ROI is DOA: How ROE (Return on Expectations) is a Better Measure of Training Success

ROI is DOA: How ROE (Return on Expectations) is a Better Measure of Training Success Having Your Customer Define Training Success

That is a good book that is opened with expectation and closed with profit – Amos Bronson Alcott

ROI – Return on Investment Unfortunately, ROI may be… DOA

DOA… Demanded by Older Authorities

ROI • Some Facts on ROI • Out of 96 company CEOs surveyed, only 4% of those companies measured ROI (ROI Institute 2009 study)* • 58% of training managers are not required to report on the effectiveness of their work* • 69% are not required to report on productivity* • Even ROI proponents agree that accounting methodologies make it difficult to measure ROI * Hansen, C and Lee, Y-T (2009) “The Cultural Context of Human Resource Development”

ROI Versus ROE • ROI is completed after the fact • ROI is hard to prove • ROE is easy to prove • ROE is completed before the fact (although measured after the fact)

Hindsight is 20/20 Photo by Ira Block This was the first and last time that Irving would agree to give Marge a piggy-back ride

ROE • ROE is • Customer focused • Customer designed • Customer accepted • ROE is COLLABORATIVE!

ROE • ROE is not a “soft” measurement • Can include “monetary” measures • It’s a better gauge of training success • It’s simple to complete!

ROE • ASTD-IBM study involving CXOs and CLOs* • Two very interesting findings: • CXOs are less concerned with quantitative metrics that show learning’s value contribution to business outcomes • Perception of stakeholders are a key indicator of learning’s value * ASTD-IBM 2005 Study: C-Level Perceptions of the Strategic Value of Learning Research Report

ROE • What does this study mean for ROE? • Perception is important with regard to the value of training • ROE can create perception • Additionally, this same study found that word of mouth is the most common measure of effectiveness that trainers felt was important to their customer

ROE Versus ROI • Characteristics of ROE vs. ROI – Donald Kirkpatrick ROI ROE

To ROE or ROI, That is The Question • When to use ROE vs. ROI ROI ROE When metrics can be identified and tied directly to the training intervention When there are no metrics that can be tied directly to the training intervention When absolute costs and benefits are requested/expected by Boards or Shareholders When the trainer can meet with the customer prior to the training intervention When use of ROI is low (less than 10%) When ROI has been utilized on more than 5-10% of training interventions

ROE and the RC • ROE is measured using a Results Contract (RC) • RC is the agreement between customer and trainer • RC is completed before design starts (scored after training delivery)

ROE Blank Results Contract

ROE Completed Results Contract

= TrV% Σ (Io x Rm)n • Training Value Σ (Io x Ro)n X 100 • Where • I = Importance • R = Results • o = objective • m = maximum achievable results • TrV% = Training Value as a percentage - ≥ 80%

ROE Results Contract With TrV

ROE Completing a Contract

Summary • ROI is difficult to prove • C-level executives are more interested in perception • ROE can create very positive perception • ROE is simple to implement

ROI is DOA: How ROE (Return on Expectations) is a Better Measure of Training Success