Learning and development professionals often assume C-level executives care only about one thing: ROI. Granted, learning and development professionals increasingly are being held accountable for proposed and implemented learning initiatives, but financial proof is not always necessary or convincing. In fact, C-level decision-makers are less concerned about a hard return on investment for training or any other intangible investment for a few key reasons.
In the context of workplace learning, these reasons include:
Many senior directors and managers find workplace learning professionals overly concerned with evaluating training delivery outcomes rather than measuring the effectiveness or impact it has on the organization. The focus of learning and development is to demonstrate some type of proof or financial gain of its success in an effort to justify the reason it was conducted in the first instance. This is not to say ROI is not a relevant factor in measuring significant training investments, but financial payback alone —specifically ROI — is not a convincing argument to gain management support.
Learning professionals learn early that for any type of training to be successful, it must have some type of impact on the business (Kirkpatrick Level 4). What is not evident is how to effectively measure up to Level 4 to demonstrate that a learning solution delivered on the promised results. In recent years, the answer to the Level 4 evaluation question has been in financial terms (Phillips Level 5), thinking this will instill rapid credibility, proof and, most importantly, support for workplace learning. It appears these criteria have not helped to build a case for workplace learning but instead delivered on increasing skepticism.
It is time workplace learning and performance move beyond ROI and financial performance measures and learn how to integrate measurement and evaluation techniques that connect with organizational and strategic objectives.
Moving Stakeholders Beyond ROI
In the business reality, pleasing the financial types of the organization is not as important as developing a strong business case. Financial results are becoming irrelevant in areas defining intangible, human issues, as well as for longer-term strategic outlooks. C-level mangers require performance indicators that look toward the future (strategic) and not the past (reactive). Moving beyond simply delivering an ROI figure and connecting to qualitative business indicators relevant to decision-makers should be your ultimate objective. These types of indicators and metrics are useful and accurate, however, they are often difficult to define within or convert to a financial context. This is the dilemma for training managers and management in general.
Managers and other stakeholders recognize not everything can or should be measured down to some type of financial measure. This still remains, however, the primary measure of accountability. Workplace learning and performance professionals must balance this need with qualitative, business-related performance measures and not focus on indicators captured solely at the course level.
Kirkpatrick Level 1, participant reaction, and Level 2, participant learning, as well as other metrics such as average participant cost are relevant measures. Training success, however, begins when individuals return to their job and actually apply what they learned (Level 3, behavior). Once you identify how the participant is applying the new knowledge, you can ascertain the impact it has on the business. But how do you define and track the indicators to do this? This is quite simple, as many of the indicators already exist. Tracking them over time will help you to determine what areas are being applied and where improvement is required.
Examples of metrics that help you to move beyond ROI include:
This is far from an exhaustive list of metrics. These types of indicators allow managers at all levels to immediately measure training results and witness behavioral change in their environments, further supporting the need for continuous learning. Many of the metrics listed above certainly exist in your organization, and some such as operational productivity already might be used by managers to measure performance. Individually, these organizational metrics are meaningless, but when they are combined with existing reporting and evaluation practices, training effectiveness and learning acceptance will increase.
Fostering a Learning Culture to Move Beyond ROI
Organizational culture is the foundation of building a successful and strategically aligned learning environment. A supportive culture facilitates and supports the impact of learning on the business, including measuring ROI. Culture, however, is not something that is in the control of learning and development professionals.
Simply, organizational culture comprises the behaviors, attitudes and process of the organization. Behavior and attitudes are people-related issues, and organizational process is how things are conducted. To build a learning-centered culture and foster positive behaviors and attitudes, C-level managers must set an example, demonstrating their involvement and commitment to learning initiatives. This is considered to be the most important point to ensure successful adoption of any initiative. Senior management support will facilitate employee buy-in. Employees will benefit by acquiring, applying and sharing new skills and knowledge gained from the learning culture.
The third component of culture, internal processes, often is considered the “sacred cow” within organizations. The saying, “If it ain’t broke, don’t fix it,” applies here. People will protect their processes — how they do their jobs and tasks — for fear of losing control, their jobs or of simply learning something new. Diffusing protectionist attitudes easily is done if you can demonstrate the benefits the affected individuals will gain by modifying or creating new ways of doing things. The challenge for workforce learning and performance professionals is to foster the behaviors and attitudes of management, ensure employee buy-in, and develop or modify internal processes to support the integration of learning as a business process.
