There are some questions which should be asked before any training scheme is put in place and one of them is what will the Return on Investment or ROI be?
Many people pay for focussed networking events such as Pink Link Ladies or the Business Network but there are also opportunities to network free which is something we at CBPartners promote and facilitate. If a networking event generates one potential customer is it worth the time, effort, travel cost and sometimes payment to join?
This is a question which every business should ask itself. No business should invest time, effort, energy, travel costs or even fees to something which will not generate new business.
So what is ROI?
It is one of the several commonly used financial metrics for evaluating the consequences of business investments, decisions or actions. ROI compares the magnitude and timing of investment gains directly with the magnitude and timing of investment costs. A high ROI means that investment gains compare favourably to the investment costs.
One of the issues of using ROI on its own is that is says nothing about the risk attached to an investment or conversely the risk of not investing and sometimes training comes into this category. It is therefore necessary not just to measure ROI but also to investigate risks associated with it.
With training and development programmes the first thing a business needs to consider are what will the gains be for the company of investing the time and money into the scheme and what will the risk be of not investing time and money.
All the monetary values should be assessed, including time from employees, travel to venues, cost of facilitating training and venue hire where necessary. An organisation is not just putting the cost of the programme into training and development but also the employees time away from a job. This is why more and more companies are investing in an online training offering.
The risk of not pursuing the programme should also be measured. Some health and safety training is mandatory and therefore the company directors can risk fines and even imprisonment if they are not carried out. Giving people the skills to do their jobs is something which is non negotiable but sometimes can be forgotten in some businesses where on the job training is not enough to really equip employees; if this is not done properly an employee can take action if disciplined or sacked for not doing their job properly.
A more difficult line to draw can be on things such as leadership development or management training. What will be the risk if managers are not au fait with their role or the company values and mission? There are many things which can be measured to prove the value of such training such as retention and recruitment, sickness and absence and productivity improvements. Alongside that could also go a decrease in poor performance amongst staff on the shop floor and less allegations of bullying or intimidation. A happier workforce will produce better results.
If the training and development is for you as a Boss or Director do you always measure its value? What do you do better at the end of a course? Do you know more about your customers, products, HR, business planning and development? These are things which may well get a great ROI because they will improve your effectiveness and performance.
As an example training should lead to reducing the effort required to make something work, increased skills leading to improved performance and higher levels of motivation leading to increased effort. Training can also lead to a higher success rate in winning competitive tenders, sales referrals made by non sales staff and new product ideas.
All training should be throughly assessed to validate it as a business tool, justify the costs incurred, to help improve the design of the training and to help in selecting training methods. If it is worth the cost and will lead to better results in a difficult market it is worth the investment.
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