As various organizations of different sizes have started absorbing more of training – classroom, online or a blend of both, the employee’s path of progression gets clearer and clearer and when he/she see the interest the organization has vested in their growth, there comes a sense of motivation, a sense of involvement, a sense of participation and the willingness to stay and perform and grow. At the end of the day, when the organization invests in building a workforce for the future, every bit they invest into their employee will pay off both in the financial sense as well as in employee engagement.
2. Objectives of this session
WHY WHAT
HOW WHICH
HOW
MUCH
Does an
organization need
training?
Are the types of
trainings
available?
Type suits you
best?Effective is it?
ROI?
3. Some statistics : Glimpse of how
organizations spend on training and
development
North American and European organizations have the largest share of
spend on training ~ 75%. Asia comes in with 17%. India spent US$21.5
billion on training in 2013, which is ~ 7% of the global share in spend on
training activities
The global spend in 2014 was US$322.2 billion
Large organizations ( >10000 employees) spend approx.
US$838/employee*
Mid-size organizations (500 to 9999 employees) spend
approx.US$838/employee*
Small organizations (<500 employees) spend approx.US$1,888/employee
Projected annual spend on training in India for the year 2015 is US$1.5
billion
4. Why is training important for the
organization?
Training
Employee
retention and
enhanced
performance
Increased
revenue and
organizational
competitiveness
5. Why do Organizations invest in Training
Change in workplace
Improvement in quality
Introduction of new technologies and upgradations
6. What are the types of organizational
trainings?
Top management training sessions
- Leadership programs
Middle management development sessions
Employee training sessions
Induction
On the job
Coaching
Mentoring
Job rotation
Job instruction technique
Lectures
Role playing
Simulations / audio visual
Self-instruction
7. It is important to
ask:
Is the training
program
beneficial to the
company
What type of
training is better
suited
Can it be
quantified
Does it have the
buy-in of the
employee
What type of
training does
he/she need
8. Charting
out a
training
plan
Is there a need?
Who needs to be
trained?
Is the training
aligned to the
overall
objective?
Who will
conduct the
training?
How can they
help transfer
knowledge on
the job?
How will they
monitor and
evaluate the
training?
What form of
training will
they adopt?
11. Types of sessions for both
Classroom Online
Induction
Simulation
Roleplay
Webinar
Seminar
Workshop
Lecture
Self instruction
Coaching/mentoring
12. Advantages and disadvantages
CLASSROOM TRAINING ONLINE TRAINING
Face-to-face Remotely conducted and accessed
Interactive One way participation or participation
via web conferencing
Lesser need for technology Lesser need for physical infrastructure
Resources and audience have to be
present at the stipulated time
Sessions can be taken up anytime,
anywhere
Fixed date and time On demand access to sessions
Course content can be flexible and
changed to suit the audience
Specially designed content for e-
learning
Easier to evaluate and measure
effectiveness
Online surveys and activities can map
the level of participation
Easier to measure completion rates,
behaviour changes and learner
engagement
Courses have to be dynamically
designed to keep the audience tuned
in
13. Advantages and disadvantages (cont’d)
CLASSROOM TRAINING ONLINE TRAINING
One time session Session can be revisited any time the
employee wants to brush up his/her
knowledge
Cost of travel/stay/training can be very
high
Online web conferencing services unite
participants from any part of the globe
Non verbal communications are
possible. Role plays, simulations, etc.
Self-paced online, on demand sessions
Personalized feedback loops Online feedback surveys
Focused on all participants Focused on the individual learner
Instructor can control and adapt Trainee is in control
Learning is also spontaneous as it is in
real time
Trainees can revisit the
module/modules
14. Concept of blended training
Blended or hybrid learning combines
e-learning with the traditional
classroom training.
15. Advantages of blended learning
It offers the best of both worlds
It enhances corporate training effectiveness
It simplifies corporate training logistics
It is cost-effective
It allows your employees to have control over their training
It enhances employees soft skills
It facilitates corporate training feedback
16. CASE STUDY 1 - Selecting the right training module
MakeMyTrip - Here is a typical case of a small organization that
shot to success overnight. Their revenue and FTE base grew so
fast that their existing training capabilities could not catch up.
