Return on Investment for Training (measurable profits)

Measurement of training is a common issue faced by most HR/Training managers. How much do you get for your training investment? Does your return justify the investment?

Kirkpatrick came up with 4 levels of evaluation.

Levels 1 and 2 are skills and knowledge. That can be measured by a pre and post training evaluation. Normally the pre and post results will almost always show a marked improvement, from around 20-30% in the pre to 80-90% in the post training evaluation.

Level 3 is behavioral change. The person’s behaviour has changed due to the training. The person who is most often tasked with this is the direct supervisor.

The “holy grail” of training is level 4, return on investment training. This has to be done over a long term period, not a 1 or 2 day training session. How has the training impacted the business and resulted in direct returns for the company.

Case Study – Hotel Industry

The hotel was an established but old hotel in a suburban area. It faced new competition and old competitors which had done a refurbishment. The unique selling proposition had to be the service as well as the quality of the traditional Malay food. The business development team was diverse, with people ranging from their early 20s to 40s from Malaysia, China and Sri Lanka.

The task – Motivate the business development resulting in increased turnover and profit.

We designed a 9 day training program for the team as follows:-

1. 2 day Strategic Planning Session where the team looked at all the issues and challenges facing the team. Each of them were tasked to look at various issues

  1. Interdepartmental communication
  2. Mindset towards product and
  3. Price sensitivity
  4. Process issues

2. 1 day presentation of their findings and recommendations on the above. The presentations were honed and they were introduced to cause and effect diagrams. They studied and applied the learning to real life issues.

3. 1 day training on marketing and sales strategies for Project Mooncake where the team would now focus on selling mooncakes. The team was taken on a field trip to the supermarket with over 20 brands of mooncake and to the premium hotel which sold over 6,500 boxes last year. By comparison, the business development team sold around 100 boxes of mooncake in the previous year. This was also to be used as part of getting back old businesses.

4. 1 day presentation on the action plan of Project Mooncake. Teams were graded on innovation (12.5%) and implementability (12.5%) during their presentations. The balance (75%) was for net profitability on the mooncake sales. The team which won was given a score of 22/25 with the lowest team achieving a score of 7/25. Prior to that they had a speaker on marketing who taught them on the 4Ps of marketing as well as online and viral marketing. The winner was a proposal to work with a bookshop to sell mooncakes with a chef demonstration.

Project result – Sales of 330 boxes of mooncakes vs 100 boxes a year ago. 100% agreement from the business development team that 5000 boxes will be the target for next year. Sales halted at 330 boxes due to the stock selling out.

5. 1 day training on innovation and creative thinking. The guest speaker was a senior GM at Maxis, Mr Lai Shu Wei on a creative and innovative marketing for caller ringtones for Maxis. The team was taken on a field trip to Sapura Auto to look at the innovations by BMW and Sapura Auto. Some innovations included Fast Lane service, where servicing is done in 90 minutes or less and the customer is shown new BMW models during this time (repurchase). The service center on top of the showroom was also another innovation to show cleanliness as well as inviting both journalists and doctors to dine in the workshop. Some lessons which were applicable to the hotel industry included the tools and processes used by BMW which could be applied to the kitchen. Participants were left behind at Sapura Auto without their wallets or mobile phones and told to return to the suburban hotel. The winning team received “buka puasa” at another hotel. There was also a mid way feedback session for the participants.

6. 1 day training on sales skills. Participants conducted role plays on selling and were exposed to the selling triangle. They had earlier worked on innovation and breakthrough performance focusing on the process, product focus and customer focus. They went through a refresher on this triumvirate. Their next assignment was application of sales, marketing and innovation to a project on outside catering.

7. 1 day presentation on outdoor catering project. Each team was given a target of RM250,000. Each team presented the cost-benefit analysis of their proposal together with application of the 4P’s of outdoor catering.

8. 1 day course on application of innovation and creativity. Participants looked at a wedding boutique and came back and gave their findings. They also applied the process of instilling creativity and innovation in their department/team.

9. 1/2 day recap of the whole course and how the training had aided each member of the team. Key learnings included innovation, marketing/sales, financial responsibility and customer focus. Team also went through communication exercises as well an exercise on recycling.

10. 1/2 day finale. The team were given a real life sales assignment serving in the hotel. This assignment was designed to allow application of :

i. teamwork with other departments (including operations)

ii. innovation and creativity (how to create an innovative and relevant product)

iii. marketing strategy (how to market your product)

Participants were judged on their innovation (25%) and their net profit for the assignment.

In summary, achieving return on investment training is possible with the following in place:-

1. Structured training over an extended period. It would be difficult to achieve such results over a one day training session.

2. Application of theory to real life assignments. As the participants were working on a real life assignment, they were focused and could see the impact of the training immediately.

3. Support from the management. This is essential as you will need to use the tasks with management to help achieve the desired results. Regular meetings between the consultants and line management helped make this project a success.

With these key factors in place, we were able to achieve a return on investment of over 5 times.

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