An overarching best practice is to ensure that cost-benefit analysis is an ongoing process, said Alysa Parks, director of talent development at CDW Corp. “Prioritization and rationalization need to occur throughout the year, both when business is strong and when there might be challenges,” she said.
Regularly assessing and evaluating the best use of the company’s resources is an imperative. “What are the business outcomes we hope to achieve from any initiative? And [we] reassign business metrics to hold ourselves accountable,” Parks said.
“[The most important thing] is that these metrics are the same as what the organization cares about: revenue, profit, productivity. It all has to be in alignment with what the other business leaders are focused on,” she said.
Tom Evans, chief learning officer at PricewaterhouseCoopers, echoed this sentiment.
“Get clarity and agreement as to what metrics — both financial and nonfinancial — are valued by management for tracking purposes,” he said. “A common mistake is that time isn’t invested on the front end to truly understand what that is.”
On the other end of the spectrum, a number of learning professionals are uncomfortable talking about business and financial measures, said Kent Barnett, founder and CEO of KnowledgeAdvisors. These people must invest in accounting and finance classes or risk not being able to have intelligent conversations about ROI and cost-benefit analysis.
Another common challenge among learning professionals is getting past the notion that they need to apply a uniform cost-benefit analysis approach across all types of decision-making processes, Parks explained.
“Depending on the scope and risk of a project, you might apply different rigor depending on what the endeavor is,” she said. “For example, at the learning investment at CDW, we want to keep a strong entrepreneurial spirit and growth goals. So for learning investment projects below a certain dollar threshold, we might be more willing to take a risk so we’re not bogged down in too much analysis, and it’s really capturing the strategic opportunity.”
Moreover, determining how to isolate the impact of a training program is a major challenge faced by learning professionals, Barnett explained.
“Learning professionals should understand that isolation is not unique to our industry,” Barnett said. Other industries must also confront issues such as: How do you isolate the impact of a marketing program, a sales program or a new product?
Still, there are some best practices for how to address this issue for learning programs.
“There are a number of models that will help you isolate [the impact of a learning initiative],” Barnett said. “A common one is the net present value or cash flow analysis, where you go and do an estimate with the training and without the training, and you can tell the differences.”
The ideal solution would be to conduct three estimates: an aggressive one, a conservative one and the learning professional’s best guess.
“Don’t go in and say: The ROI is 313 percent. Go in and say: Based upon our analysis, we think the program could have this impact on learning under this period of time, and here’s the range,” Barnett said. “That’s the right way for [the learning] industry to address it.”