L&D Best Practices: Business Goals and Measuring ROI

Training and Business Goals

By Lisa Pruitt, VP, Learning Strategies, First Horizon National

At First Horizon National, the parent company of First Tennessee Bank and FTN Financial, executives set business goals in late November. Goals then are cascaded electronically through the system via myPLAN (the organization’s talent management system) in December. An annual Training Summit is conducted in early January with top executives enterprise-wide, across all business lines.

Prior to the summit, line of business learning managers (LOBLMs) meet with their line of business executives (LOBEs) for a personal review of business goals. A training gap analysis is completed and agreement reached (between LOBLM and LOBE) on training priorities for the coming year. As a result, a consolidated document is created that includes:

• Business goals and strategies for each line of business
• Training gap/barrier to achieve the goal/strategy
• Training strategy for overcoming the gap
• Tentative prioritization of training strategy

During the summit, the LOBE and LOBLM jointly present their findings to the entire group. All business lines are required to be present during the other business lines’ presentations to help provide a horizontal view of learning needs versus a vertical view. There was resistance to this at first, but it now is considered a best practice. It has helped uncover common gaps across the enterprise and prioritize resources. Hits, misses and opportunities from the previous year also are discussed, as are current overall training resource prioritization issues. These discussions typically uncover consistent training gaps.

After the summit, LOBLM and LOBE drill down and make final prioritizations, set timelines, etc. LOBLMs and LOBEs meet weekly in one-on-ones to make adjustments. LOBLMs attend LOBE sales and staff meetings to stay in the loop and suggest learning alternatives to business challenges.

The summit document is updated quarterly and shared across enterprise LOBEs. The document is adjusted and reprioritized based on business changes (e.g., new regulations, unexpected changes in profitability, directions, etc.). At this point, other projects might be placed on hold or the priority level changed based on resources. The document is reviewed annually to determine hits, misses, and opportunities. Business outcome results are documented.

Each LOB and compliance has a governance committee that includes management, training, and line representation. Some areas also have learning advisory boards that delve into the details of how to resolve certain business issues, focusing on holistic solutions (i.e., it isn’t just about training but involves a mix of training, coaching, processes, systems, hiring, incentives, culture, etc.). These representatives often serve as champions of certain change initiatives.

During the third quarter, LOBLMs and the VP of Learning Strategies attend in-person meetings with front-line management across the company to collect hits, misses, and opportunities. These meetings provide a “real-life” evaluation of how training is being implemented and set up for the discussions and goal-setting sessions at the end of the year. An Annual Report summarizes budget, resources, projects, and results, and includes benchmarking studies.

When it comes to determining training expectations, the training summit document matches the goal against the gap and then against the solution and expectations. For each solution, the learning strategist works with subject matter experts, management, etc., to arrive at training and performance expectations. We dig deep with those assigned by senior management to agree on specifics. All these are included in a Training Requisition that must be signed off on by the sponsor. The plan is validated along the project line.

Sample questions include:

BUSINESS GOAL/NEED QUESTIONS

1. What prompted this request?

a. Is this a new process, product, procedure?

b. Is this an existing process, product, or procedure where
a performance gap exists? If so, what?

c. If there is a performance gap, how is it impacting our
ability to make a profit (risk, fee income, efficiency,
customer relationships, etc.)?

d. Was there an internal or external audit or regulation change that prompted this request? If so, what? Be specific. Please insert the audit or regulation point within this
document.

2. What is the potential consequence of not conducting this training?

3. How will we prove the training is successful?

a. What behaviors do we intend to see changed?

b. What business metrics can we track to prove the training was successful?

• Retention/Turnover
• New Employee Referrals/Recruitment/Internal Promotions/ Diversity
• Quality Improvement
• Production/Output
• Loss Prevention/Risk Management
• Building Relationships/Customer Service/Market Share/ Customer Loyalty
• Innovation
• Revenue/Sales
• Safety/Health
• Product Development
• Employee Engagement
• Other

c. How are these business metrics currently tracked?

d. How can we prove improvement? Is there a certain percentage improvement we expect?

