Link ROI to Corporate Training Objectives Part 1: Identify Performance Gaps & Analyze Needs
How do you measure success in your business?
Typically, it’s measured through ROI — return on investment: the net profit of the company minus the money you invested in it.
But success could also mean complying with regulations or meeting KPIs like number of units sold in a week. 
One of the ways your business can succeed is by linking ROI to your employee training objectives. And the first part of successful training is identifying the real causes of performance gaps instead of making assumptions.
Let’s take the example of Bill, a loan manager at Acme Bank.  Bill was unhappy with the declining revenue stream of an auto insurance product, and he was convinced the solution was product training for his loan officers.
Bill approached the training manager, Ken, with a slide deck to facilitate product training, but neither had evaluated the need for it. Ken asked Bill to pose some questions to his team related to product knowledge, and they answered all of the product knowledge questions correctly.
Ken did some digging and discovered three techniques that successful loan officers implemented: They mentioned the insurance product early in their overall loan closing process, they used a series of questions to qualify their loan customers for insurance products, and they told stories of past customers who had benefited from the purchase.
The performance gap in this case was not product knowledge. Making assumptions, as Bill did, is counter-productive. Don’t be like Bill.
Needs assessments are sometimes challenging but absolutely necessary. We can use Harless’s (1973) front-end analysis questions to get to the heart of the matter pretty quickly.
Here are Harless’s first six questions and their relation to Acme Bank:
- Do we have a problem? The auto loan insurance revenue is declining, so there is a problem.
- Do we have a performance problem? This is defined as someone not doing something he/she is expected to do, someone doing something he/she should not be doing, or a prediction of something negative that could happen in the future with either. Since loan officers sell the auto loan insurance, there is a performance problem because there is something (or things) they should be doing to sell more of it.
- How will we know when the problem is solved? This is part of creating measurable objectives, which we’ll cover in my next post. We know Acme’s problem will be solved when revenue increases by x amount.
- What is the performance problem? We know product knowledge is not Acme Bank’s performance problem, so we can discount it. Training manager Ken determined that some loan officers are using more successful techniques than other loan officers, so all should be trained in these techniques.
- Should we allocate resources to solve it? If nothing is done, we can predict that revenue will continue to decline for this auto loan insurance, so Acme has it in their interest to implement the correct training program.
- What are the possible causes of the problem? This could be lack of data, tools, incentives, knowledge, capacity, etc. Some loan officers are not using effective sales techniques, so the cause is lack of knowledge.
I’m adding to Harless’s list with this question: What are the costs associated with the performance problem? If we don’t know, we have no hope of identifying the ROI associated with the problem. And if the problem isn’t correctly identified, the correct measurable outcome can’t be defined.
Bill now knows the actual performance gap — the three techniques that successful loan officers use — and he can consider the cost associated with it to be the declining revenue stream. At the very least, if nothing changes, revenue will likely continue to decline. That means the ROI associated with the training can be measured through a specific training objective.
In my next post, we’ll examine how best to create measurable objectives for your corporate training.