They were hiring by the thousands all over the country and their
orientation programs were unable to meet the demands. Plus the
cost of taking the new employee to the training was also proving
very expensive.
17. What they did and how they did it
They hired an external training solutions provider to design some online
modules for their requirements, which were:
• Consistency in training across locations
• Scalable solution to meet growing workforce
• Increased rate of employee engagement
18. The external solutions provider took their existing training modules and
revamped them to suit online training programs. This helped them:
• Cut down costs of module development
• Costs of physical training
• Expedite training across locations
• Quicker on the job
• As a result:
26% employee engagement
97% completion rate
19. Case Study 2: Managing employee
attrition
Zig Ziglar a great US motivational
speaker said, “What’s worse than
training your workers and losing
them? Not training them and
keeping them!”
21. Criteria for measuring training
success
NumbersReactions
Income
received
Direct
and
Indirect
costs
Efficiency
Performance
to schedule
Behaviour
change
Learning Performance
change
22. Measuring the effectiveness of the
session
The Kirkpatrick Four levels of evaluation method uses just four parameters to measure the
effectiveness of a training program
Reaction Learning Behaviour Results
24. Why evaluate and measure training?
To validate training as a business tool
To help improve the design of training
To help in selecting training methods
To justify the costs incurred in training
To ensure that the ROI in training exceeds the investment
25. Forecasting and measuring costs
Costs of designing and developing the program
Cost of promoting the program
Cost of administration
Cost of training
Cost of content and materials
Cost of infrastructure/technology
Cost of employee attendance
Cost of evaluation
31. Why should we be quantifying training
initiatives
Dip in economy
Steep competition
Rising cost of business
Organization wide cost cutting
Inability to quantify the benefits of training
Inability to quantify the value add
32. How to justify your budget spend?
Learning drives
business outcomes
33. CASE STUDY 3 - Measuring ROI on Classroom
training
Indian Oil Corporation conducted approximately 2434 in-house training
sessions in behavioural and functional training in order to improve the
attitude sets and skill levels of its employees, as well as improve their
competencies in the core functions.
Their primary motivation for driving the training enterprise-wide was:
• Improve attitude sets
• Upgrade skill levels
• Positively impact business bottom line
They chose two programs for the analysis:
1. Threshold program for mid to top level management to drive general
management skills. 30 participants
2. Excellence in Project Management Program – how to optimise
investment in the face of challenges. 30 participants
34. They chose the following parameters:
• Questionnaires to ascertain the degree of success
• Trainees estimate of cost incurred to put them through the training
• The latter included the following subdivisions:
• Faculty honorarium
• Cost of flight, stay, food
• Cost of material, stationery, giveaways
• Daily allowance
• CTC
• For the Threshold program, the total cost was Rs. 15,49,989
35. For the Threshold program, the parameters that estimated the cost impact
were better decision making, efficient management, efficient handling of
situations, better teamwork and the total cost attributed was Rs. 32,50,000
ROI = benefits – cost/costs * 100
32,50,000 – 15,49,989/15,49,989 *100
=109.68%
36. Case Study 4: Training success story
The IT industry is the largest user of Training and Development and spends
anywhere between 3 to 5% of their revenue on training as opposed to non-IT
sectors who spend around 0.5 to 2% on their training initiatives.
One of the most famous stories in the training industry is that of IBM. They
have always been known for their zest towards developing their employees
and in the 1990s, their spend on training alone crossed USD1 billion. In an
effort to lower their costs of training but at the same time not compromise on
their employee development, they came up with the idea of e-learning.
37. Within one year they saved USD166 million
By 2001 they saved about USD350 million after implementing e-learning
The ROI earned from their basic Blue e-learning course was as high as 2284
percent
By 2002, IBM was listed as first company to have the largest enrolments into
e-learning courses
While their e-learning courses did not completely replace their traditional
courses, the impact was undeniable
Later, IBM identified this as a business opportunity and started developing e-
learning products for other organizations as well
39. Way forward…..
For the fiscal year 2015….
