Early in my L&D career, a business leader asked me, “So how do we know this training is worth this investment? What is the ROI?”
“That’s an interesting question,” I said. “One way to think about it is that you and I have discussed what the most successful people do and how they consistently get the best results and looked for ways to replicate that within our own team. With practice, this course will help others on the team build and strengthen those same skills so we can also get the best results.”
“I know that,” the leader responded. “But for every dollar we spend, how much will we get back? I’m investing in my team, and I need to know what my return will be—my ROI.”
Perplexed, I finally admitted, “I have no idea. But if we track our success, we can find out.”
That seemed to appease the leader to move forward, and it also marked the beginning of my adventures to try and achieve a return on the learning investment.
Let’s start by acknowledging that it’s nearly impossible—and scientifically unsound—to attribute ROI (return on investment) to soft skills training. That’s because while our learning sessions will attempt to change behavior, these results can’t be isolated within the context of a robust learning strategy. Likely, your learning strategy involves lots of levers, content sets, and strategies all aimed at impacting change—not to mention programs, projects, and people across the business. Attributing bottom-line or key results to just one lever is inaccurate and incomplete.
However, there are ways to measure the impact of your learning initiative. Because soft skills training is aimed at behaviors, you can measure behavior change. Through pre- and post-measurement tools you can see how your learners behaved before a course and how those behaviors have changed in the weeks and months following training.
In some cases, you may draw correlations between certain behaviors and organizational effects to show how a program might impact the business, but the measurement requires a broader framework. For example, MaineGeneral Hospital measured behavior change as a result of Crucial Conversations for Mastering Dialogue. They found that managers who took the course showed an 85 percent improvement in speaking up about poor teamwork, a 66 percent improvement in addressing poor initiative, and a 43 percent improvement in addressing incompetence. Leaders believed that this marked increase in respectfully addressing concerns with the right person had a direct impact on patient care—an impressive and critical result for the organization. But is this ROI? That’s where it gets tricky.
Let’s first define ROI and also look at another way to measure return through ROE:
- ROI (return on investment) seeks to measure if an expenditure yielded a profit. Was the financial return greater than the financial investment?
- ROE (return on expectations) looks to clarify and refine the expectations of key business stakeholders and aim learning initiatives at these specific expectations. These expectations may have indirect financial implications.
So the question becomes, “Do you want to turn a profit on this one-time investment, or do you want employees to develop skills and behaviors that continually generate results?”
A good business leader will likely say, “Yes. I want both.”
Here are some ideas for doing just that.
Start with Expectations
Begin by collecting data and asking questions to better understand what the leader or stakeholder is trying to achieve. Questions might include:
- What are you expecting the training to accomplish?
- What will success look like? Why is that important?
- What do you expect to see that is different than today?
- Why is that outcome important to you? How might it be important to your team?
- That’s clearly important to your team’s success. How would the organization be impacted if you achieve that?
- Who on your team is good at this already? What do they do differently?
- How will you know this effort is a success? What measures will tell you so?
Match Expectations with Outcomes
Once you know what the business leader hopes to achieve or solve with training, you can match those expectations to learning outcomes from the course as well as business measures. For example, imagine your business stakeholder says something like this:
- “Our team members aren’t hitting deadlines.”
- “Our new salespeople immediately give price discounts when clients question our standard pricing.”
- “Our middle managers are ‘too nice’ and don’t hold team members accountable.”
- “Our employees are distracted by their phones when they should be working.”
- “We’ve had several injuries at the plant this year.”
- “We want to be the leader in our industry.”
What would the underlying issue be for each of these problems? What courses would you recommend? What learning outcomes might solve these challenges?
Find Correlations between Behavior Change and Business Measures
Once you’ve identified the appropriate learning initiative, begin by discussing business measures you can track that will indicate success in meeting those expectations. Measures may include profitability, client satisfaction, employee engagement/fulfillment, and team performance. Then identify a baseline of those metrics before you begin training.
Next comes measuring behavior change. As you prepare for the course, have learners self-report on criteria corresponding to the areas you’ve identified for improvement. This is best done with assessments before the course, immediately following the course, and after the course has ended (e.g., 60, 90, or 120 days). The results are self-reported, so the data is only as good as its sources, but this will help you to track behavior change among the learners.
Once the course is over, review the business measures you’ve identified against the baseline you recorded before training. See if the positive change in behaviors correlates to an increase or decrease in the business metrics in the weeks and months following training. If they increase, you can likely draw a correlation between the behavior change you are driving and a return on expectations. And as a learning leader, you’ll have a complete view of all the work you are doing to drive change and have a better pulse on what courses and initiatives are having an impact.
To put this into a real-world scenario, let’s look at employee turnover, which does have a financial impact in the cost of recruiting and onboarding. So, if for instance, your organization finds an 11% decrease in turnover/attrition among team members of managers who successfully completed your course, and your learners demonstrated a change in behavior, then you could link a correlation in behavior change to the reduction in costs associated with hiring and onboarding new employees. Just remember that you are looking for correlations, not causation.
So, while ROE does not deliver a percentage increase in the initial investment, it is a way to measure the impact of L&D. When you know what business leaders want, and you have clearly identified how learning outcomes relate to their goals and challenges, you can justify the financial investment in training.
When we start with clarifying and defining expectations (using your consulting skills and questions), and then matching them to both the right course and the appropriate business outcomes, you get a return that matters to both that leader and the business.
At the end of the day, organizations are comprised of people. Every ROI is generated by human behavior. Invest your time to clarify expectations and help leaders see how behaviors affect organizational performance, and you will reap many valuable returns.