What a negative ROI can tell you and how to report it
After investing time and resources in training, it can be disappointing to find a negative ROI (return on investment) figure in your evaluation. It’s important not to focus on the negative outcome, but to remember that the evaluation provides an opportunity for improvement. When reporting the results to stakeholders, present the evaluation as a learning exercise that has provided your business with valuable information to develop your human resource investments to their full capacity.
If you’ve followed the recommended five levels of evaluation, you will gain valuable information at each stage of the process that may highlight why the training did not have the desired effect. Were the participants engaged? Did they achieve the desired learning outcomes? Were there barriers that prevented them from putting their training into practice? Putting procedures in place to tackle these issues could dramatically improve the ROI of future interventions.
If you have been analysing the results of your evaluation proactively at each level, there may have been warning signs that the training wasn’t having the desired effect. It is important to act on issues as they occur and to put measures in place that will help achieve a ROI. Some evaluators prefer not to interfere with the training process once the evaluation has begun; however it is important to remember that this is not an impartial scientific study, it is about your organisation maximising its performance and profits.
When assessing the results, consider if the evaluation really reflects a chain of impact through each level. Were you measuring the right factors? Consider if the training programme really reflected the needs of your staff and organisation. A needs assessment and stakeholder analysis can help with this, particularly if they were not conducted before the training commenced.
Some programmes will require a few tweaks to increase their return; others may need to be discontinued. It can be easy to focus on improving the return; however it is also important to consider the cost of the programme and whether it is too high. Could the training be completed over fewer days? Could you conduct the training onsite, rather than at a hired venue? A negative ROI can help you to focus on reducing the cost of training and cut down unnecessary spending.
Your evaluation can be an on-going process in order to continuously improve delivery and implementation. If adjustments are made to the programme following a negative ROI, it could be worthwhile to re-evaluate. Once the programme has shown the desired ROI, evaluation could then take place once a year or when required. While it is important to evaluate training, it can be an expensive process and should only be done when it will provide you with valuable information that justifies the time and resources required.
You may have found a negative ROI because the programme was not suitable for this type of evaluation in the first place. You should consider whether the key performance indicators (KPIs) for the programme were intangible. If this is the case, it may be worth ignoring the ROI calculation as it will not provide an accurate assessment and could take attention away from the intangible benefits. Either way, make sure you highlight any intangible benefits when reporting the results as they can often be just as illustrative and business critical as a ROI figure.
For some training it can be worth considering the cost of not implementing the programme. Would not implementing the training lead to serious consequences, such as inadequate performance or loss of business? Does the training help to avoid noncompliance issues and accidents? There is a way to conduct a ROI calculation using this type of information: it compares the difference between current performance and the estimated performance without training, to the costs of the training. Although this can provide a valuable contrast to a negative ROI, many estimates are used in the calculation, so the final ROI figure is very subjective.