JOHN LODDER: Is training and development really necessary? How to measure the ‘Return Of Investment’?

We are in an economic crisis! Many companies have problems and some have real hard times to survive. Companies have to reduce costs but on what?

In any case an organisation should protect their vital parts. It is important to keep production and sales on a good level. To ensure this a company needs enough employees.

If not really necessary, organisations in general do not want to cut on employees. Social aspects are important, every fired person has an uncertain future and you do not want to do this to your staff!

And, if an organisation fires employees they also show to the market that the company is not doing well, which has effects on the trust of customers and shareholders of the company.

Internally it of course has a devastating effect on the trust in the company and on the feeling of security of your employees. This can decrease the companies’ productivity for many years.

Cost reduction: employees or training and development?

So, preferable is not firing employees but then, where to reduce costs? Logic is to look for expenses that are not directly necessary. Many companies reduce their budgets for Marketing, HRM and Training and Development. What I see in organisations, this is all wrong, but now I like to talk a bit about Training and Development.

The consequence of reducing costs on Training and Development means that employees will not be enough educated but, anyway, they can keep their job, this is often the thought of top management. With this argument they buy off their feeling of guilt.

And besides, it is easy to sell to employees: ‘at this moment we have no budget for your development’.

When making a choice like this you should ask yourself what is effectively the return of investment of training and development? We do not always see the results after an employee attended a training. And if we notice improvements it is not always clear if the employees gained their new skills through the training or by own discoveries in their practice. How an employee learned new knowledge or skills is difficult to measure.

Social developments

These days organisations often reduce costs on Training and Development. That means directly reducing the quality of your employees and, indirectly, reducing your turnover.

This is a very unwise policy, because skipping your complete or large parts of your training programs results in less quality of your core business and your customers will not accept that. Your customers will go to your competitor who offers better service and quality.

The P of Personnel is one, if not one of the most important P’s of your marketing mix.

Nevertheless, it is always good to have a critical look at what is necessary and what not. Social changes in the last decennia also changed the role and meaning of training and development.

Not so long ago companies offered their employees a job for life and by training employees they developed new skills that could be applied in their further career within the same organisation.

With the development of technology and structural changes in organisations it has become more and more crucial that employees keep on developing themselves. Knowledge changes nearly daily and employees have to keep up; skills are becoming more and more important and need regular ‘keep up’ trainings.

With the downsizing of organisations it is often necessary that employees are flexible and be able to switch between different tasks and functions. This makes being trained necessary.

But there are different ways to train and develop your employees. Which program you choose is depending on your company goals and depending on the needs of your employees. Your company goals are very clear I assume and the needs of your employees are clearly defined by their job description, their experience and current knowledge, their tasks and position, your talent management program and so on.

This gives a variety of different, tailor made Training and Development approaches for your employees as shown in the next figure.


An effective training program

What if you choose to organise a training for your employees? This is what happens the most in practice and this is what also the most, after the training turns out to be not satisfying.

When you choose to organise a trining it is important that you ensure that the training delivers the desired results! For this you need to take the following steps:

  1. Analyse the need for training
  2. Choice of trainer and design of the training
  3. Evaluation of the training

1. Analyse the need for training

Sometimes training programs are developed without questioning if they are really necessary.

What we often see is, as an example, a manager is seduced by an advertisement for a training to improve customer services. This manager thinks ‘yes, this is a nice offer and improving customer service is always a good idea’.

But, if the manager does not inquire what the training needs of his employees are, how does he know that the time they are in training and, not productive in their job, will be effective?

Maybe there is no problem with the customer service of the employees and, maybe there is no need for the training at all.

What do you want to achieve?

Before you decide to send employees to training it is important to analyse the need for training.

First you look if the proposed training fits in the strategy and goals of your organisation (department) Then, is a training the best solution to solve the existing problems? (see figure above) What is the return on investment? Finally you look at which knowledge, skills and/or attitudes employees would need to develop to achieve the goals of your organisation (department).