Accenture has made an investment of US$800 million to
build skills and develop their workforce
TCS has begun an online instructor led training program
called iClass and their investment of RS.360.9 crores last
year has already gone up by 19% this year. Their
employees spend an average of 10.3 days/year in training
At the associate level, employees in Infosys spend an
average of 37 days/year in training
40. For more information on how to identify your training program and justify it,
reach out to us at info@kelphr.com
Editor's Notes
Training is a way to constantly update your learning and it leads to better organizational effectiveness and ultimately better profitability. There is no doubting that. This is perhaps why it is also called as Learning and Development. In this webinar, we will mull over how choosing the right kind of training can help the organization in better managing attrition as well better employee engagement.
Training or Learning & Development as it called in big organizations, is as veered towards developing its employee as it is towards gainfully and effectively engaging him/her. Managers today are facing a big challenge of balancing high attrition and engaging a workforce that is getting increasingly versatile. With newer trends coming in into the workforce, such as the concept of the millennials, effectively engaging the employee becomes crucial. The Dale Carnegie Employee Engagement Survey of 2014 showed that 54% of the Indian workforce is not completely engaged at work and this also ultimately effects not only the percentage of attrition, but also the realization of the organizational business goals and of course the bottom line growth.
HRD and Training managers have always faced a challenge in justifying the need for training in the organization as it has not always been easy to show in monetary terms what the ROI on training can be. But with managing attrition especially amongst high performers becoming an escalating issue, organizations are turning towards adopting holistic solutions in the form of L&D to plug the leak. With the whole structure of L&D now coming under scrutiny, several companies are embracing different trends to train their employees, be it the traditional classroom training, the more modern concept of e-learning or the blended hybrid approach. It has become very important to correctly identify the need for training and to adopt the right form of training that would most suit the need. But in order to continuously rollout training programs in the organization, it is also vital to quantify the returns that they get, both in terms of quantifying the non-monetary employee engagement as well as showing the monetary return on the investment.
Training has now been clearly divided as classroom and online training. While the traditional form of classroom training is still widely prevalent, there is no denying the fact that online training sessions have several USPs as well and many organizations are, for several reasons, preferring to have a larger budget allocated to the latter.
It is important to understand the pros and cons of the two forms of training first before trying to determine how to calculate the ROI on them. Or trying to figure out which form or what percentage of a mix of both would suit the unique needs of your organization.
Our session today will explore, first the importance of training, then how to choose between classroom and online training and finally and most importantly, how to quantify the benefits of the training.
As we mentioned earlier, training is a process whereby employees are constantly upgrading their skill sets and knowledge and therefore it does become imperative for training managers and HR heads to continuously plan for training sessions. Our take home from this session today would be to understand which form of training would be more beneficial for the need/budget of your organization in particular. In order to arrive at this conclusion, it would be simpler to understand it in a steady progression of the following subheadings:
Why is training important for the organization?
What are the types of organizational trainings?
Charting out a good training plan
What is classroom training?
What is online training?
Types of sessions for both
Advantages and disadvantages
How to decide what is better for your organization
Measuring effectiveness
Calculating ROI
How to justify your budget spend?
Quantifying training initiatives
Let’s look at some facts and figures before we move ahead.
North American and European organizations have the largest share of spend on training ~ 75%. Asia comes in with 17%. India spent US$21.5 billion on training in 2013, which is ~ 7% of the global share in spend on training activities
The global spend in 2014 was US$322.2 billion
Large organizations ( >10000 employees) spend approx. US$838/employee*
Mid-size organizations (500 to 9999 employees) spend approx.US$838/employee*
Small organizations (<500 employees) spend approx.US$1,888/employee
Projected annual spend on training in India for the year 2015 is US$1.5 billion
The year 2015 bodes well for the training industry within corporates in India as the projected estimate for annual spend on L&D is in the ballpark of US$1.5 billion now.
Larger and mid-size organizations incur lesser cost of the training programs, as the cost is spread across the employee base. The larger the base, the lower the cost. Given this reason, larger organizations usually need to spend less than mid-size organizations on their training programs.
The numbers can establish the fact that all organizations have allocated a separate budget for their training initiatives. However, very often low economy rates or the inability to measure and justify the training program can lead to a decrease in the budget. An organization is primarily concerned about its holistic objectives being met, but if training departments are unable to prove these results then it also means that they are unable to justify their budget. Why organizations increase or decrease their investment in training and L&D becomes the point of discussion in the rest of the slides.
