Mark Latham, CEO, Corporate Learning Solutions PLC, London, England
It should be said clearly at the outset that there are no algorithms which can demonstrate a clear and immediate numerical correlation between an investment in training and an increase in revenue. To be effective, training needs to be sustained, consistent and long term: the cumulative impact will be considerable, although often apparently intangible and difficult but not impossible to measure.
For continued commercial success and steady revenue growth, it is essential that organisations maintain and develop a body of well-trained staff, who, crucially:
- Properly understand and can communicate the nature of the organisation’s business and processes.
- Possess the required skills for efficient execution of tasks including analysis, product design and negotiation.
- Productive and effective in presentations, generating sales and in delivering great customer service.
There is plenty of evidence to suggest that organisation’s revenues do benefit indirectly from investment in training in terms of the beneficial impact of training on the following key organisational functions:
- Better general efficiency and greater productivity
- Improved team working
- Increased competencies
- Enhanced leadership and management skills
- Improved customer service
- More effective negotiation skills
- Increased employee motivation
All of which have a definite, substantive and positive impact on revenue. Essentially, all effective and successful training is designed to ensure that the SKILLS element in the famous McKinsey 7 S Organisational Framework is robust, powerful and contributing to organisational performance.
Underlying (good) reasons to invest in training
The underlying general reason for a company to invest in training – in learning and development - is to improve organisational performance and therefore financial results including revenue generation. Specific reasons for training interventions are to address and solve problems – e.g. lack of sales skills - or to accelerate the management/ professional development of identified individuals. Overall the demand is usually to create – through training - high performance teams.
The Training Starting Point: Training Needs Analysis
Effective and impactful training must be carefully designed and be based on a thorough understanding of organisational needs. An optimal approach is to apply a systematic Training Needs Analysis methodology which will explore fully the apparent training requirements, the problems to be solved, the target audience, budgetary and any other constraints, and training style preferences. The output of the Training Needs Analysis should be a clear statement of the Training Learning Objectives and Outcomes and an Agreed Training Design.
Training should be delivered by well qualified, experienced, expert, charismatic trainers in a supportive physical environment to small groups: 10-15 persons who have been well briefed by their company and are motivated to learn.
Evaluation of Training
Donald Kirkpatrick, an American Professor, developed a 4 Stage Analytical Model enabling a structured assessment of the impact of Training interventions – and calculation of the benefit to organisations:
The 4 Stages are:
- Immediate Reaction - End of Course feedback by Participants - orally and in writing
- Demonstration of Learning - e.g. by Test or Exercise results from Participants
- Behavioural Change - Through observation/ recording of Participant behaviours, 3-6 months after training
- Results - Organisational impact: measurement of KPI, revenue/ financial benefits
Further scholars have proposed a 5th Stage – ROI – Return on investment - comparing the expenditure one the training with the results shown in 4 above.
Investment in effective training unquestionably brings benefits to organisation’s performance including revenue generation by a focus on achieving behavioural change. The result is an improvement in staff competencies, knowledge and skills – and in the case of more senior managers, better leadership.
Optimum results flow from the following steps:
- Clear Training Needs Analysis - defining the scope & purpose of the Training intervention
- Selection and utilisation of excellent, expert, inspirational trainers
- Careful analysis of outcomes using the Kirkpatrick evaluation model