The UK’s economic recovery is welcome news, but it has also exposed a worrying skills shortage that could cut deep in to multiple industries. The Annual Global Skills Index 2013 from Recruitment agency Hays reported that after Portugal, Spain and Ireland, the UK has the worst skills shortage in Europe.
However, at the same time training budgets have come under intense pressure. The Learning and Talent Development Report 2012 found that only 12 per cent of HR professionals polled expected training budgets to increase in the next 12 months. Over a third predicted decreases.
Businesses appreciate the need to develop skills, but when margins are tight it is difficult to justify the outlay on employee learning and development when the tangible benefits are unclear.
Determining true return on investment can be challenging, explains John Wellwood, Managing Director of 100% Effective. Few training programmes relate their outcomes to the potential benefits, so how can you tell if you’re getting your money’s worth?
The first step to better ROI is in understanding your current position. If you are unable to outline how productive a person or process was before training, it will be impossible to prove the learning had any impact.
Organisations need to establish specific Key Performance Indicators that are specific to the individual’s role and benchmark performance. Without this fundamental data gathering, carried out before any training is undertaken, businesses stumble at the first hurdle.
“In order to justify the value of any training programme, you must be able to demonstrate the ROI in financial or strategic terms. Without clear measures of performance you can’t prove the exercise was effective, and faith in training is undermined,” says John.
“Over the years we’ve known countless people who are keen to obtain training, but who struggle to justify it to their manager. When we explain how Lean Six Sigma works, and that by completing a project you can make a solid business case, obtaining sign off becomes far easier.”
Achieving a good return on investment is often a result of closely aligning training with the wider business goals. But it takes more than lip service to achieve results.
“Training has to be targeted, planned, and linked to corporate objectives, or it risks being considered a waste of time,” John stresses. “Delegates who understand how the learning will benefit them specifically are generally better prepared and will get more out of it.”
His opinion is supported by figures from the PEX State of the Industry Report 2013, which suggests that the most successful Lean Six Sigma initiatives are those linked to strategic objectives. Everyone understands the end goal and will work to help the individual and business to achieve it.
Leverage the learning
When the training has been completed, businesses can start actively measuring their return. So a delegate’s first few weeks and months back at their desk are arguably the most important. Lessons learned need to be put into practice before they are forgotten.
Here again we see the importance of securing manager buy-in from the outset. When a training plan is formalised before the programme starts, businesses are more able to see the benefit of providing post-course support and ensuring that training is applied.
According to John, leveraging the learning can take many forms. With Lean Six Sigma the projects completed as part of the training generate immediate savings, however Belts often train their team to support the project, transferring skills and leading to a much greater ROI.
Measure, Analyse, Improve
Collecting performance data is only half the task. Businesses need to analyse it in order to draw conclusions and improve their future ROI. If a training course did not provide any value, it may not mean that the training was unnecessary, rather that one of these key steps was missed.
With regular measuring and hard numbers, identifying the weak link in the chain becomes much simpler. Once you can identify what’s not working in a business, it’s much easier to take effective action to improve performance, profitability and demonstrate ROI.
Take it to 100%
As a leading Lean Six Sigma training company we have an advantage – our training courses are based on data and certification relies on demonstrating a sufficient ROI linked to corporate objectives.
The scale of savings and improvements in efficiency depend on the scope of project, size of the organisation and ability of the individual, however typically speaking we expect Green Belts to deliver per project ROI of 5:1, and for Black Belts the expectation is at least 7:1.
Furthermore, with the benefit of more accurate data, managers can make more informed decisions, leading to additional improvements. There are also the non-tangible benefits to consider, such as increased staff motivation, higher confidence levels and better team working.
Helping you make the case
At 100% Effective we aim to help organisations to improve their business through skills and knowledge transfer, and we recognise that achieving sign off can be a challenge.
This is why we’re offering you the opportunity to speak with a Master Black Belt about your training requirements so that we can help you put together a solid business case.
To arrange your appointment, simply call 0800 066 3749.