ROI

Those of you who've read my thoughts on ROI know that I believe cost/benefit analysis is manditory and most ROI calculations are utterly worthless. Thus, I was delighted to come upon Enough Already! Getting Off the ROI Bandwagon by Kevin Kruse (mistakenly identified as Kevin Kenexa) in the current issue of Chief Learning Officer magazine.

Kevin writes that:

First came the articles, then the books, and now I see that an entire conference is devoted to the ROI of training. Obviously we’re seeing a backlash against the orgy of IT spending of the late 1990s, and against e-learning initiatives that fell short of expectations. Personally, I think it’s all hype, and I’ve had enough.

First, many senior executives don’t care about ROI. In Jack Welch’s book, “Straight From the Gut,” he tells of his decision to invest millions in GE’s new Crotonville training facility, even while undertaking massive layoffs. He didn’t have an ROI spreadsheet to tell him training was a good investment; he just knew that investing in talent was critical to GE’s future.

Second, ROI is an imperfect science that often involves making educated guesses at potential savings and gains. Senior executives know this, and they also know that there are many variables that can’t be captured by a formula.

Third, ROI “guesstimates” are often a cop-out for tougher measurements of results. How about measuring employee engagement scores before and after management training, or doing pilot studies of sales training programs that measure closing ratios and time-to-close?

The article in Chief Learning Officer ends with "Related Articles: No Related Content Found." I'm sure you can find some at Kevin's site, but just in case, here are three white papers on the topic from Internet Time Group:

• A Fresh Look at ROI

• Leveraging the People Value Chain

• Time Matters and Profit Returns

Posted by Jay Cross at January 10, 2003 05:05 PM | TrackBack