ROI

Not Just Training ROI, Assess Training Impact

By Paul Sarvadi

“I am always doing that which I cannot do, in order that I may learn how to do it.”        

― Pablo Picasso

We operate in a business environment that demands accountability for expenses and investments. What is our rate of return on our R&D investment? How has our new customer management software improved our sales to existing customers? Has our new automation reduced our cycle time and improved quality? Rightly so, we manage business to be as effective as possible. Some executives use this return on investment (ROI) standard to weigh the impact of their training expense. By this benchmark, training costs may be viewed as soft money and may not be prioritized or included in annual budgets.

When we train employees in new skills, we expect to see productivity improvements to justify the expense. Training ROI can be calculated by measuring pre-training performance, subtracting post-training performance, and dividing the result by the cost of the training. But that may not reveal the full benefit of training to the company.

Let’s consider the human capital impact of training beyond the measurable ROI. Employees often express concerns that management doesn’t value them. They may become discouraged, bored or frustrated due to lack of support. An invitation to well-targeted training can change those feelings and bolster commitment.

Some training is meant to improve short-term performance, but don’t neglect to offer training that improves employee long-term career potential. Training unlocks latent skills and can unfold a motivating career path for your employees. Opportunity engenders loyalty and creates a driving force for retaining great people. It provides employees an opportunity to view their function from a new vantage point and may inspire innovation and creativity. None of these positive impacts can be captured in an ROI calculation.

Developing your people—magnifying their personal and professional capacity—is the real impact of training. It is a multiplier that yields benefits far beyond the newly acquired skill. Employees see an investment in training as an investment in their careers. They feel a sense of accomplishment and greater contribution to the firm. Better trained, and less fearful of failure, they will often go beyond their basic functions to find better ways to accomplish their jobs.

Regardless of what industry you’re in, your employees should never stagnate in their personal, professional, and intellectual growth. Because if they’re stagnating, your business is stagnating.  Keep growing and nurturing new talent and cultivating new skills, and you’ll soon see the return on your human capital training investment beyond traditional ROI measurements.

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