Which skills are best?

Ask anyone involved in Learning & Development (L&D) about “the value of training” and they’ll think Return on Investment (ROI) (Kirkpatrick and Philips). That will involve holding back a “control group” and doing the analysis after a learning intervention based on a rigorous analysis of the performance of trained individuals versus the performance of the untrained individuals. Valid, but after the event no-one cares – because there’s nothing you can do about it anyway!
    
That’s why the Institute of IT Training (IITT) has launched its new Value of Learning programme; and what it comes down to is that with just five numbers (actually only three in many circumstances) you can establish the value of a learning intervention before it takes place. The issue is that you need to know which five (or three) numbers you’re looking for.

Types of intervention
The first step in trying to assess the value of a learning intervention is to see what type of intervention it is. This is illustrated in the ‘Learning Interventions’ chart.
    
In broad terms, learning interventions can be classified into seven broad areas:

• Compliance: this sits at the low end of value add for one reason only – it represents the delta between doing it anyway and doing it in a way that satisfies the assessors. Let’s take C. Difficile training as an example. It may be that it’s being done as part of an initiative to improve hygiene, in which case it would probably represent high value. Alternatively, it could be that the training was already being carried out but had to be done differently in order to satisfy compliance requirements.
• Induction: that is training for new recruits. It has one simple function – to get them to a stage of proficiency as quickly as possible. It may be focused on different ways of doing tasks, and may be as simple as who’s who.
• Remedial: these learning interventions address problems such as behavioural, professional, technical or process related. Although they occur mostly after a problem has been detected, that will not always be the case; the problems may be anticipated or even precautionary.
• Developmental: such interventions represent the normal development and enhancement of an individual. They may be associated with promotion, career change or simply progression. 
• System roll-out: there is a fascinating phase between the introduction of a new system and its acceptance by the staff who are using it. And the length of this stage is rarely a function of the system’s complexity. 
• Initiative related: many learning interventions result from new initiatives, whether they are generated centrally or locally. Whether they really come this high on the value-add curve depends on how realistic and desirable the initiative – but let’s not get into that debate here.
• Transformation: whilst such initiatives are rarer than the others, although they do command a high level of focus when they occur – assuming they are desirable.

Analysis of the different types of learning interventions is a useful starting point in the debate about the value of incremental skills – it provides a useful framework and a means of classification. It is also a great way to clarify objectives.

The bottom line
To cut to the chase, any learning intervention that you look at – from a major new system roll-out for 5,000 people to a short three-minute remedial intervention for one individual – will be conducted for one of two purposes; it will be for either performance/productivity reasons or for risk mitigation.
    
This is a critical distinction to understand; and they are sometimes difficult to distinguish. A great example is that of an Office 2007 roll-out. When I was advising on one recently, I asked about the productivity gain. “We’re not expecting one,” was the answer. “We’re doing it because our current version of Office will soon be un-supported.” And the consequence – all of the costs (licences, retraining, and disruption) were driven by risk mitigation and not by productivity.
    
For a performance/productivity intervention you only need to know five numbers; and for a risk mitigation intervention you only need three.
    
The five numbers you need for a performance improvement intervention are:

• Audience size
• Learner costs
• Overheads
• Productivity gain
• Delivery costs

Of these five numbers, four of them are easy to get; it’s those two words “productivity gain” that are tricky. Now the best way to get that one “nailed down” is in a discussion with the sponsor(s) of the learning intervention. Their first answer is likely to be “I don’t know.” This is a forecast; and therefore no-one knows for certain. But we’re all used to giving forecasts all the time; a forecast is what we expect to happen. Even in the most difficult forecasting scenario there’s a well proven technique – to understand the best case and worst case – and then we can base our expectations on the mid-point.
    
Here’s an example of a calculation based on these five numbers:

• Audience Size – 50 people
• Learner Costs - £30K p.a. salary plus overheads at 66 per cent - i.e. £50K p.a.
• Productivity Benefit – 20 per cent
• Delivery Costs - £125K

So as each person costs us £50K, we therefore assume that they add at least £50K of value each year; and since the learning intervention improves their performance by 20 per cent we are generating £10K of value each year. We assumed that 50 people were involved in this learning intervention and therefore that represents a gain of £500K against a delivery cost of £125K. In other words, a return of 4:1.
    
There’s an obvious outcome to an analysis like this – anyone can dispute the figures, but no-one can dispute the logic.

Risk interventions
The three numbers you need for a performance improvement intervention are:

• Size of the risk exposure
• The reduction in risk
• Delivery costs

This is an example of the calculation:
Let us assume that we have calculated that the total cost of the exposure to risk is £1m, and we have assessed our current exposure to this risk at 15 per cent. Further, we have concluded that, once the learning intervention has been completed we will have reduced the risk to five per cent. It is now clear that the value of the intervention was £100K (i.e. 10 per cent 0f £1m). If we find we have delivery costs of £50K we would be looking at a return of 2:1.
    
Now, just let’s go back to that Office 2007 roll-out that I mentioned earlier. To make the upgrade worthwhile they must have put a very high valuation on the risk of exposure to unsupported software.
     
Let us take an example of floor-walking; a typical floor-walking situation would be one in which a knowledge worker has been asked to do analysis which really requires the use of a pivot table – but they’ve forgotten how to do it. A floor-walker supported intervention means that they complete the task in 30 minutes whilst, on their own they would have taken 2½ hours. This means that the floor-walking benefit is 2 hours.
    
Now we have to answer six questions:

• For how long are we providing the floor-walking service?
• How many people are we providing it to?
• How many interventions, such as the one above, would the average person receive over the course of the floor-walking programme?
• Is this intervention typical, or is the two hour gain either too long or too short?
• What’s the average cost of the floor-walking audience (direct cost/overheads/margin contribution)?
• What’s the cost of delivering the floor walking service?

And here’s the worked example:

• How long  – 12 months
• Audience – 2,500 people
• Interventions per person per year – 3 
• 2 hour gain is typical
• Average loaded cost – £50K p.a 
• Cost of delivery – 3 people at £40K each (fully loaded)

Therefore, at £50K per year and assuming 200 working days a year, the average member of the audience generates a value of £250 per day. So, if the average intervention saves ¼ of a day, then the value of those 2 hours is £62.50. And over the course of one year we generate a value of £187.50 per person or £468,750 in total, whilst the cost of delivery is £120K. The value ratio is therefore 3.9:1.

So what?
One of the biggest challenges that L&D Professionals face is the challenge that “there is no time to train”. And yet most learning interventions will generate a very substantial pay-back. Value analysis like this enables an organisation to determine where it should put its focus, and it provides a framework in which L&D can demonstrate the way in which it adds value rather than the way in which it consumes resources.

For more information
E-mail Alan Bellinger at abellinger@iitt.org.uk