We often say that calculating the ROI of training is hard; this leads us to dig in and put more effort into determining ROI. In fact, it's better to say that, in most cases, calculating the ROI of training is impractical. This more realistic perspective leads us to consider that we should use our analytics team for tasks other than trying to produce a bullet-proof ROI.
Before we think about different things the analytics team should be doing, we need to step back and figure out why we are always asked about ROI in the first place. After all, finance professionals know that they rarely get useful ROIs on training; there must be a reason they keep asking.
What does the ROI request really mean?
It's a useful exercise to pause for a minute and think ... what's driving the requests for ROI in your own organization. My view is that in most companies, ROI requests flow from the budgeting process. Budgets are a very important control mechanism and in budgets, everything boils down to a dollar value. Whether we're talking about buying new equipment or hiring a contractor to clean the office or investing in additional training, as a matter of form, the appropriate way to choose where to spend money is to compare the ROIs. Now in truth, for many of these investments, it is impractical to calculate an ROI. Nevertheless, it sits in the back of everyone's mind, and so it's a question that will be asked every time. We should be ready for it.
High face validity opens doors
How should HR deal with questions about the ROI of training given that it is usually impractical to answer without a lot of hand waving? One clue is to consider how organizations deal with questions about the ROI of cleaning the office. You can't really calculate the ROI of a clean office; luckily you don't need to because it has such high face validity than no one worries too much about justifying it. We all enjoy clean offices, no one questions that! The same thing happens with training. If training has high face validity, then no one will push too hard for an ROI based on objective data. When leaders keep asking for more data to determine the ROI of training, it means that they're not convinced it is adding value.
What this discussion shows is that we won't escape being asked for an ROI of training, however, it will only be painful if leaders don't believe in their hearts that the training is effective. HR needs to work on face validity, rather than working on the (usually) impractical task of an ROI based on objective metrics.
How to bump up Face Validity
More than anything else, face validity will follow from effectively working with leaders when we design training programs. That design has to start with a specific, not just generic, view of business needs and a discussion of options for addressing those needs. Frequently, training will be part of a set of options that will address a need. If you get this right, which will require pushing leaders to get really clear about that they need, then you're a long way towards having the all-valuable face validity. After that, getting leaders to understand why the training is designed the way it is, and then acting on feedback from participants, will create enough buy-in that your estimates of ROI are less likely to be challenged.
Once we free ourselves from the impractical quest for a bullet-proof ROI, we can devote our analytics efforts to more productive ends and focus on the true outcome of employee learning: improved performance, retention and engagement.