Measuring the ROI in Selling skills training
Nedbank Case Study
Nedbank is one of the leaders in the industry regarding their strong focus on developing their employees to learn new skills and acquire competencies to operate in a very competitive environment. Millions of Rands are spent annually on training. The question is: “what is the value of the money invested in training?” Measuring the value of the money spent on training is the clearest statement an organisation can make to measure the impact of training and the return on their investment in training.
Without measuring the return on investment (ROI) in training, how will an organisation know what the benefit is of the investment in training? How will they be able to determine the relationship between training input and employee output? Will they be able to make a clear conclusion regarding the impact of training?
When measuring ROI, it is possible to answer these questions. If there is a benefit greater than the cost or investment in training, then training is worthwhile. To draw this conclusion, the benefit of training has to be determined in rand value to be able to measure the return on investment. Many organisations do not measure the return on investment and therefore do not determine the direct relationship between training inputs and bottom line profit and outputs. This is partly due to some of the challenges in measuring the impact of training. These challenges could be a lack of clear objectives of training, the difficulty in obtaining data, and not determining the influence of non-training issues; for example the influence of a peak business season could have an influence on increased sales after employees attended training.
The good news is that ROI can be determined through a scientific method. ROI is the measure of the monetary benefits obtained by an organisation over a specified period in return for a given investment in a learning programme. In other words, it is the extent to which the benefits (outputs) of training exceed the costs (inputs).
ROI measurement entails the three ‘c’s of ROI; cost, change and calculate, i.e. determine the cost of learning, measure the change in behaviour as a result of learning, and calculate the benefits as a rand value.
What is Nedbank’s business rationale for their investment in training?
- To remain one of the leaders in the market
- Adherence to legislative compliance
- Keep informed of the latest technology
- Adapt to market conditions
- Strategic positioning
- Upgrade employee’s skills continuously
- Improve individual performance to meet operational standards
- Raise the organisational level of performance
- Enable best skills matches between the individual and the organisation
- Develop the potential for promotion
- The performance of each individual affects business performance
Specific measures are used when measuring ROI to demonstrate the link between training and tangible measures in the form of for example, increased output, fewer errors, improved quality or higher level of customer satisfaction. Positive behaviour as a result of training could be reduced absenteeism or lower staff turnover, or increased sales due to higher motivation.
Some of the constraints to measure ROI are the difficulty to collect data and the lack of sufficient training records. A business approach to ROI highlights other issues such as the linking of training to the organisation’s strategic objectives. These objectives are indicated amongst others, on the Workplace Skills Plan. Individual performance and the relevant training needs required to achieve strategic objectives should be linked to the Performance Management system of the organisation. One integrated process is then applied to identify individual competencies needed to achieve organisational effectiveness and these competencies are recorded on the individual’s Personal Development Plan. This ensures that learning is integrated into the overall business strategy.
Nedbank decided to measure the benefits of their 5 Point Plan that focuses on advanced selling skills and techniques. The goal is to equip employees with the necessary skills and knowledge to be able to successfully complete and submit a quality credit application based on the 5 Point Plan which will result in increased approvals in the Small Business Services (SBS) area. Clear objectives were identified before the training intervention that could result in improved outputs. Specific areas that were targeted are the background of SBS clients, the financial position of SBS clients, determining the needs and income of SBS clients, and an understanding of securities when applying credit to SBS clients.