Evaluation of Returns on Investment for Training Programs - Paper Example

Introduction

Training has been in existence since the beginning of industrialization since organizations were focused on the development of professionals and qualified pool of employees. Initially, firms would pump finances towards the training process and not account for them. However, after the global recession period, budgets have become tighter, with each firm focused on the accountability of the available resources. Therefore, training being a costly event in an organization, it was treated like any other process, where managers and stakeholders were interested in its evaluation. Therefore, over this period, several metric trends have emerged to evaluate the training process to ensure that it yields the expected value to the firm (Matias, 2010). One of the major trend is the increase in concern on the return on investment and impacts of a training program in an organization. Others include the increase in budget allocation for measurement, evaluation, metrics, and analysis, and focus on the cost injected into the training program. There has been an increased focus on the evaluation of returns on investment for training programs, which is evident in organizations across the world.

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Returns on investments data has become a major concern for the contemporary executive leaders and managers. Such information is used to show the returns on the capital invested by an organization in the training and development program, and the impact it has brought into the organization's performance. Its upsurge was experienced after 2008 after firms experience bloat, inefficiency, and bureaucracy, which resulted in most of them adopting strict measures to trim the rate of expenditure. This led to the emergence of evaluation of the training processes, where the stakeholders majored on the analysis of the returns yielded from the finances invested in the training program. Therefore, the application of this trend involves the identification of the metrics to be measured, which majorly is based on the needs and targets of the major stakeholders in an organization. These may include impacts such as learning, reaction, change of behavior, and organizational impacts like increasing sales or profit margins. These may be measured through approaches such as success case method, or the impact measurement framework, which is based on the score indexes gathered from the trainees. For instance, in my organization, this trend has majorly been used especially in training new sales and customer service interns. In most cases, the major metric adopted to evaluate the impact of the training process is a change of behavior and learning. As new interns undergo this program, it is usually costly regarding time and finances, and hence, the manager is always concerned to evaluate the learning process of such individuals. Hence, the evaluation is done majorly by considering how they learn and adopt new or improved behavior towards the customers. This is essential in ensuring that the organization can achieve its ultimate target in maximizing profits.

Challenges Facing Returns on Investment Metric

The process is perceived to involve significant amounts of finances. The processes, especially through the utilization of the impact measurement framework, involves the utilization of large finances. According to Griffin (2014), most cases, the evaluation process may cost an average of 5-10% of the overall cost of a training program. Thus, this makes most leaders and managers indifferent to its applicability and significance, since it plows back the finances the firm was trying to save in the first place.

Additionally, most of the stakeholders fear the results to be exhibited at the end of a return on investment evaluation. Any individual fears failure. This also applies to managers and major organization stakeholders, who fear the consequence of such reports in case they come out to be negative (Griffin, 2014). Thus, this has significantly reduced the number of corporations and managers adopting the return on investment trend.

Moreover, there are several approaches and models which can be used to establish the returns or impacts of such training programs, thus making the process complex. Some approaches such as the impact measurement framework involve the use of complex mathematics and application of formulas (Barnett & Mattox, 2010). This idea has limited its utilization in various organizations across the globe.

Benefits of Application of the ROI Metric Trend

The process has increased the rate of accountability in organizations and other technical set ups. The original reason for the establishment of the training evaluation process was to ensure that the available resources were utilized maximumly and assist in yielding the target results (Barnett & Mattox, 2010). Therefore, the process has enabled the management to cut financial allocations on unproductive programs, thus improving on the accountability levels in a set enterprise.

Moreover, it has led to the improvement of programs to the required standards, which will enable the patrons to achieve their goals. As stated by Nickols (2012), individuals tend to be more productive if they expect to audit of their work. Therefore, the trend has ensured that programs aim at attaining optimum and improved results from all the participants, thus ensuring efficiency in such programs.