Another way to move easily beyond measuring training ROI is to integrate a continual monitoring process post-training to collect organizational results. By sampling smaller groups over time, training departments quickly can get valuable insights on the effects their learning initiative delivers. This might sound time-consuming and involved, but it is quite simple and quick. Investigation methods such as conducting surveys and forming focus groups can be used to measure specific business influences as related to the objectives of the learning solution. So Level 3 issues (application) can be measured through productivity and efficiency metrics, and Level 4 (business results) is witnessed through business-related metrics (e.g., customer satisfaction, goal attainment, etc.). Success with this approach is found only if you build this capacity into your training organization, reduce your dependence on ROI and allow yourself to make Levels 3 and 4 natural parts of your evaluation regimen.
Moving Beyond ROI and Moving Toward Strategy
With a globalizing economy, hyper-competitive markets, strong entrepreneurial initiatives, access to technological advances, continuous technological changes and the pursuit of scarce human talent, organizations of all sizes quickly have recognized their employees’ value and how they are the drivers for innovation, growth and achieving strategy objectives. Management now is focused on clearly communicating and connecting, in tangible and realistic terms, strategic objectives to all levels within the organization, demonstrating to employees how their roles contribute to attaining these critical success factors. More than being financially accountable or proving an ROI, workforce learning and performance professionals have a critical role in helping stakeholders attain strategic expectations by linking learning solutions to organizational strategy.
For every organization, an effective and clear business strategy is essential for long-term growth and success, and it is at the top of the priority list for senior management and organizational stakeholders. The one weakness for management is being able to communicate and connect, in tangible and realistic terms, the strategic plan to all levels within the organization and to demonstrate to employees how their roles contribute to attaining critical success factors. The weakness for workforce learning and performance professionals is to understand how to connect to the organizational strategy in an effective manner. Again, their first instinct is to deliver results in financial terms, specifically, delivering ROI. As mentioned earlier, C-level decision-makers are less concerned about hard financial returns for training and more intrigued to know how to leverage a learning strategy to the benefit of the organization.
The one strategic performance tool resolving this dilemma is the development of the Balanced Scorecard (BSC). Also referred to as the “strategy dashboard,” the BSC effectively translates the strategic plan and mission of an organization into tangible nonfinancial and financial performance measures within four distinct business focus categories. One is called “Learning and Growth.”
Like a well-oiled machine, an organization functions best when the sum of its parts (departments and divisions) works toward a common goal. Within the BSC, many of these parts (financial, internal processes and customer) now work together effectively through very tangible objectives, measures and initiatives. The one component of the BSC often left unto itself is “Learning and Growth.” There is a lack of understanding and common language between management and the traditionally functional areas of employee development (training and HR), which prevents them from clearly communicating with each other.
In the past, the functional areas such as training and HR were excluded because they were perceived as not directly contributing to the overall strategic objectives. In today’ business context, learning is perceived as an integral part of achieving the organizational strategy in the long term.
Early in his study of business and strategy, Peter Drucker recognized that innovation from creative people provides the only assured source of long-term success and competitiveness because every other activity of an organization can be duplicated by others. He said having the right people with a continual learning process should be standard. Learning initiates and links to the organization’s other strategic focus area. This approach is strategic, providing for framework, allowing for proactive, nonfinancial-based leading performance measures, moving away from traditional ROI.
It is time to value workplace learning and performance more than simplifying it to financial figures such as ROI. There are many ways to measure the impact any learning initiative can have on the organization. What it comes down to is beginning with the organization’s strategic objectives and working back, linking learning objectives with immediate business concerns. By doing this, you easily will determine the performance measures and metrics relevant to the need and satisfy senior management’s preoccupations with operational performance and efficiency, compliance issues, organizational effectiveness, and workforce capacity and proficiency, as well as more intangible dimensions such as motivation, innovation and adaptability. Workforce learning and performance professionals need to start thinking “outside of the course” and think in terms that connect business concerns and strategic objectives. This will facilitate the process of developing the right performance measures in a way that is inexpensive, relevant and moves you beyond ROI.
Ajay Pangarkar and Teresa Kirkwood are partners at CentralKnowledge.com. Watch for their upcoming book, “Building Business Acumen for Trainers,” published by Pfeiffer. They can be reached at firstname.lastname@example.org.