To put it in a very simple yet cascading manner, training leads to better capabilities in the employees, which not only helps to retain them and help their growth, but also helps them to perform better. This, of course, is the prime concern for any organization. While the organization wants to retain its employees, what it predominantly wants is for them to perform optimally and reduce errors so that there is an increased generation of revenue and better market-wide competitiveness and branding for their company.
Unfortunately, the reverse is also true.
Poor training, inadequate training or the lack thereof can also lead to the employees making very expensive mistakes, which in turn impacts not only their performance and career progression, but also the overall competitiveness and revenue of the organization.
Training has always been seen as a support function and training heads are always asked to optimize their cost of training. However, training supports the organization to help it achieve its objectives and while the impacts do not reflect in a short term, the results are felt in the long run. In professional jargon, it is called “building a workforce for the future”.
Broadly speaking, organizations invest in training as they want to develop their employees and retain them, which would in turn help them achieve their business goals and generate better revenue. That is a point that we have already made. However, there are other aspects that are focused on when developing a training module and they are:
Change in workplace – to foster better teamwork, promote leadership skills, increase core competencies, enhance communication skills, etc.
Improvement in quality – enable process improvements in order to reduce redundancies and manual errors
Introduction of new technologies and upgradations – organizations also look at training programs to roll out an organization wide upgradation or introduction of new technologies, systems, processes, policies, etc.
If you speak to a head of HR and a head of Training, they will tell you that the organizational budget is allocated for several types of trainings both at the employee level as well as the leadership level.
When we look at the types of trainings provided/facilitated within an organization, they could be broadly classified as those for the top management, for the middle level employees and the executive or the lower level employees. While several of the training sessions are in common, the executive level employee training programs usually include the above.
Top management training sessions
- Leadership programs
Middle management development sessions
Employee training sessions - These technical and soft skills trainings are usually concentrated on the entry level and as an employee grows in the hierarchy of the organization, the types of sessions are more oriented towards leadership and development.
Induction
On the job
Coaching
Mentoring
Job rotation
Job instruction technique
Lectures
Role playing
Simulations / audio visual
Self-instruction
Now that we have established that there are several types of training sessions available within an organization, it is important to identify who needs to be trained, what they need to be trained on, and how they will be trained.
Before allocating the budget and the necessary resources, the two most important questions that need to be answered are:
Is the training program beneficial to the company?
Does it have the buy-in of the employee?
These questions will in turn help you answer the questions of what type of training program is better suited for meeting the objective and also in measuring and evaluating the effectiveness of the program as well as in aligning the right type of training to suit the employee. It will also ultimately help in justifying the need for the training in the first place.
Before charting out a training plan, all training managers must ask themselves a few questions:
Is there a need for this particular training in the first place?
If there is, who will be the target audience?
Is the training program aligned to the overall organizational objective?
Who will conduct the training program?
Will he/she be able to transfer the knowledge/information on the job?
Will there be a system to monitor and evaluate the training?
What form or type of training will they choose? Classroom or Online training?
To answer the last question first, as that is the main point of our discussion today, we need to understand the basic differences between the two in order to be able to identify the pros and cons.
Instructor led training or ILT. This is a practice of training in a real time, classroom like environment where there is an instructor or facilitator training a group of individuals/employees. These sessions can be either in the form of a lecture or a workshop and can simultaneously address a number of participants.
Also known as computer based training (CBT), distance learning, or e-learning, online training is a form of instruction that takes place completely on the internet. It involves a variety of multimedia elements, including graphics, audio, video, and web-links, which can be accessed through one's internet browser.
This form is also known as computer based training, eLearning, mLearning (mobile learning), distance learning, self-paced learning, asynchronous training.
Online training involves the creation of learning content focused around a specific topic which is then assembled in to a variety of multimedia elements such as presentations, interactive content, graphics, audio, and video which form a course. This content is then uploaded in to a delivery tool known as a Learning Management System (LMS) and courses are made available to trainees and accessed via a web browser.
Online training courses are designed to guide people through information and coursework, or help trainees to better perform in specific tasks. Some of these courses may even be mandated as a workplace requirement by law.
Live interactions and real-time feedback for things like quizzes, tests and surveys. Interactions between instructors and students are also conducted via an online medium through chat or email.
