By Dr Malcolm A Birkin from the Sandton Consulting Group (Pty) Ltd

In a downturn we need to look at expenditure to make very certain that we receive good value for what we spend.

This is especially important when we look at training costs, because good training is expensive and we have be very certain that we achieve a return that is well in excess of our costs.

It is not surprising that measuring the return on training investment has become popular, but is it effective, is it well understood, or are we simply throwing good money after bad in trying to measure a myth?

This article shows that following the much advertised courses and routes seeking to measure ROI from training, is not only chasing a myth, but will not achieve any of the results claimed, and is largely an exercise in futility.

But there is a very different, well-proven route to achieving incredible returns from training that is the focus of this article.

Why is the current route to measuring ROI a failure?

I. It is an after-the-event measurement. What do we do if there is no ROI, do we ask for our money back and try to sue the training company for the time and money our employees have wasted? This is not a practical solution.

2. lf we exclude all but very basic training, the value of medium to higher levels of training (and therefore the most expensive), does not reside in any specific, individual, piece of training The true value occurs ONLY when we combine that training with what has gone before it, and above all we can only realise the full value of that combined training when it is fully integrated into the daily operations of the company.

When integration is complete, and producing maximum value, we cannot isolate it to measure it, so why would we want to try?

We know that the primary reason why companies send people for training is to improve the bottom line, so is there any point in trying to measure individual units of training, when our major interest is in achieving bottom-line results from the whole?

3. Let’s assume that the training received was very good, but there was little or no perceived benefit. The cause may well have little to do with the actual value of the training, but could be due to low levels of people management skills or to generally low levels of company development.

So we are not measuring training at all in this case, we are measuring the levels of development within the company. A recent survey carried out by The Village Leadership showed that the majority of companies reviewed had very low levels of cultural development, (meaning that they operated only at a basic transactional level: orders in, products or services out).

Obviously companies operating at this level are not going to get much value from training. Not only do they have low levels of development but their culture, the cement that should hold the company together, is missing.

4. The primary, indisputable point is simply that we cannot order people to learn and we cannot order people to apply what they have learned. They have to WANT to do that. People who want to learn and apply what they have learned will have high levels of commitment, and those not wanting to do so will have low levels of commitment.

So before we send anyone for training we need to be very certain that we have successfully created high levels of people commitment in our company. If we have failed to achieve this, then we should not send ANYONE for training because it will be a complete waste of time and money.

5. The second most important aspect of training is the value of the training content. How does the training company or presenter differentiate their offerings from their competitors.

Most people sent on a training course will judge it, not by the value of the content, but by how entertaining the presenter is. That may be understandable but it is not good business because it bears no relationship to value.

We need to know how up to date the content is, does adequate proof exist that the content is the best that international management has to offer, is it practical, hands-on, ready-to-use, is there adequate information given on how to implement what is being taught.

Is it highly relevant to the training needs of the company, (and this is dependant upon those needs having been correctly analysed beforehand by a specialist). Does it address exactly what is needed today, and does it go beyond that and address the likely needs of tomorrow?

Does it contain adequate proof of global success, does it contain content relative to the current levels of development of the company, meaning is it aimed too low or too high?

Has it been presented in a logical progression enabling it to be followed easily? Does it clearly spell out the advantages that can be obtained when the content is correctly implemented and integrated. There are more, but this will make a very good start.

6. This means that the value of all training depends primarily upon two factors, the level of commitment of the people attending and the value of the content. Both can readily be assessed BEFORE the event so why would we want to carry out a post-mortem after the event that will be of highly dubious value? We can readily measure the value of both these key aspects beforehand.

7. One of the big weaknesses of the SETA system is that it trains in isolation. Trainers, often from different organizations, train in specific topics, usually as unit standards, leaving the students with a jig-saw puzzle of disconnected pieces of information. Integration is missing.

You recall how bad the old companies were when organised by functional divisions, Finance, Engineering, R&D, Production, Personnel, Sales, Marketing etc. All reported upwards to the M.D, and there was little contact company-wide across the walls built between the functional divisions.