How is the motivation?

When analysing the training needs you, of course, also look at the motivation of the employees. Sometimes there is already enough knowledge available but employees only miss the self-confidence or the skills to apply their knowledge. Or they have enough knowledge and skills, but there is not enough support from the back office. Or there is a resistance to the execution.

It is important to realise that during a training employees not only have to learn new knowledge and skills. It usually means that they have to let go of the standard way of working and behaving as they are used to. They have to unlearn existing behaviour! It can take some time until a new skill is applied with trust and confidence. The trainer then will have to invest more in change of attitude than in the development of new knowledge and skills of the participants.

These viewpoints can be used to decide to offer or not to offer a training to your employees. Further it gives input for the content of the training. And, of course, the individual need of the employee is very, very important, to integrate in the training program.

A training that the employees think of as useless does not contribute to motivation and change.

Therefor it is always the best decision to involve some employees in this decision making process so you have good information and a higher commitment.

2. Choice of trainer and design of the training

If it is clear what you want to achieve with the training you can start looking for the trainer. With him or her you talk about your needs. Make sure you have this very clear, written down, and do not make any concessions of your goals to the bureau or trainer, they should be competent to deliver what you desire.

You also look at the format and execution of the training. It is not always necessary to hire an expensive training bureau; it is very useful to see if you have internal possibilities to exchange knowledge and skills between employees. But keep a good eye on the quality, be very critical. If you organise a training with less qualified internal trainers then the costs could turn out higher than the revenues.

Take also into account the time that your employees are in training and thus not productive.

Depending on the total number of employees a training can become rather expensive. Looking for a cheaper alternative is not always the best option. The training design has to be based on your training goals and content and format of the training program. The organisation tells the trainer what the participants need to know or need to be able to do after the training in clear criteria. (curriculum) The trainer tells which working methods he can offer; using presentations, dialogue, role-plays, video, computer etc. And how will the skills be exercised? How much time is needed to improve knowledge and skills? Which link will be made between training situation and praxis? And are there follow-up days?

3. Evaluation of the training

How do you know if the training was successful? It is important to know what the effect of a training is if you consider follow-up trainings. Also if you consider to offer the same training to other employees it is important to know what the return of investment will be.

What are the reactions?

Many trainers ask participants to fill in an evaluation sheet. Of course, the opinion of the participants is important, but an inventory of the response alone can give a wrong and incomplete view.

Participants can for instance give a high score because they had a good time, it was nice and cosy, the training was a nice alternative for a day working etc.

Or the result can be negative because the subjects were dull or difficult, because there was not a good cooperation with the trainer etc. This feedback says not much about the real effectiveness of the training. It is better to ask after values like: was the content useful? Difficult? Applicable? Etc. It shows that asking for this type of measurements are a better predictor for application of skills in practice.

What is learned?

The ideal objective way to measure if a training was successful is to let participants make a test in which the participants answer several questions and/or do an exercise connected to the content of the training. Especially if such a test is also taken before the training will make the training better measurable. The optimum to have a good view on the effectiveness of the training is to test the results after ca. 3 months in practice. Unfortunately not many organisations work this way, I think they should.

What changes in practice?

To know if the training contributed enough to the development of new knowledge and skills, it is important to also evaluate and judge the results in practice.

Are the participants able to show that they really apply the learned skills in their daily work situation?

Of course should the manager be capable to analyse if the performance of the employees have improved; but this judgement is also not always subjective.

The evaluation of the manager can be influenced by his expectation of the training. If organising the training was the initiative of the trainer he will see the positive results sooner. (Halo effect) Another measurement for the effectiveness of the training can be the number of external signals as complaints and compliments.

For more information

Of course we can provide you with a thorough analysis for your development needs and the most effective and productive development program for your company. We will only do this in combination with your company strategy and marketing plan because that is the start of an effective development program for your company. If you are interested to increase your turnover and company results you can contact us at: