Bridging Training and ROI

Can investment in employee training and development be directly translated into bottom line improvement? Is there evidence of a dollar-for-dollar ROI when it comes to education? These are tough questions, particularly for those involved in promoting the use of training materials in a bear market environment. Yet for those willing to look at the bigger picture, the results not only speak for themselves but provide considerable guidance on how to measure the outcomes of training and improve those measures with supporting activity.

In 2006, Susan Levering, Ph.D., partnered with the NAW Distribution Research & Education Foundation (now known as the Institute for Distribution Excellence), to survey wholesale distributors about their training practices. Forty-four market segments, including plumbing and PVF, were represented, with responding companies ranging in size from $20 million to more than $1 billion in sales. Through the data that Levering collected, they were hoping to identify a correlation between training and development (T&D) and a company’s ultimate profitability.

While the hard data to support a direct connection wasn’t readily available, what Levering did find were provocative similarities among some top performing companies as to how they approached the training and professional development of their employees. In her research, which included in-depth personal interviews, she noted that wholesaler distributors usually don’t think about training investments in the same way they might think about inventory or sales management.

“When it comes to T&D activity,” Levering says, “these top performers are driven by conviction, believing that it’s good business to engage their employees in learning experiences. These companies identify their strategic initiatives, engage training personnel to partner with them, and provide training activities to support their vision.”

In her book, “Smart Investments – Developing Top Performers in Wholesale Distribution,” Levering explores the survey’s findings, including five key strategies employed by the most successful distributors when it comes to T&D. In general they were found to:

Integrate training activity with business strategies
Form partnerships with training personnel
Develop a strategic training plan
Engage all employees in training activity and hold them accountable
Utilize creative solutions to overcome obstacles

Levering’s report cited that 97% of the reporting companies said they perceived T&D activity as an investment rather than as an expense. Interestingly, a survey in late 2007 conducted by ASA among plumbing & PVF wholesaler training professionals paralleled those findings. Among ASA’s respondents, 90.3% of them agreed that their companies view training as an investment, rather than as an expense.

Also in ASA’s survey, “strategic initiatives” was cited as the number-one factor for determining training needs. Following is the ranking, among ASA’s respondents, of their reasons for providing training:

2. Keeps company competitive

3. Aligns employees to strategic initiatives

4. Reduces turnover

5. Increases sales

Data that supports a direct-line ROI between the expense of training & development and increased profits remains elusive because many other factors also influence payback. Fortunately many other measures can document the success of your company’s training efforts. The most important of these is proving that your training is well-aligned with your business objectives. Without this alignment, successful training is a chance occurrence.

Other measures that can measure success your training program include:

Changes in employee morale
Sales figures per employee
Number of employees who participate in training
Internal promotions given within a given year
Customer complaints/satisfaction statistics
Employee quality and tenure
Certifications like ISO
Reduction in mistakes/actions
Increased efficiency

Many leading employers go beyond job-specific training to improve their employees’ general business acumen, interpersonal communications, team building, leadership and other development activities that improve their lives at work and at home. These companies possess the wisdom to know that a well-educated, high-morale, loyal team of business professionals provides the ultimate business advantage.

Implementing these measures isn’t rocket science but does require a diligent effort to integrate business objectives and development activities into job descriptions, performance evaluations, the training program and even employee orientations. The ASA Education Foundation’s Employee Performance Improvement Tool Kit can provide considerable assistance in implementing many of the ideas that Dr. Levering discusses. For more information visit www.asa.net.

Dr. Levering’s book is available at www.naw.org, where ASA members will qualify for discounted pricing. Likewise, ASA offers a wide variety of training programs, ranging from self-paced product knowledge courses, to business and sales training directed specifically to the unique needs of plumbing & industrial PVF distributors.