A few examples to illustrate how different types of trainings sessions are usually conducted. However, there are no hard and fast rules. A classroom session is also called as an instructor lead training session, but the same instructor can conduct a pre recorded/live lecture that reaches the audience via the online media. Coaching and mentoring is almost always a face-to-face and one-on-one session but due to geographical constraints, they can be conducted online as well.
Slide 12 and 13
Classroom:
Face to face
Interactive
Lesser need for technology
Resources and audience need to be present at the stipulated time
Fixed date, time and location
Course content can be flexible to suit the changing needs in the session
Easier to evaluate and measure effectiveness as non-verbal communication can be monitored too
Easier to measure completion rates, behavioural changes, and learner engagement
One time session
Cost of travel/stay/training can be expensive
Non-verbal communications like roleplays etc are possible
Personalized feedback loops
Equal focus on all participants
Instructor can control and adapt
Learning is spontaneous
Online:
One way participation or via web conferencing
Lesser need for physical infrastructure
Anytime, anywhere accessibility
On demand access to sessions
Specially designed course content
Online surveys and activities can ma the level of participation
Courses have to be dynamically designed to capture the attention of the participants
Session can be revisited anytime
Online web conferencing services can unite participants across geographies
Self-paced, on demand
Online feedback surveys
Focused on individual learner
Trainee is in control
Slide 12 and 13
Classroom:
Face to face
Interactive
Lesser need for technology
Resources and audience need to be present at the stipulated time
Fixed date, time and location
Course content can be flexible to suit the changing needs in the session
Easier to evaluate and measure effectiveness as non-verbal communication can be monitored too
Easier to measure completion rates, behavioural changes, and learner engagement
One time session
Cost of travel/stay/training can be expensive
Non-verbal communications like roleplays etc are possible
Personalized feedback loops
Equal focus on all participants
Instructor can control and adapt
Learning is spontaneous
Online:
One way participation or via web conferencing
Lesser need for physical infrastructure
Anytime, anywhere accessibility
On demand access to sessions
Specially designed course content
Online surveys and activities can ma the level of participation
Courses have to be dynamically designed to capture the attention of the participants
Session can be revisited anytime
Online web conferencing services can unite participants across geographies
Self-paced, on demand
Online feedback surveys
Focused on individual learner
Trainee is in control
Every classroom program -- including custom built corporate training programs -- can be modified for online delivery.
But often the organization might feel the need for a training program that combines the advantages of both.
Blended learning (BL) integrates formal and informal learning, face-to-face and online experiences. For the organization, blended learning improves performance and helps in achieving business objectives. The employee is also comfortable as he/she can literally customize the type of training they need.
It might involve structured or casual interactions with instructors, peers, coaches, mentors, and supervisors. It happens in classrooms, or at home. Employees can elect to skip entire programs or elements that they don’t need.
It encourages the organization to extend lessons and conversations far beyond the classroom and into the workplace through coaching, e-coaching, and online communities.
Diagnostics, assessments and feedback can be used to tailor experiences and activities.
Blended Learning can be in the form of:
Face to face– where the teacher drives the instruction and supports with digital tools.
Rotation – students go through a schedule of independent online study and face-to-face classroom time
Flex – Most of the curriculum is delivered via a digital platform but instructors are available for face-to-face consultation and support
Labs– All of the curriculum is delivered via a digital platform but in one single physical location. It can be combined with traditional classes as well.
Self-Blend– Students choose to support their traditional learning with online course work.
Online – self explanatory
These are the advantages. Now, for an organization to choose either classroom, online or a blend of both forms of training, it first needs to be able to evaluate and measure the effectiveness of each type of training as well as the ROI that it can receive.
It offers the best of both worlds
It enhances corporate training effectiveness
It simplifies corporate training logistics
It is cost-effective
It allows your employees to have control over their training
It enhances employees soft skills
It facilitates corporate training feedback
Here is an example of a company that chose to switch over to the e learning type of training.
MakeMyTrip - a typical case of a small organization that shot to success overnight. Their revenue and FTE base grew so fast that their existing training capabilities could not catch up. They were hiring by the thousands all over the country and their orientation programs were unable to meet the demands. Plus the cost of taking the new employee to the training was also proving very expensive.