In short there was no integration and we cannot run companies without high levels of integration today if we want to compete successfully. We have to make sure that whatever training we use does not take the company backwards by reinforcing the lack of integration.

8. The vital need to ensure that training must be up to date and contain the very best of international (global) best practices has been mentioned before. There are good reasons for this, and there is much to be gained from doing so. First, these practices are the best the world has to show us, and we can learn from the experiences of the rest of the world free of charge.

There are no royalties to pay, no franchise fees, no commissions. When we can get the best, but we do not want to use them, what exactly are we settling for, second best, third best, or just plain old mediocrity?

Not everyone applauds the use of global best practices. Many claim that they have no need to do so, as they would rather “Do it our way.” But there is no “Our way”. We run our businesses based upon the Western model and in most cases that does not simply mean the old Western model, it means the old Western model that many companies have continued to build upon.

In doing so, they have further retarded their development. Better developed companies in West no longer use the Western model, but use the best of global practices. So claiming that “we do it our way” is just another myth. Continuing to use old Western practices that the West has long ago thrown out, is not a route to development.

We have a very special advantage from following and implementing the best of global practices. Best global practices developed from international management that was created by a combination of the best of previously national, or regional, systems.

Most of the people management practices now entrenched in international management and global best practices, originated in South East Asia. If you recall the early editions of Fortune magazines “Best 100 Companies to Work For” much of their criteria originated in Japan.

The same applies to much of the recent Harvard Business Review survey. We see the culmination of these policies today when Toyota claimed, surprisingly, that it was not their lean production methods, and it was not their ratio of robots to people (that is one of the highest in the world), but their competitive edge was provided by the skills of their people.

In this context, the term ‘skills’ means the combination of higher levels of training given, linked to high levels of people commitment and high levels of people management skills.

G.M tracked Toyota for forty years (as there was nothing Toyota did that was in any way secret), but GM refused to believe that people were Toyota’s competitive edge and made no attempt to follow their example, They are now technically bankrupt.

In South Africa we have very much more to gain from this than most countries.

People management skills that originated in the East have very much more in common with ubuntu philosophies than those coming from the West, and are far more suited to our needs. And, they reflect the real-world situation that the West is no longer the sole repository of management excellence. This underlines a very real need for change, and why it is so advantageous for us to do so.

We are being pushed rapidly and unavoidably toward high levels of change for other reasons. Business today has moved forwards very quickly to meet the never ending increasing demands of global business.

It has moved so quickly that the thinking of the management gurus, that so often was “of the moment’, has been left behind. The changes that we see have come from the ongoing, always up to date, practices derived from international management. International management recoginses no boundaries, ignores racial differences, and ignores concepts, practices, ideas, programmes, that have been unsuccessful in meeting the demands of global business, and have long been discarded.

Over the past five to ten years, all the major tenets of how we manage our companies and our people have changed through 180 degrees, making the new the opposite of the old, and the new no longer compatible with the old.

The best of global practices reflect this, making it obvious that those companies that have yet to embrace meaningful change will reach a point where their practices are so outdated that they will be incompatible with the new practices, making the company an obsolete museum piece. In a competitive environment they will go bankrupt.

We cannot asses the value of training based upon its apparent popularity. We know that popularity does not equate to being effective or to getting results. Using the very best concepts etc, is not simply good business, it is vital for business. Had the eight of our top companies that failed to compete successfully in the United States learned and implemented global best practices company-wide beforehand, there are no valid reasons why they could not have been successful.

The best of global practices combine to show us the way to train people that can produce bottom-line results way above anything even dreamt of in the current attempts to measure ROI. They go beyond that level to show how to understand training and what can be achieved from it, in ways that benefit the entire company. It opens the scope of training from being “keyhole surgery” to addressing the full development needs of the entire company.

9. There are ancillary aspects that we should consider, after the above criteria have been met. Does the training organization, (in-house) allow for special attention to be given to those needing to catch up, does the training company give assistance in implementing the training or do they just talk about it; does the content relate to the evolutionary progression, and how much of it can be equated to globally successful results..

10. The crux of the issue is contained in point 6, above. In ignoring that, we reduce the value of all training to a minute portion of what it could be, so why would try to measure it ?

Part Two available here.