Training Strategy ROI – Reality or Fantasy Dr. Rovel Shackleford Optec  (Energy Industry Training & Consulting)
Content <ul><li>Busting the ROI Fantasy </li></ul><ul><li>ROI vs. EVA </li></ul><ul><li>New Measures, New Dialog  (justify...
Busting the ROI Fantasy CORPORATE  STRATEGIC OBJECTIVES KNOWLEDGE  MANAGEMENT SYSTEM TECHNICAL INFORMATION FUNCTIONAL MANA...
ROI vs. EVA <ul><li>Attributes of EVA </li></ul><ul><li>Created to measure the investment return for a  specific  activity...
Comparison of ROI to EVA   ROI formula:  (Benefits - Costs) * 100   Costs   Comparison of ROI to EVA   ROI measures :  Cha...
Comparison of ROI to EVA   EVA formula (as applied to training):   Current Value of Aligned Human Capital + Value-added of...
New Measures, New Dialog  (justify vs. qualify) <ul><li>EVA as a Strategic Training Metric   </li></ul><ul><li>Requires tr...
EVA-  Why is it predictive?   <ul><li>Focus on alignment change Longitudinal measure Human Capital as an appreciating asse...
When Considering EVA as a Metric
Best Practices Approach - 1 <ul><li>Demonstrate in the training proposition a consideration of a range of options such as ...
Best Practices Approach - 2 <ul><li>Engage with stakeholders to determine strategies which will enhance participation and ...
Best practice Approach - 3 <ul><li>Use executive contact to understand key business issues. </li></ul><ul><li>Create and o...
Case Study - ROI vs. EVA EVA Metrics ROI Metrics
Some Helpful Tools <ul><li>Training Budget Tool </li></ul><ul><li>Training Proposal Tool </li></ul><ul><li>Training Needs ...
Further reading <ul><li>Boudreau, J. w., & Ramstad, P. M. (2001).  Beyond cost--per-hire and time to fill:  </li></ul><ul>...
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Optec Power point Dr Rovel Shackleford

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ROI on training investment in the industrial sectors by Dr Rovel Shackleford

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  • 06/19/11
  • Optec Power point Dr Rovel Shackleford

