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November 6, 2008

Do More with Less and Prove It: Training ROI

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Jeff Cochran

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According to the latest annual report by Training Magazine, U.S. organizations spent $58.5 billion for training (including payroll and training budgets) with $16.3 billion spent on external learning products and services. While growth in the training industry tailed off (6% growth versus 7% in 2006), staffing and training budgets increased by 4.8%. Breaking it down further, the average spend per learner in 2007 was roughly $1,202 which is about the same as the $1,276 spent in 2006. These are significant numbers in troubled economic times since companies are making tough budgeting decisions for 2008 as you read this and all signs point to an extended period of recession.

Top Priorities

1. Increase the Effectiveness of Training

Forty-four (44%) percent of companies responding to the annual Training survey listed increasing the effectiveness of training as a top priority in 2007, and I predict that figure will increase when the 2008 survey results are published. Companies are focusing more attention on implementing programs that maximize learning transfer to the job and that have a direct impact on the bottom line. Gone are the days of 3-day “flavor of the month” in-house workshops with extended role playing. Today’s training provider has to deliver the goods in a short, memorable program and follow through with easy-to-use job aids.

2. Reduce Training Costs

“Increased effectiveness” is often code for “better training for less money.” This is understandable when training directors and business-line leaders are making decisions on headcount, technology and other key business drivers and trying to justify training expenditures at the same time. Twenty-nine (29%) percent of respondents to the Training survey reported that vigilance over training expense is their #1 priority in 2007. This will undoubtedly increase as the economy continues to stumble.

3. Measure Training Impact

At SNI, we have experienced a significant increase in the number of clients expressing a desire to carefully analyze the effectiveness of our training programs. More and more companies are looking for partners who are willing and able to assess learning transfer and its impact on the bottom line. While many companies continue to struggle with the measurement process, most are willing to spend the time and money needed to more closely assess bottom line impact. According to Bersin & Associates, most companies will choose one or two programs that are closely aligned with results for which there is readily available data for the measurement effort.

Conclusion

This blog will explore the emerging trends and outcomes of the “new training economy” to identify the best survival tactics for today’s training professional. The first step in forming a strategy for success is knowing precisely what the training buyers and participants need from us. The good news is that while increased effectiveness, reduced costs and accurate impact measurement all seem to be incongruent (“Do more with less and prove it”)it creates the perfect storm of opportunity for us. Plato (apparently?) said “Necessity (which) is the mother of invention.” Perhaps this is our opportunity to take all of the tools, technology and training we have and use it to meet these emerging needs in our customers.

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