Executive Briefings

Published April 2008

Speaking the Corporate Language: Measuring ROI

Lindsay Edmonds Wickman

With a potential recession on the horizon, training budgets may be on the chopping block if learning executives are unable to communicate the value of that training to the C-suite.

Already training leaders are feeling pressure to reduce costs, according to a recent survey by Expertus and TrainingIndustry.com. Of the 113 training leaders surveyed, 13 percent feel an intense external pressure to reduce training costs, 41 percent feel significant pressure, 37 percent feel mild pressure and only 9 percent feel no pressure at all.

“Since [C-level executives] don’t see the value in training, there’s always going to be pressure to reduce costs, especially in a down market like today,” said Gordon Johnson, vice president of marketing at Expertus, which provides outsourcing services. “It’s hard to determine a return on investment for training, and a lot of people try to do it but very few training organizations are able to.”

Training dollars may be under scrutiny because many chief learning officers and training directors are unable to provide the data necessary to illustrate the effect of training on the organization. Gathering this data is especially elusive, as it’s difficult to correlate training such as leadership development to dollars and cents.

“Talk to most CLOs and training directors, and they’ll say their biggest pain is measurement and that’s not measuring the busywork,” Johnson said. “That’s measuring what the value of that training is on the organization and how efficient your training organization is. Those are the biggest things that reduce our ability to talk to senior-level management. They speak a different language; they speak in revenues and costs.”

Training executives typically don’t speak this language, but they need to learn how to speak it by developing appropriate measures to illustrate the value of training. According to the survey, 41 percent of respondents use Kirkpatrick Levels I-III for measurement, 36 percent use output and volume metrics, 20 percent use return on investment/profitability or business outcome, 8 percent use advanced metrics and 4 percent use some other form of measurement.

“If you want to transcend that problem of training being the red-headed stepchild, you’ve got to show business results,” Johnson said. “If you can’t show any business results, almost inevitably your training dollars are going to go down.”

The first step in developing business metrics that measure the impact of training on an organization is actually not a step forward, but a step backward.

“What you [have] to do is you [have] to take a step back and say, ‘What are we going to measure?’” Johnson said. “First, you’ve got to minimize what you’re measuring, and that sounds counterintuitive, but you’ve got to stop measuring everything and start measuring those one, two, three important things. Unfortunately, what’s happened is these training organizations already have 500 things that they’re measuring, and then they want to measure these other things. Well, you just don’t have enough time to do it, so you’ve got to take a step back.”

One caution: Companies should be thoughtful when developing a strategy for ROI, as providing accurate data can be just as critical as gathering the right data.

“The very last thing that you ever want to have happen is to give a CEO data that says, ‘Here’s the return on investment of the sales training that we did three months ago,’ and then a month later come back and say, ‘We made a mistake.’ We have heard stories about this, and we’ve seen it happen. Nothing kills your credibility and your future training prospects more than not being trusted by the C-level executives.”

Lindsay Edmonds Wickman is an associate editor for Chief Learning Officer magazine. She can be reached at editor@clomedia.com.

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