myths of ROI on HR and training
Myth 1. ROI is a finance concept and not an HR concept.
Calculating ROI is based on a simple mathematical formula. It takes into account benefits and costs. Enough tools and methods are available to arrive at the benefits factor for all the programs, processes and policies.
Myth 2. We do the evaluation. Post the program we administer the reaction questionnaire/ feedback form.
Administering reaction questionnaire is one part of the evaluation process. In fact, it is the base level of an evaluation. Evaluation of any program or process takes a minimum of three months to start showing the monetary benefits. A time period of at least six months will give good results.
Myth 3. Soft skills and behavior training cannot be measured
Majority of the things can be measured provided we intend to measure and we know how to measure.
Three things are vital
Operational definition of the concept to be measured
Measures that are linked to the business needs
Various tools, techniques, and software on measurements are available.
Myth 4. We cannot measure everything
Measurement is a world of possibilities. Our entire world is governed by measurements. Some measurements are available, some are derived.
Eg. Crossing the road: We take the distance and make certain assumptions about the speed of the car before we cross the road. Our brain is complex and is capable of processing information at a speed with a multiplier effect. The brain processes the information so fast that everything is governed at the subconscious level and we act consciously. All the actions that we do are based on measurements whether it is the force, speed or time.
Myth 5. ROI is a measurement that can be done at the end of the training?
To find the ROI of any program, we need to begin with the end in mind. Hence ROI process needs to be included even before the program starts. That includes training needs analysis.
Myth 6. Evaluation is time-consuming.
When one gets an ROI, one realizes that it is worth spending the money and time in the evaluation process. It is better to invest time in evaluation rather than repent on the amount, efforts and time spent on programs that give no ROI.
Myth 7. No matter what HR does, HR is never going to get the due
Let us understand who gets the due? People who are able to prove value and numbers get the due. Hence, sales professionals get the due as bring in revenue. The irony is these people are recruited by HR. Still, HR professionals do not get noticed. To get recognized HR needs to consciously make decision around the below areas
Align the programs as per the business need.
Need to shift the focus from reactive approach to proactive approach.
Thoroughly understand the balance sheet and how decisions taken in HR can affect the balance sheet.
Able to prove the ROI on every investment for training, employee engagement activities, introducing policies and processes.
Develop competencies that are ahead of time. Example what competencies do HR need in this era of ‘Artificial Intelligence’ need to be thought of.
Myth 8. Our CEO does not care for ROI on HR, training, and processes
There could be various reasons why there is not a mandate to prove the ROI on HR, training, and processes. If the management has not mandated who stops an HR from not proving the ROI for their initiatives. Once the HR starts showing the numbers, the management would probably start noticing it.
Myth 9. We can do evaluation process when the need arises
Who decides the need? You, your HR head or the CEO. It is all about mindset. To develop a mindset of measurements and evaluation. A mindset to prove the returns for every investment a company makes in HR.
Myth 10. To calculate ROI, we need to have a strong mathematical ability
To calculate ROI on HR and training process, we do not need high-end knowledge of mathematics or statistics. Basic knowledge is good. Though HR does need to develop analytical skills. Knowledge of software such as SPSS or R would add value.