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Employment Today, HR Solutions - Thomson Reuters

Employment Today, HR Solutions - Thomson Reuters



Employment Today Magazine

Making a business case for L&D

“If it was my money, would I hand it over?” Derek Good explains how to work out a return on investment on an L&D programme by providing a simple business case to address the payoff to your organisation.

If you owned a manufacturing plant and had just purchased an expensive piece of machinery, one of the first things you would do is to train the operators on how to use your expensive new asset. You would train your operators for three main reasons: firstly, you wouldn’t want them to hurt themselves; secondly, you wouldn’t want them to damage the machine in any way and lastly, you would want them to utilise the equipment at maximum efficiency. This makes logical sense.

It’s amazing how this logic does not always translate to training our staff when we put our most important asset—our customers— into their hands. So many organisations try to get away with the minimum (or no) training without thinking about the repercussions of any potentially negative experiences customers may have, and the knock-on effect of them telling others and leaving to find another supplier.

INVESTING IN PEOPLE

Investing in your people through a learning and development programme can pay great dividends as they, in turn, invest in your customers—who will invest back into a business they feel comfortable with.

Any learning and development programme should have some basic reasons for taking place. You can help to identify those by asking some simple questions like:

  • • 
    “Why do we need this training?”
  • • 
    “What do I expect to see happen as a result?”
  • • 
    “How will I know if this has been successful?”
  • • 
    “What will be my return on investment?”
  • • 
    “What do my people need to know before they attend?”
  • • 
    “What support will they need afterwards?”

It is not enough to organise a programme simply because you have budget or you think that training may sort out a problem. In many cases, the simple question of “What is happening that shows me I need to organise a programme?” should highlight if training is the answer or whether coaching would be better—or even if something totally different is needed, like an incentive programme.

In all cases, it’s a question of either training to provide skills or motivation to perform. If you apply the wrong solution, you are unlikely to get a sustainable result. For example, if someone already knows how to do something, putting them through more training is unlikely to fix their lack of motivation.

So, let’s say you have identified what’s required and the need that’s led you there. The next step is normally to convince somebody else to pay for the programme to go ahead. If budgets are tight or someone who doesn’t share your optimism can’t see the benefits of what you propose, you may get knocked back and the programme won’t go ahead.

Let’s face it, asking for something like a training programme—which is normally seen as offering a hard-to-measure result—is not as convincing as someone asking for some new piece of technology.

A RETURN ON INVESTMENT

In order for your budget for a programme to be approved, you need to show the benefits in a way that is easy to understand and in a measurable manner. This basically comes down to a return on investment (ROI) or some monetary return for the cost of the programme. If you can’t see an ROI, then you may effectively be burning your money.

One great place to start is to ask yourself the question about the programme: “If it was my money, would I hand it over?” Someone is responsible for the expenditures made in the business. Why should they pay for something that you’re not convinced will be of benefit? If you wouldn’t pay for it, why should you expect someone else to?

Working out the return on investment needn’t be an impossible task. You don’t need to predict something 100 percent, but you should be able to show what you are going to get as a result. For example, let’s say your front-line staff are getting a number of complaints which they are escalating to managers. You could target a reduction in escalations by training your front-line staff on skills to deal with these complaints. But first you should work out what the escalations are costing the business through the time spent on them and look at what reduction you would need to make the programme worthwhile.

Suddenly you are talking in monetary terms with an easy measure. Try to keep the measures to something simple and only two or three measures at the most.

WHERE DO I START?

Rather than starting with a budget or starting with what you think you need, begin at the top and identify what business impact you are trying to improve. Is it staff retention? Is it a reduction in sales your business is struggling with? Are you spending too much money on recruitment?

Identifying what the company is struggling with at a high level should be step one. Linking what’s happening with your teams to that business impact issue is step two. Think about what you can do with your teams that will have an impact on the business issue and link that as a business objective.

Those in your company who hold the purse strings are more likely to listen to a solution you have that will improve an issue which is on their radar, rather than one that may simply resolve a localised issue or which is not linked to a monetary return.

Think about the difference between the following:

1.
We want to do some training on handling difficult customers; and
2.
We can help save our leadership team time by reducing the need for them to take escalated calls from the frontline staff. To do this we need to equip the frontline staff with more skills on handling difficult customer calls. This will free up the leaders’ time to focus on core aspects of their roles and improve productivity. We’ve investigated the difference this specific programme can have and have seen increases of x percent of each leader’s available time as a result.

One organisation that followed this example saw average daily occurrences drop from two escalations per day to one escalation per week, saving some four hours of time a week for each leader.

There is a bit of work involved in getting these links connected, but there are people who can help. Start with the supplier of the programme—they can give you some ideas. You can talk to other people who have done something similar to see what their experience has been. And you can also utilise LinkedIn groups or pilot small groups yourself.

SO WHAT?

When you have identified what the L&D programme is you’re going to run, ask yourself a series of “so what?” questions. This means that you try to take your reasoning through to a monetary gain. For example, if you have decided you are going to run some customer service training, you might follow this route:

  • • 
    We are running some customer service training. So what?
  • • 
    So that our staff will have some better skills in dealing with our customers. So what?
  • • 
    So that our customers have a better experience when they contact us. So what?
  • • 
    So that they stay longer with us and spend more with us. So what?
  • • 
    So that our income increases. Okay, so the customer service programme is being run to help improve the customer loyalty, longevity and spend of customers.

Or perhaps you have decided you are going to run a leadership training programme. So what?

  • • 
    So that our leaders will have more skills on how to coach more effectively. So what?
  • • 
    So that they will be able to motivate and focus staff on better conversation control. So what?
  • • 
    So we reduce the amount of unnecessary talk time with customers and focus on a solution. So what?
  • • 
    So that the cost of the operation is reduced by reducing interaction time. Okay, so the leadership programme will reduce our operating costs through coaching the staff on controlling the conversations better.

In this last example, one organisation reduced their total call time in their contact centre by 14 percent. You can begin to work out what 14 percent extra capacity could mean for any organisation.

KEY POINTS TO REMEMBER

When working out the benefits of a learning and development programme and working out an ROI, consider the following:

1.
Ensure you have an answer to the question: “What tells me I need to run this programme?”
2.
Link your expectations of the programme to some business impact need (such as reduction of staff turnover, an increase in sales or fewer abandoned calls).
3.
Identify two or three simple measures of success of the programme. If possible, utilise metrics that are already in place so as to avoid additional work for others.
4.
Get help from the supplier and others who have some data or case studies to help in your own predicted ROI.
5.
Ask the two questions, “If it was my money, would I hand it over?” and “So what?”

Working out a return on investment on an L&D programme means providing a simple business case that should address the business payoff, what’s involved and how you will measure it. If you can keep it simple and be convinced yourself, you’re likely to get what you want across the line.

DEREK GOOD is managing director of Rapid Results Limited which specialise in sales, service and leadership programmes and utilising return on investment methodology. Visit www.rapidresults.co.nz

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