They hired an external training solutions provider to design some online modules for their requirements, which were:
Consistency in training across locations
Scalable solution to meet growing workforce
Increased rate of employee engagement
The external solutions provider took their existing training modules and revamped them to suit online training programs. This helped them:
Cut down costs of module development
Costs of physical training
Expedite training across locations
Quicker on the job
As a result:
26% employee engagement
97% completion rate
Zig Ziglar a great US motivational speaker said, “What’s worse than training your workers and losing them? Not training them and keeping them!”
Cost of hiring and rehiring can be anywhere between 30 to 250 percent of the employees total annual compensation.
Several studies show that training increases the employees productivity, then his levels of motivation and job satisfaction and that in itself ensures that he/she stay back in the organization. Approximately 40% of employees cite lack of or poor training to be the reason for their quitting. High performing individuals are also concerned about having a clearly charted out path for their career and an employer who shows them that is one that they will stay with. Let us look at an example to see how training initiatives helped this company reduce their turnover.
After experiencing severe turnover, Tesco, a UK based Retail Company with stores across Europe, North America and Asia and an FTE base of over 472,000 employees decided to devise a plan to retain its employees using training and career development in 2011. They have an in house training “Tesco Academy” whose primary objective besides designing and rolling out training programs is to evolve and adapt to the employees ambitions. Some of the programs that helped them in marginally improve their employee management were:
Every little helps – continuous enhancement programs that were aimed at improving core and supporting abilities
Optional development program – was aimed at helping the employees study while continuing their work. Approximately 7000 employees are covered at a time under this program.
Managers at Tesco have said that roughly 80% of managerial positions are filled from internal hiring, which is proof enough that their turnover is very low.
Once the organization decides on which type of training suits them better, the next important step is to look at how to measure the success/effectiveness of the program.
The form of evaluation that we undertake is determined by the criteria that we choose to measure success:
Numbers – number of participants can indicate that the training is addressing a need and that the design and methodology is meeting expectations. But this not a very accurate measure as it does not take into account the effectiveness of the program.
Direct cost- indicate the costs incurred for the training session- cost of trainer, course content/material, travel etc.Indirect cost - Indirect costs are costs that may or may not be directly associated with a training event but come into picture whether or not the training took place. Cost of infrastructure, hiring a trainer, cost of employees being away from their work, etc.
Efficiency - measures the amount of learning achieved in a stipulated time frame.
Performance to schedule -Sometimes the training needs to be completed by a given date if a particular business objective is to be achieved
Income received – comes into picture if there is an external provider or in a situation where an internal training resource charges and additional fee for the training.
Reactions - Reactions are important because, if students react negatively to your courses, they are less likely to transfer what they learned to their work
Learning - in terms of new or improved skills, knowledge and attitudes, is the primary aim of a training session. It can be measured objectively using a test or or assessed exercise. the degree of retention is also crucial.
Behaviour change -If a student has learned something from a course, you hope that this will be reflected in their behaviour on the job. To assess behaviour change requires that the measurements are taken before and after the training. This can be recorder either through continued observation or automated recordings.
Performance change -If students are using the right behaviours on the job after the session has been completed. A wide variety of indicators can be employed to measure the impact of training on performance – numbers of complaints, sales made, output per hour and so on. Ideally, to accurately assess the spike in performance a comparison to a group that has not gone through the same training may be needed.
The Kirkpatrick method of measuring and evaluating the success
Reaction -whether they felt engaged, and whether they felt the training was relevant
Learning - measures the degree to which participants acquired the intended knowledge, skills and attitudes as a result of the training. This level is used by instructors and training executives to determine if training objectives are being met and to make the necessary changes to the training module
Behaviour - measures the degree to which participants’ behaviour changed as a result of the training – basically whether the knowledge and skills from the training are then applied on the job
Results - seeks to determine the tangible results of the training such as: reduced cost, improved quality and efficiency, increased productivity, employee retention, increased sales and higher morale.
Evaluating and quantifying of the impact of the training program can happen both in non-monetary terms as well as monetary ones, such as calculating the ROI, which we will discuss a little later.
