STATE OF ROI TRAINING MEASUREMENT IN SOUTH AFRICA:
Meyer and Melanie Bushney
African companies are spending millions of rands on training their
employees. The mere expenditure of vast amounts of money sounds great
until you realise that most of these organizations don’t know how much
value their training adds to the organisation. However, the critical
question is whether training affects the bottom line. This article attempts to provide an overview of the current
state of ROI measurement practices in South Africa.
on investment (ROI) is a measure of the financial benefits obtained over a
specified period in return for a given investment – in this case, a
training programme. To put it simply, it is the extent to which the
benefits (outputs) of training exceed the costs (inputs).
the Skills Development Act and Skills Development Levies Act require
employers to invest in staff training, managers are increasingly demanding
not only accountability for the time spent on legislative processes, but
also greater articulation of how training interventions benefit their
companies in terms of the bottom-line. The pressure to measure ROI is thus
increasing. The critical question is:
America considerable emphasis is being placed on the evaluation and
measurement of training. The American Society for Training and Development
(ASTD) has been the international champion for ROI measurement. The
ASTD ROI Network has been very active to promote good measurement and
evaluation practices. The four level evaluation framework developed by
Donald Kirkpatrick has been used for decades as the ASTD benchmark for
training evaluation, supplemented by the ROI process of Jack Phillips.
ASTD Global Network South Africa recently conducted the third annual state
of the South African industry training and HR study.
A total of 432 training and HR managers contributed to the study.
The South African results in comparison with the American study are
above table indicates that the many South African organizations are
applying the Kirkpatrick levels to some extent, while results evaluation
and ROI measurement has increased significantly over the last year.
FOR THE GROWTH IN ROI
question is: What is the reason for the good growth in ROI in South
Africa. There are a few possible reasons:
the good growth in ROI, there is still a big need for capacity-building in
ROI. The following table reflects the responses with respect to ROI
practices in South African organizations.
The above table contradicts the graph on
the growth in ROI. Although ROI measurement has increased in South Africa,
it appears as if more focussed work needs to be done to create fully
integrated ROI evaluation in organisations. For instance, how do you implement ROI if only 13% of HRD
staff members have been trained in the methodology?
challenge is to build sufficient awareness and capacity so that training
managers can take ownership of ROI measurement and ensure that it is
implemented in their organisations. The
following recommendations can be used as a guideline:
critical step is to calculate the costs of a training programme (eg.
design, facilitation, catering etc). The ROI formula is: net
programme benefits times 100 divided by programme costs, where the net
benefits are the monetary value of the benefits minus the costs of the
programme. The benefits (eg.
less rework, more sales, less accidents etc) must be quantified into
monetary value in order to be included in the ROI calculation. The formula
ROI (%) = (benefits – costs) x 100
an ROI exercise usually requires a major paradigm shift on the part of
training practitioners and managers. The
ability to measure ROI is an opportunity for training managers to show the
value they add to their organizations based on a solid business case. ROI
may be a new concept in South Africa, but it is clearly growing in
Meyer and Melanie Bushney lecture in human resource development at UNISA,
the fourth largest university in the world.
Marius is a member of the ASTD ROI Committee (USA) and board member
of the Donald Kirkpatrick Foundation. More
information about the 2005 ASTD State of the South African training
industry report is available on www.astd.co.za
They can be contacted at firstname.lastname@example.org