The ROI metric trend ensures that the costs incurred by an organization are in check. It ensures that the training programs are effective in advancing the quality of work, employee attitude, behavior, and develop new skills through the utilization of a set budget allocation (Matias, 2010). This will further enable such an enterprise to eliminate unnecessary costs without any compromise on the required quality of the results.

Need for Results-Based Evaluation

Result based evaluation is a significant tool to foster financial and political support for programs and projects that can assist an organization build on a pool of solid knowledge base. For instance, my organization being a retail firm, it is essential for the human resource department to prove their returns on the finances allocated by the executive (Nickols, 2012). For example, if the learning and knowledge acquired by the interns are significant and assists in the attainment of the set customer count, then the top management increases its financial investments in such a program.

Additionally, the use of ROI evaluation measure ensures that the firm can attain external and internal pressure to ensure transparency and accountability. Result based approach is an appropriate method to exhibit the success or failure of programs adopted by the firm (Griffin, 2014). For instance, in my organization, the shareholders who act as the external stakeholders and the management who are the internal interested parties are majorly focused on ensuring that the responsible human resource department accounts for the finances allocated and achieved the needed results. Thus, this boosts confidence and support from such forces in the firm.

Moreover, the approach ensures that the firm establishes a sustainable process of talent identification and nurturing, which ensures that the enterprise has access to qualified personnel (ATD, 2018). For instance, my organization is a customer-based retail firm. Thus, the evaluation process assists the management in identifying the success achieved by the human resource department in training new customer care and sales interns. This motivates the management to fund the program further, thus ensuring that the firm always has qualified staff to achieve the target increase in sales and customer service.

Recommendations

The organization ought to identify more key indicators other than relying on the current basic ones. The human resources rely on the utilization of indicators such as the change in customer contact and increase in sales, thus leading to incomprehensive results due to the utilization of inferior analytical methods. Thus, the organization ought to adopt more advanced tools such as interviews and allocation of performance indices, which will allow the firm to apply advanced analytical tools such as Kirkpatrick model, success case method and the impact measurement framework (Barnett & Mattox, 2010). This would ensure that the enterprise attains accurate scenario in the ground and attain personal performance and points of improvement to ensure the financial allocation attains maximum utility.

Additionally, the firm ought to make the evaluation process a routine and mandatory for all the programs run by the firm. Currently, the firm performs ROI analysis on randomly selected programs and thus leaving others unattended. This reduces the effectiveness and precision of the conclusions made by the management (Matias, 2010). For instance, if the selected program indicates success, the management assumes that the rest are also successful and the other way around. This thus may give mixed conclusions and fail to achieve the main target to achieve accountability and transparency.

Conclusion

There has been an amplified focus on the evaluation of returns on investment for training programs, which is evident in organizations across the world. This has encountered challenges such as perception to consume large amounts of capital, thus making it inappropriate with some forms. It also faced with the fear of the results in case they are negative, and its complexity and the hard task of selecting the best approach. It, however, possesses benefits such as increasing the rate of accountability in organizations, improvement of programs to the required standards and ensuring that the costs incurred by an organization are in check. Additionally, the result-based evaluation is necessary to foster financial and political support for programs and projects, ensuring that the firm can attain external and internal pressure to ensure transparency and accountability, and establish a sustainable process of talent identification and nurture. Thus, my firm can identify more key indicators and make the evaluation process a routine and mandatory for all the programs to ensure success of the approach.

References

Griffin, R. (2014). Complete training evaluation. London: Kogan Page.

Barnett, K., & Mattox, J. (2010). Measuring Success and ROI in CorporateTraining. Online Learning, 14(2). doi: 10.24059/olj.v14i2.157.

ATD. (2018). ATD | The World's Largest Talent Development Association. Retrieved from https://www.td.org/.

Nickols, F. (2012). Evaluating Training - There Is No Cookbook Approach. Retrieved from http://www.nickols.us/evaluating_training.htm.

Matias. (2010). Training and Development: Training Evaluation. Retrieved from http://www.youtube.com/watch?v=NIBPrbOf7Jk.