Putting a value on training

Training is extremely critical to most R&D organizations.  Toyota, as we have seen, has made improved training a key cornerstone of their quality improvement initiatives. The article Putting a value on training McKinsey Quarterly addresses how to measure effectiveness of training programs and develop a business case for deploying them.

…typically measure training’s impact by conducting surveys of attendees or counting how many employees complete courses rather than by assessing whether those employees learned anything that improved business performance.  This approach was, perhaps, acceptable when companies had money to spare. Now, most don’t. 

However, there is a need for more formal approaches to measure return-on-investment of training programs

Yet more and more, organizations need highly capable employees—90 percent of the respondents to a recent McKinsey Quarterly survey1 said that building capabilities was a top-ten priority for their organizations. Only a quarter, though, said that their programs are effective at improving performance measurably, and only 8 percent track the programs’ return on investment. 

The article talks about a detailed training program for BGCA (Boys and Girls Clubs of America).  Suffice it to say that the training was quite extensive and expensive.

BGCA therefore built its training program around those four subjects. The program involved both intensive classroom work and a project chosen by each local team; projects ranged from implementing new HR processes to deepening the impact of after-school programs. By the end of 2009, over 650 leaders from approximately 250 local organizations had been trained.

Here is the key message plan how you will measure effectiveness before launching an expensive training program.  This was much easier for a not for profit organization such as BGCA:

Because the program was designed to improve specific organizational-performance outcomes, the process of assessing its impact was straightforward. Where the leaders of local organizations had received training, BGCA compared their pre- and post-training results. More important, it also compared the post-training results against those of a control set of organizations, which had similar characteristics (such as budget size) but whose leaders had not yet gone through the training. 

FYI – the training was a success for BGCA.  They could measure the delta between trained and untrained organizations and actually calculate a return on investment.  The fact that they matched organizations to control sets, gave them the confidence that the results were relevant.  In for-profit organizations, metrics might be different but they must be measured before and after launching training programs.  Metrics and accountability is key to success of most campaigns.

Key take away:

In every case, companies must continually review and revise the links between skills, performance, and training programs. Typically, to determine which metrics should be improved, companies assess their current performance against industry benchmarks or their own goals. Like retailers and manufacturers, most other companies know what kinds of skills are tied to different areas of performance. So a good next step is to conduct an analysis of the relevant groups of employees to identify the most important specific skills for them (as BGCA did) and which performance-enhancing skills they currently lack. To get a clear read on the impact of a program, it’s crucial to control for the influence of external factors (for instance, the opening of new retail competitors in local markets) and of extraordinary internal factors (such as a scheduled plant shutdown for preventative maintenance). It’s also crucial to make appropriate comparisons within peer groups defined by preexisting performance bands or market types.