What is the value of an organization’s training pro-grams? What is the return on investment in enter-prise learning and other workforce enablement initia-tives? Although these are very basic questions, feworganizations can answer them with an adequatedegree of rigor. It’s a curious situation: althoughexecutives usually can provide detailed informationabout the their return on investments in equipmentor other physical assets, many of the same executivesdo not know what their companies are spending onworkforce enablement, much less the measurablevalue it is delivering.
Why would one wish to know detailed informationabout the return on learning? For us—a team fromAccenture’s internal capability development groupleading a transformation of the company’s internaltraining programs —it was not merely an academicexercise. The motive was, in part, extremely practical:prove to our steering committee and the sponsors ofour transformation initiative that their continued,ongoing attention to training at Accenture was asound business investment. Not only was it “the rightthing to do,” the learning transformation programwould also deliver a measurable impact to the com-pany’s bottom line.
The shortfall in traditional measurement techniquesThe program we developed to assess the ROI in learn-ing was extremely methodical, starting with basicquestions and proceeding to more difficult ones. Thefirst question was simply whether an ROI in learningeven exists. The integrity of a measurement processreally depends on starting from zero. So our approachwas to begin with the presumption that there is no
value to learning, and then see what evidence therewas to the contrary.
In fact, much of the traditional evidence turns out tobe somewhat shaky on close inspection. Reviewingthe secondary literature, some of the work done incalculating the return on training investments isguilty of misrepresentation and over-reliance on softdata. Survey data (for example, “Did you enjoy thiscourse?” or “Would you recommend this course?”) isoften the foundation of such studies.
However, to create a sound ROI model for training,one needs to look beyond operational statistics likenumbers of courses and satisfaction scores, andinstead determine whether employees actually made a better contribution to the organization because ofthe course. To use an analogy, assessing the quality ofmedical care is not a question of whether people are“satisfied” with their hospital visit; the right questionis whether they become healthy again.
So although the secondary research revealed that anumber of studies were untrustworthy, we learnedthat others were more solid. Based on this, we determined that the quest for an ROI in learning was justifiable.
Another set of questions was about training’s tangibleand intangible impacts on business. We wanted toinclude in our model only those elements for whichwe could find good data. For example, although onemay affirm intuitively or anecdotally that training hasa positive effect on knowledge sharing and morale, anadequate model for tracking those business impactsdoes not exist. So the bad news was that we had to
December 2006, No. 2
OutlookPoint of View
Return on learning, Part 3: Measuring the return on investment in training By Tad Waddington
Tad Waddington is thedirector of performancemeasurement for theAccenture CapabilityDevelopment [email protected]
Workforce Performance & Learning
leave out a number of promising ways thatlearning can have an impact on perfor-mance. But the good news was that theresults would be conservative—and thusmore believable.
Creating the modelWith a foundation based on the questionsanswered to this point, we proceeded tobuild a defensible ROI model (see figure).The model, validated by university experts instatistics, plots employee contributionagainst time with the company. Each com-pany must assign its own metric for contri-bution based on the nature of its business.In Accenture’s case, contribution can beassessed most persuasively by the metric of“per-person margin.” The other axis, timewith the company, measures the increase invalue received from employees the longerthey stay.
The model is founded on three solidinsights. First, a company with better train-ing opportunities can hire better employees.(Our own surveys found this to be true:recruits are willing to accept a slightlylower starting salary in return for theopportunities afforded by better training.)Second, employees at a company that pro-vides better training opportunities will staywith the company longer. Third, employeesat a company that provides better trainingopportunities will achieve competent levelsof performance faster.
In the simplified conceptual model summa-rized in the figure, the overall effect oftraining on the business should be the areaunder the line for the company that trainsminus the area of that for the company thatdoes not provide training.
At this point, the analysis turned more rigorous. The rules of engagement were to,1) use only hard data—that is, not “Wereyou satisfied?” but “Did your contributionincrease?”; 2) use only hard analysis (not “Is there a correlation between training andcontribution?” but “Controlling for experi-ence, economic cycles and other factors, isthere a correlation between training andcontribution?”; and 3) consider all trainingin the analysis, not just the best training.
We used per-person margin as the outcomevariable and analyzed millions of datapoints. We found that, all else being equal,employees who took more training weremore valuable overall because they hadmore billable hours and higher billing rates,and also stayed with the company longer.Accounting for the measurable factorsunder the rules of engagement, the result of our analysis was that for every dollarAccenture invests in training employees, the company receives $4.53 back.
Needless to say, this was a critical momentin the reinvigoration of training and learn-ing at Accenture. The ROI number provedthat training is important, and that learninginvestments not only are the right thing todo for our people, but also make strongfinancial sense.
The whole that is greater thanthe partsOne of our key insights from this ROI work,and a key takeaway for any organizationassessing its own ROI in learning, was thatthe effects of learning on business perfor-mance are cumulative over time. Many whohave tried to measure the business impactof learning have sought to calculate ROI by
looking at how a specific course taught spe-cific skills to specific individuals. But anysingle course by itself is unlikely to havemuch of a discernible effect. On the otherhand, when you look at several courses inconjunction with one another, you begin tosee measurable effects.
Becoming more rigorous in measuring thereturn on investment in training is a criticalstep in bringing predictability and greateracceptance for enterprise learning. Suchrigor can help organizations justify andinspire a renewed commitment to learningand workforce performance. It can also helpkeep training investments aligned with busi-ness needs by tracking business impact andredirecting workforce investments to areasof maximum effectiveness.
Outlook Point of ViewDecember 2006, No. 2Copyright © 2006 Accenture All rights reserved.
The Outlook Point of View series offersinsights about leading trends andinnovations across all industries.
David Cudaback, Editor-in-ChiefCraig Mindrum, Managing EditorJacqueline H. Kessler, Senior Editor
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Contribution(Performance:Slope of line =effect on speedto competency)
Time with company(Retention: Length of lines = people stay with company longer)
Benefits of learning: The area under the trainingline minus the area under the no training line
Training No training
Accenture’s model for measuring the return on learning
