Organizations in the United States alone spend more than 150 billion dollars on training and employee development every year. With that amount of investment, coupled with the unflinching focus most businesses place on the bottom line, one would naturally assume that the “payoff” or ultimate benefits (such as increased productivity and revenue) of training is rigorously measured and monetized down to the last penny.
Where Are We Now?
Surprisingly, this assumption could not be further from the truth. In fact, the vast majority of organizations don’t even take the most fundamental steps to determine whether training is even working. In other words, they fail to ask:
- Does training actually improve the knowledge and skills it was designed to improve?
- Are employees really more productive after training?
- Are they doing anything different back on the job?
Granted, turning all training benefits into solid, top-line dollar values is no easy task, but many organizations don’t even try. They collect little or no data to connect training to employee behavior or employee behavior to business results. More importantly, 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 conducted, we are faced with the irrefutable fact that otherwise smart, savvy, profit-focused organizations are sending millions of employees through training experiences and spending billions of dollars on training every year, but quite literally have nothing to show for it. Indeed, you don’t need to be a finance guru to understand that without some impressive benefits (or any at all) on the top line, you’re always going to have a disappointing and dismal view of the bottom line. And to make matters worse, companies go to great lengths to define most other costs in exhaustive and excruciating detail.
So, without the same type of rigorous measurement on the benefits of training, what kind of ROI cases are we left with? If we want senior executives to think of training as a profitable business imperative, instead of a distracting and costly diversion, we need to define these benefits and create powerful stories of impact and ROI. After all, if the only tangible data that CEOs and business leaders have access to are costs, then what other conclusion can they come to except that training is a risky and frivolous investment. Put simply, we need to give them something to show for their investment in training.
Why Are We Here?
So what’s the problem? Why do employees and their businesses end up with nothing to show for training? Why aren’t organizations making an aggressive and determined attempt to measure and report the true benefits of their training programs?
The short answer is simple: They lack the expertise and confidence to present their results to senior business leaders. In a recent study, it was estimated that more than 95 percent of organizations feel the real need and urgency to demonstrate the impact and bottom-line value of training. However, less than 5 percent feel confident in their ability to measure and report that very same business impact.
The paradox here is that ROI numbers are so important to the business that most training organizations are too afraid to present them. They want to get it right so bad (and they are so afraid of getting it wrong) that they end up presenting nothing! This paralysis and lack of data is quickly interpreted as ineffectiveness and only fuels the already prevalent notion—especially amid the more skeptical business leaders, that many employee training programs don’t “work.”
Ironically, another reason why HR, L&D, and other training groups are not cranking out the impact studies is that historically they may have been given a bit of a “free pass” when it comes to proving their worth and justifying their every expense. Because they represent, advocate, and spend much of their resources on developing the “human” side of the business, organizational leaders tend to be cautious about taking them to task and demanding irrefutable evidence that they’re turning a profit. No leader wants to advance or align their self with the belief that investing in their people is a “bad” idea.
While this historical treatment has been a blessing on one hand, it may have rendered L&D less aggressive when it comes to proving our value to the business. Although the burning platform has been ignited, and measurement is fast becoming more of a priority, the sheer lack of fire all these years has simply left most training organizations inexperienced at the art and science of defining their worth. When you put these two factors together (lack of confidence and no experience), you end up with an inevitable scenario in which the training function is unable to compete for resources. Organizational leaders and stakeholders must allocate their limited capital and make hard decisions about where they want to invest their money. It should come as no surprise that they will focus on what will provide the largest and surest return on their investments.
Clearly, the business groups and functions that can show a great ROI track record and present their budgetary needs with the promise of demonstrable returns will be the ones getting the lion share of resources.
How Do We Get Where We Need to Be?
How can we never effectively compete for resources, or the respect we deserve at the C-suite, if we measure nothing, present nothing, and take none of the credit for bottom-line business results?
Can you imagine going for a job and submitting a resume with no previous accomplishment and no clear description of the value you will add. Can you imagine going to a bank and asking a loan officer for money to open a new business and promising nothing in return? Can you imagine going in front of a judge to plead your case and presenting no hard evidence? In all these cases, you’d either be laughed at, asked to leave, or escorted to the door!
While I exaggerate a bit, the reality is that when we don’t present any benefits of training and employee development, we leave top executives and decision makers little choice but to dismiss our requests for more spending and put other priorities first. We can’t be complacent while the rest of our organization’s functions are defining their impact, getting every bit of the budget they need, and establishing their reputation as a critical contributor to business survival. If we want a seat at the table with them, we can’t be afraid to present our results.
My ultimate message: L&D must start conducting business-impact and ROI studies. Of course, as L&D professionals, we know just how powerful the right training initiatives can be, but isn’t it about time we show business leaders and stakeholders across the organization just how powerful? Isn’t about time we define our critical contributions and impact on the bottom line? Believe me, all your business leaders are dying to see those results! You’ll be surprised how appreciative they are to see that you’re finally—and formally—linking your initiatives to the metrics they really care about. They’re not looking for perfection; they’re only looking for progression.
So, I say again loud and clear: Measure your results and present your findings—it will be the best investment you ever make.