A Return On Training

A company that ignores its Return On Training Investment (ROTI) won’t stay in business for long!

Return on Training

Return on Training Investment

When a prospective client asks how much I charge for coaching, I often ask them to give me a dollar without expecting its return. When I get the dollar, I give them $5 in return. This demonstrates my commitment to their satisfaction from my services. It is my commitment to train clients for a 5-to-1 return on their training investment.

Good training has that kind of impact.

Recently, I attended a presentation where the vice president of a national company told us how he had hired a training company to train their managers. He proudly told us that he was following his CEO’s leadership and advice, “In these hard economic times, cut costs, but don’t cut training!” So, he hired a training company to develop a program for their managers across the country.

At the end of his presentation, the presenter asked the audience if they had any questions. Several questions were asked about the training process: how was it done, how long did it take, who was involved, and so on. A question was burning in my head. So, when the presenter said, “Can we have one last question please,” I raised my hand and asked, “You said that this training was motivated by your CEO who said, “In these tough economic times, I want you to cut costs, but not training? Is that correct?”

The presenter confirmed my recollection. So, I continued, “What has been your return on investment for the $millions you spent on the training?”

He said, “We can’t measure that.”

I continued, “So, can you say how much money you saved on reduced costs as a result of the training?”

“No,” was his answer as he hurried to end the presentation.

After the presentation, the training company’s representative came over to my table and supported his client’s statement that you can’t measure ROTI.

I couldn’t believe what I was hearing from these professional executives. As the founder of a training company, I have always held ROTI as a significant measure of training.

I believe that the CEO of this large company was trying to teach her top level managers to focus on cutting costs, but not to view training as a cost. The alternative to viewing training as a cost is to view it as an investment and, logically, to expect a return greater than the original investment.

More company leaders should support and reinforce this Chief Executive Officer’s appreciation for training and development. It just makes sense.

Belief is a powerful precept. If you believe it, then it is so. If you believe your services are expensive, then they are. If you believe you are charging too much, then you are. If you can’t assess the value of the impact that you’re making with your clients, then you are not making an impact. For the customer to be well served, the worth of your services must be greater than the cost of your services. Otherwise, it is a waste of time and money.

One of my clients, the financial VP of a large company, measured the results of our training and showed me how our training had saved them over $4 million yearly. They had spent $200,000 with me over two years. They got a 20 to 1 return on their investment within a year of program completion.

Don’t tell me that ROTI can’t be measured!

Often a customer will say, “I believe in developing my people, but training costs money!” But, what will it cost for them to stay where they are and not develop their employees? Yes, training costs money… one way or the other! Isn’t it better to INVEST in training? Or should you wait until the cost of not training catches up with you?

It’s not the cost of training that’s important, it’s the measurable return on people development. What will the training save you in time and money? What will the changes generate in money saved or money earned and the resulting impact on your customer service or products? If you can’t identify these things, then you don’t deserve the training!

A training company that can’t estimate the dollar value of their customer services shouldn’t be in the business!

A company that ignores its return on training costs won’t be in business for long!

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