How to measure the impact of training? ROI vs ROE

At the same time as the digital transformation of our value chains and business models has unleashed competition and driven up the performance imperative across all sectors, it creates the necessity for companies to develop the skills, which will enable them to thrive in a constantly changing environment.

More than ever  before, the notion of human capital is relevant in today’s world, as it is one of the critical levers for success.

But in the ultra-competitive context, as we know it, investing in human capital and making it work for one’s business objective are often evaluated through the same kind of metric as any other investment, which means ROI (return on investment).

Trouble is linking competence development to business results is a far from trivial exercise and one which is subject to many subjective interpretations.

One of the main reasons for this is that skills are developed to contribute to an objective, which is often dependent on many concurrent factors and being able to unpick the contribution of training to the bottom line is therefore almost impossible, unless you tweak the performance metric and you bring in a learning design approach upfront, enabling to make this connection. Let me explain.

Given the above, a more relevant performance metric than ROI for learning & development activities is ROE (return on expectation). Why? Because to be able to produce and demonstrate  their impact on business results, training activities have to be linked to competences or behaviours which 1)  are under one’s control 2)  are value levers towards the business objectives,  3) can be measured and compared.

Numbers 1 and 2 are all about understanding where your organisation stands today and the symptoms of that situation, understanding the root causes underlying these symptoms, their connection to the realisation of business objectives and how they can be remediated or improved. Number 3 is about setting stretched targets, which will contribute to get the business performance where you want it to be, through the development of these skills: that is the expectation or the “E” of ROE.

This leads us to the learning design element of the journey towards more impactful training.

To enhance the impact of training activities, a useful and powerful design approach can be derived from  the 4-level training evaluation model developed by Kirkpatrick et al, seen in the picture below.

Traditionally, learning & development activities are evaluated at levels 1 & 2 and that is why, in many cases, the effort and investment made in training people get lost in the bottom line picture.

Only by taking levels 3 & 4 into account upfront during the design of  training events and making them the first ones to be addressed is it possible to ensure a connection between learned skills and business results, in other words, the pyramid has to be turned on its head.

An efficient way to achieve the behavioural changes needed to impact the business results through the development of the relevant skills is by using serious games. Because of their role play dimension and the ability to recreate business contexts, situations and challenges, they enable to work both on skills development and their application, making transfer back in the workplace more relevant and effective, one of the shortcomings of more traditional learning approaches.

ALL4ONE consulting has developed business games for this very reason and uses them to learn and practice agile project management, team performance and to develop leadership attributes and behaviours in a volatile environment.

Get in touch, if you are looking for impactful and efficient competence development solutions: [email protected]