HR fails to measure training ROI

Jul 24 2007 by Nic Paton Print This Article

Just a fifth of businesses measure whether their employee training and development delivers an effective return on investment, despite six out of 10 HR directors believing they could do so.

Six out of 10 HR directors are convinced that measuring the return on investment of their employee training and development is not only crucial but possible, yet just a fifth of companies actually do as they suggest.

The global analysis by British consultancy Lane4 is more evidence, if more were needed, of the continuing apathy and lack of clout that HR has within many businesses.

More than two thirds of businesses dismissed ROI as difficult to calculate when it came to employee/people development initiatives, with a similar percentage saying they did not have enough resources to make it a reality.

As one media-related HR professional told the researchers: "To be seen as a credible partner to the business and to work collaboratively, HR needs to be able to demonstrate a clearer return on investment that is widely understood rather than spurious measures that sound good but mean very little."

Tom Smith, head of organisational development at Lane4, added: "ROI is something that businesses want and expect from their training programmes.

"Measurement of ROI has invaluable benefits beyond the bottom line including more bespoke people development for your organisation, goal-focused interventions as well as the ability to predict effective investment.

"Despite HRDs being fully aware of these advantages, few are measuring ROI due to a belief that it is too time consuming or difficult to calculate."

The most successful employee development programmes ensured HR initiatives were aligned with business strategy by involving relevant stakeholders as well as identifying the desired ROI (for example saving on recruitment cost by increased retention), the research found.

Financial ROI could be calculated through the use of key performance indicators identified at the beginning of an initiative with relevant stakeholders, it added.

And using goal setting techniques to design interventions through your KPIs to your desired return was also a good idea.