Apart from looking at the ROI, training managers and HR heads also need to measure the non-monetary value of the training sessions. This can be done in several ways:
Keeping a track of the attrition rate post the training
Surveys, feedback forms, and assessment activities that are periodically rolled out post the training
Keep a track on the increase in operational efficiencies by mapping the reduction in errors, the increase in sales, etc
If the process is customer interactive, feedback from customers can also help track improvement in service
Instructor evaluation
Continuous assessment of change in behaviour and performance
Customized score cards that can map the requisite parameters that suit the organization…….
But why do we need to measure and evaluate the success and effectiveness of a training program?
To validate training as a business tool
To help improve the design of training
To help in selecting training methods
To justify the costs incurred in training
To ensure that the ROI in training exceeds the investment
These factors are not always easy to quantify in monetary terms as but this is the only way to measure the ROI on training, which will then go on to justify the need for the training.
Now let us get into what we need to calculate the ROI.
They are:
Costs of designing and developing the program
Cost of promoting the program
Cost of administration
Cost of training
Cost of content and materials
Cost of infrastructure/technology
Cost of employee attendance
Cost of evaluation
Measuring the benefits of training needs something tangible. The reaction, learning or behavioural changes of the participants cannot directly quantify the cost benefits that the organization derives.
Cost of labour – reduced errors, reduced time on work, faster access too data
Increase in productivity – improved skills, higher levels of motivation, streamlined method of working
Increase in income – increase in sales due to improved efficiencies, lesser redundancies and errors, lower turnover, etc.
The only way to quantify benefit in numbers is to measure the impact of the improved performance on the growth chart of the organization. This is what is professionally termed as ROI. It will also help to use existing organization performance metrics to measure several parameters.
Return on investment (ROI) is a measure of the monetary benefits obtained by an organisation over a specified time period in return for a given investment in a training programme. Looking at it another way, ROI is the extent to which the benefits (outputs) of training exceed the costs (inputs).
ROI can be used both to justify a planned investment and to evaluate the extent to which the desired return was achieved.
But there are some aspects of the training success that cannot be measured by the ROI calculation and they are the ones we spoke about under the heading of non-monetary measures. They are:
whether students liked the training or not
the extent to which students' personal objectives were achieved
Four levels of impact for ROI
Engagement – Was the training or coaching worth their while? Have they learnt something new and been able to translate it into their work?
Learning –have they developed new knowledge, skills, attitude and have they been able to apply it? This can be tested using simulation or comparison exercises
Application and Implementation – are there any changes in their behaviour? Can be measured using 360 feedbacks or monitoring their planned actions
Business Impact – this can be more tangible, as hard impacts can be captured in financial terms as the cost benefits that the company has received after the training
ROI is then calculated. Fully loaded costs of the programme are gathered (cost of programme, participants’ time and on-costs) and the Net Programme benefits are calculated: (Benefits – Costs)/ Costs x 100
ROI is a key financial metric of the value of training investments and costs. It is a ratio of net benefits to costs, expressed as a percentage. The formula can be expressed as:[(monetary benefits – cost of the training) / cost of the training] x 100
For example –
Program benefits for the 1st year is Rs. 2,50,000
Cost per program for 10 participants is Rs. 80,000
ROI = 250000 – 80000/80000 * 100 =212.5%
Some companies also prefer to look at it as the Benefits to Cost Ratio which is calculated as benefits/cost
After calculating the ROI on training, as well as understanding the impact of a specific type of training, every organization chooses to go with either classroom or online training. Several organizations are seeing the benefits of having a blend of both. Whether they want the traditional format or an on-demand course for their employees, they as well as their employees can get the best of both.
Our case study 1 demonstrates how a company decided to remodel their existing training format into a e learning course and the benefits that they derived from doing so. In the next few slides, we will explore another case study, where the company sticks to the traditional classroom training and also look at how they derived benefits out of that.
Now, lets look into why we need to quantify training initiatives in the first place – in order to justify the need for it? Yes, certainly. Training and HR managers constantly feel the need to do so, especially when factors such as those below come into the picture:
Dip in economy
Steep competition
Rising cost of business
Organization wide cost cutting
Inability to quantify the benefits of training
Inability to quantify the value add
So, how do you justify your spend?
Charting out the training plan, estimating the costs and calculating its ROI in order to get the buy-in from the management are all crucial steps in drawing up a training module.