4. How often does the training need to be conducted?

a. Is this a one-time event or is annual training required?

b. If annual training is required, please state the business reason for this requirement.

c. Is there a certain percentage of the population that must complete the training?

d. Is there a preferred method of training (in-person, CBT, etc.)?

5. Will new hires be required to take the training?

6. Is there a time length requirement for this training?

7. What is the associated payback to the company for conducting this training expressed in terms of dollars potentially saved, customer relations (risk, fee income, efficiency, customer relationships, etc.)?

PERFORMANCE NEED ANALYSIS

Critical Business Need (that training can help address)

Job Performance Need: What will participants be doing differently in three to six months? What does success look like?

Acceptable Evidence: What data is needed to decide whether the program is working?

Results Verification: Who will be able to confirm, document, and/or track the change?

Learning Objective

Learning Evaluation: How will this skill be observed/tested for competence?

The biggest challenge in this whole process is making sure line management is engaged in the prioritization and business results expectations. It is a series of conversations and documentation of the agreement, not a “Here is the problem, so go and solve it.” If you can’t agree on a way to track business impact, it probably isn’t worth the company’s money to pursue. The line of business must work with training to show how the investment of the learning dollars will result in bottom-line impact, tied to specific metrics. The bigger the investment, the bigger the conversations and documentation. Also, you must have a formal process to clarify, verify, and track results. The summit, governance, setting observable and trackable business outcomes, and working together toward a solution is a best practice that works for First Horizon National.

Measuring ROI

By David McGeough, VP, Training and Development, PAETEC

Some 15 to 20 percent of all training at PAETEC is given a full return-on-investment (ROI) analysis. We do analytics on programs where we feel we can track a specific outcome during a specific period of time.

We do not plan on a larger percentage of training undergoing the analysis in the future. Our thought is if you try to put too much training under the ROI microscope, you spend too much time chasing numbers to justify programs. An organization has to have a culture that believes training is a necessary component of its employees’ success. I once read that sometimes the process of tracking ROI is itself a negative ROI behavior. This is why it must be reserved for select programs; it should be looked at as one more tool to add to the other measures, such as surveys, return on value, and balanced scorecard, used to evaluate training.

When doing an ROI analysis of training, we take into account the cost of our trainer’s time, time of the employees being out of the field, and travel costs, and then we add an average opportunity cost. The total then is compared to the outcome of the training program, whether it is an increase in a specific product’s revenue or a reduction in a specific cost.

We’ve also been using a balanced scorecard for a few years now. It’s been an evolutionary process. Initially, a large challenge was overcoming the fear of attaching Training’s performance to such hard numbers. So many variables play into different key performance indicators (KPIs)—for example, new sales rep turnover and order install intervals—that it can be intimidating to attach them to the Training team. Once we started linking the output of training with a handful of KPIs, and then sharing this one-page scorecard with our senior team every month, it allowed us to ask ourselves the tough questions of where we could improve. Two of the KPIs we currently track are sales rep turnover for tenured and new reps, and customer attrition. Each KPI bar graph includes bullets of that month’s training deliverables.

Our turnover of new sales reps was something we always tracked, but when we applied it to the balanced scorecard, it enabled us to create a cross-functional team from Sales, HR, and Training to deploy a new strategy. This team approach improved our execution and allowed for better follow-up and inspection. The result has been a year-over-year improvement of 10 percent.

If you are thinking about implementing a balanced scorecard approach, be sure that the KPIs and business metrics identified are decided in collaboration with senior management. We’ve learned that these decisions can’t be made in a silo. They must include input from your internal customers, otherwise they have no real value. Also, a balanced scorecard should be used as an indicator for the effectiveness of Training’s strategy but not the be-all, end-all indicator of performance. A good combination of return on expectations (ROE), ROI, balanced scorecard, and Kirkpatrick’s four levels of evaluation ensures a fair and balanced assessment.