their
training investments. In fact, the vast
majority of organizations don’t even take the most fundamental steps to
determine if the training is even “working”.
That is, does it actually improve the knowledge, skills and performance
it was designed to improve? Are
employees more productive than they were before the training? Are they doing anything different back on the job?
Granted, turning all the benefits of training into solid, top-line
dollar values is no easy task, but most organizations don’t even try. They collect little or no data to connect
training events to employee behavior, they collect no data connecting employee
behavior to business results, and they certainly never come close to building a
sound ROI case for their training investments.
When we look at the magnitude of the these training budgets compared to
the amount of comprehensive impact studies that are being done, we are
instantly faced with the irrefutable fact that other-wise smart, savvy,
profit-focused organizations are sending millions of employees through training
experiences, spending billions of dollars on training every year, and quite
literally have nothing to show for it.
You don’t need to be a Finance guru to know that without some visible
and tangible benefits on the top line you’re always going to have a
disappointing and dismal bottom line.
Instead of focusing on the value added by the training, business leaders
and stakeholders will always be forced to focus on what they can see and touch
- the expense of training. After all,
the only thing they have in front of their faces are the costs. And to make matters even more challenging,
companies have always and will continue to go through great lengths to define
all their costs in exhaustive and excruciating detail. So, using the simplest Benefits Costs Ratio
analysis (BCR), what almost all organizations end up with are some very vague
or absent numbers above the line and some very real and punishing numbers below
the line. What kind of ROI case can you make with this data? If we ever want senior executives to think of
training as a profitable business imperative, instead of a distractive and
costly diversion, we need to define these benefits in detail, monetize them,
and create powerful stories of impact and ROI.
Put simply, we need to give them “something to show for it”.
This blog will be devoted to helping all training and business professionals tell their story of impact.