A few questions that you as a training head and the organization needs to ask first is:
Will the organization get a value add out of this training?
Will my employee benefit personally/professionally out of it?
Will it impact their engagement at work?
Will it improve their efficiency?
will it help me reduce turnover?
Is it aligned to the overall business objectives?
Will I see an increase in business outcomes/revenue/competitiveness?
Will it help in continuous improvement?
Let us look at a case study where a large corporate calculated the ROI on their traditional training in order to justify their spend.
Indian Oil Corporation conducted approximately 2434 in-house training sessions in behavioural and functional training in order to improve the attitude sets and skill levels of its employees, as well as improve their competencies in the core functions.
Their primary motivation for driving the training enterprise-wide was:
Improve attitude sets
Upgrade skill levels
Positively impact business bottom line
They chose two programs for the analysis:
Threshold program for mid to top level management to drive general management skills. 30 participants
Excellence in Project Management Program – how to optimise investment in the face of challenges. 30 participants
They chose the following parameters:
Questionnaires to ascertain the degree of success
Trainees estimate of cost incurred to put them through the training
The latter included the following subdivisions:
Faculty honorarium
Cost of flight, stay, food
Cost of material, stationery, giveaways
Daily allowance
CTC* - CTC was taken into account as well as they had to measure the amount of money that company was losing by not have the employee working.
For the sake of making this simple, let us only look at how they calculated the ROI on one of these programs.
For the Threshold program, the total cost was Rs. 15,49,989
For the Threshold program, the parameters that estimated the cost impact were better decision making, efficient management, efficient handling of situations, better teamwork and the total cost attributed was Rs. 32,50,000
ROI = benefits – cost/costs * 100
32,50,000 – 15,49,989/15,49,989 *100
=109.68%
Training success story
The IT industry is the largest user of Training and Development and spends anywhere between 3 to 5% of their revenue on training as opposed to non-IT sectors who spend around 0.5 to 2% on their training initiatives.
One of the most famous stories in the training industry is that of IBM. They have always been known for their zest towards developing their employees and in the 1990s, their spend on training alone crossed USD1 billion. In an effort to lower their costs of training but at the same time not compromise on their employee development, they came up with the idea of e-learning.
Within one year they saved USD166 million
By 2001 they saved about USD350 million after implementing e-learning
The ROI earned from their basic Blue e-learning course was as high as 2284 percent
By 2002, IBM was listed as first company to have the largest enrolments into e-learning courses
While their e-learning courses did not completely replace their traditional courses, the impact was undeniable
Later, IBM identified this as a business opportunity and started developing e-learning products for other organizations as well
It is obvious from the success story of IBM that training initiatives cannot be brought in for a short duration and then discarded altogether. Training as is learning is a continuous process. Similarly, the measure of the impact of the training program cannot also be monitored briefly and then let go. Many of the benefits may not be realized just after the program ends. The organization may need to specify itself a time frame within which they closely monitor the impact felt after the training. The true measure of the impact happens over a long duration, during which time the various parameters are closely monitored to see if they ultimately are aligned with the business objectives. If there has been an overall increase in sales, an increase in revenue, improvement in the customer satisfaction matrix, an improvement in efficiencies, a reduction in turnover, etc. over the specified period, then the organization can conclude that the training initiatives that they rolled out were indeed fruitful and the need for any further training programs are easily justified.
For the fiscal year 2015….
Accenture has made an investment of US$800 million to build skills and develop their workforce
TCS has begun an online instructor led training program called iClass and their investment of RS.360.9 crores last year has already gone up by 19% this year. Their employees spend an average of 10.3 days/year in training
At the associate level, employees in Infosys spend an average of 37 days/year in training
With new age industries like the ecommerce and start-up sectors coming into the market and more activities like M&As happening now, several of these emerging giants, Flipkart for example, are making huge investments into training across their hierarchy in order to develop their workforce and to be able to better retain them. Organizations are feeling the need to retrain and reskill their employees to face the growing demand of digital services as well. With companies such as HCL revamping their training programs entirely, there is very little doubt that the investments in training is set to rise and steeply at that.
This brings us to the end of our webinar.
For more information on how to identify your training program and justify it, reach out to us at info@kelphr.com