    1. 1. Training Strategy ROI – Reality or Fantasy Dr. Rovel Shackleford Optec (Energy Industry Training & Consulting)
    2. 2. Content <ul><li>Busting the ROI Fantasy </li></ul><ul><li>ROI vs. EVA </li></ul><ul><li>New Measures, New Dialog (justify vs. qualify) </li></ul><ul><li>EVA Why is it Predictive </li></ul><ul><li>EVA as a Metric </li></ul><ul><li>Case Study ROI vs. EVA </li></ul><ul><li>ROI scenario vs. EVA scenario </li></ul><ul><li>Best Practice Approach 1-3 </li></ul><ul><li>Further reading </li></ul>
    3. 3. Busting the ROI Fantasy CORPORATE STRATEGIC OBJECTIVES KNOWLEDGE MANAGEMENT SYSTEM TECHNICAL INFORMATION FUNCTIONAL MANAGEMENT SYSTEMS LEARNING MANAGEMENT SYSTEM PERFORMANCE MANAGEMENT SYSTEM LEARNING VERIFICATION ELECTRONIC LIBRARY BEST PRACTICES CORPORATE GOVERNANCE SYSTEM RELEVANT LEARNING PERFORMANCE MEASUREMENT JOB PERFORMANCE BEHAVIOUR KPIs PERFORMANCE REVIEW STRATEGIC OBJECTIVES CORRECTIVE & PROACTIVE ACTION WORKFORCE SUSTAINABILITY MANAGEMENT SYSTEM WORKFORCE PLANNING CORPORATE KNOWLEDGE SUSTAINABILITY HUMAN CAPITAL MANAGEMENT SYSTEM EVA EVA
    4. 4. ROI vs. EVA <ul><li>Attributes of EVA </li></ul><ul><li>Created to measure the investment return for a specific activity (intervention-based) </li></ul><ul><li>Focus on individual performance Traditional supporting metrics have focused on influence of intervention on individual work place skills or behaviors Reactive measure </li></ul><ul><li>Attributes of EVA </li></ul><ul><li>Measures the value-added of training/ learning over a period of time (iterative) </li></ul><ul><li>Focus on individual/ team alignment </li></ul><ul><li>• Supporting metrics are created to measure the increase in customer value/ alignment inclusive of all other learning </li></ul><ul><li>Predictive measure </li></ul>
    5. 5. Comparison of ROI to EVA ROI formula: (Benefits - Costs) * 100 Costs Comparison of ROI to EVA ROI measures : Change in individual behavior or skill proficiency
    6. 6. Comparison of ROI to EVA EVA formula (as applied to training): Current Value of Aligned Human Capital + Value-added of Training or Learning Economic Value Added of Aligned Human Capital Comparison of ROI to EVA EVA measures :
    7. 7. New Measures, New Dialog (justify vs. qualify) <ul><li>EVA as a Strategic Training Metric </li></ul><ul><li>Requires training designers to align training outcomes with external customer needs </li></ul><ul><li>Focus on successful alignment versus successful accomplishment Training </li></ul><ul><li>Managers may have some programs that have negative individual ROI, but when combined with other programs generates a synergism that creates tremendous collective positive EVA </li></ul>
    8. 8. EVA- Why is it predictive? <ul><li>Focus on alignment change Longitudinal measure Human Capital as an appreciating asset </li></ul><ul><li>Examines appreciation of Human Capital in relation to alignment with the organizations Vision & Mission </li></ul><ul><li>Considers accretive value of all learning </li></ul>
    9. 9. When Considering EVA as a Metric
    10. 10. Best Practices Approach - 1 <ul><li>Demonstrate in the training proposition a consideration of a range of options such as in-sourcing, outsourcing and delivery mechanisms such as e-learning or mentor supported training (blended learning models) </li></ul>Consider and explore options <ul><li>Alignment to contemporary compliance requirements at the macro end of the enterprise, such as Corporate Governance </li></ul>Corporate alignment to Governance <ul><li>Clearly define the expected impact of outcomes and alignment to EVA </li></ul><ul><li>Ensure the proposition is value centred for all stakeholders </li></ul>Ambiguous Skills development goals Best practice process Issue
    11. 11. Best Practices Approach - 2 <ul><li>Engage with stakeholders to determine strategies which will enhance participation and mitigate the opportunity to undermine training development. </li></ul>Lack of skills enhancement support <ul><li>Develop a baseline position against which training outcomes can be measured post event. The baseline position needs to be developed in collaboration with all stakeholders. </li></ul>Pre and post consultation <ul><li>Seek and document key stakeholder support and advocacy of the training proposition; support can be articulated in a quantitative or qualitative way. </li></ul>Key stakeholder support Best practices process ROI Issue
    12. 12. Best practice Approach - 3 <ul><li>Use executive contact to understand key business issues. </li></ul><ul><li>Create and offer logical ROI models that allow stakeholders to enter their own data and determine the resulting impacts. </li></ul><ul><li>Provide models in word-processed or spreadsheet formats. </li></ul><ul><li>Report performance regularly as part of standard management reporting package. </li></ul><ul><li>Develop programs to address process deficiencies in individual benchmark areas. </li></ul>Tools to help <ul><li>Develop before-and-after studies with stakeholders as part of the justification process. </li></ul><ul><li>Use study results as part of an aggregate data offering. </li></ul><ul><li>Shift the focus from ROI to EVA . </li></ul>ROI impact not believable <ul><li>Offer models that can be modified to gain a clearer picture. </li></ul><ul><li>Offer solutions that optimize the process and, hence, ROI. </li></ul>Measures are too narrow Best practice process ROI Issue
    13. 13. Case Study - ROI vs. EVA EVA Metrics ROI Metrics
    14. 14. Some Helpful Tools <ul><li>Training Budget Tool </li></ul><ul><li>Training Proposal Tool </li></ul><ul><li>Training Needs Assessment Tool </li></ul><ul><li>Training Planning Tool </li></ul>
    15. 15. Further reading <ul><li>Boudreau, J. w., & Ramstad, P. M. (2001). Beyond cost--per-hire and time to fill: </li></ul><ul><li>Supply-chain measurement for staffing (No. 01-16). Ithaca: Cornell University Center for Advanced Human Resource Studies. </li></ul><ul><li>Boudreau, J. W., & Ramstad, P. M. (2002). From &quot;Professional Business Partner&quot; to &quot;Strategic Talent Leader&quot;: &quot;What's Next&quot; for Human Resource Management (No. 02­10). Ithaca: Cornell University Center for Advanced Human Resource Studies. Brown, D. (2001). Measuring the value of HR. Canadian HR Reporter, 14(16), 1-5. Cieri, H. D., & Boudreau, J. W. (2003). Global human resource metrics (No. 03-07). Ithaca: Cornell University Center for Advanced Human Resource Studies. </li></ul><ul><li>Cohen, D. J. (2003). HR metrics: A must. HRMagazine, 48(2), 136-137. </li></ul><ul><li>Fields, G. S. (2002). In there or up front?: An introduction to bottom-line human resource management (No. 02-07). Ithaca: Cornell University Center for Advanced Human Resource Studies. </li></ul><ul><li>Fitz-enz, J. (1995). How to measure human resource management (2 ed.). New York: </li></ul><ul><li>McGraw-HilI. </li></ul><ul><li>Fitz-Enz, J. (2000). The ROI of human capital: measuring the economic value of employee performance. New York: AMACOM. </li></ul><ul><li>Fitz-enz, J., & Phillips, J. J. (1998). A new vision for human resources: Defining the human resources function by its results. Menlo Park: Crisp Publications. Inc. Gerhart, B., Wright, P. M., McMahan, G. C., & Snell, S. A (2000). Measuring error in research on human resources and firm performance: how much error is there and how does it influence effect size estimates? Personnel Psychology, 53, 803-834. </li></ul>

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