Training Industry Quarterly - Winter 2009 - (Page 26) Continued from page 24 Enhance design and development by defining content issues, helping with design of exercises and activities, making skill practice and role plays relevant, supporting the facilitation of action plans, and making quizzes job-related. ■ Improve facilitation by showing the end result and providing the focus to achieve it, focusing the discussions on application and impact and ensuring the facilitator has job-related experience. ■ Help participants understand what is expected by detailing what participants must do, setting clear expectations about what the participant must ultimately accomplish, defining the “What’s in it for me?” and explaining why the program is being conducted. ■ Excite sponsors — particularly the impact objectives. They tell sponsors the program is connected to the business. They show sponsors the program is ultimately about showing business value. ■ Simplify evaluation by identifying data to be selected in the organization; defining specific measures; suggesting the appropriate data collection method, sources of data and timing of data collection; suggesting the most appropriate isolation and data conversion methods. Collectively, the levels of objectives help stakeholders understand the program more clearly. ■ ROI Objectives ROI is the ultimate level of evaluation as it compares the actual cost of the program to its monetary benefits (See Figure 1). A positive ROI indicates that the payoff gained due to the program outweighs the cost of the inputs. A negative ROI indicates just the opposite – inputs cost more than the payoff gains. Whether the ROI is negative or positive, high or low, it is only as meaningful as the objective against which it is compared. One might say an ROI of 25% is pretty good, but not if the objective was 50%. Four strategies can help set the ROI objective: 1. Set the ROI using the same values used to invest in capital expenditures such as equipment, facilities and new companies. The typical hurdle rate is 15 to 20 percent. 2. Use an ROI target that represents a higher standard than the value required for other investments. Since the ROI process is still relatively new in some organizations and because it often involves subjective input, a higher standard is often placed on the ROI objective. 3. Break-even is sometimes set for an ROI. This is often the strategy for nonprofit and government organizations. A 0% ROI indicates that the investment is returned, but there is no gain. 4. Asking the client to set the ROI expectation is another strategy. They can gauge how much a learning program will actu- ally impact the opportunity and know what an acceptable return is. ROI objectives are not applied to every program. They are appropriate for programs that are: ■ Important to the organization to meet operating goals. ■ Closely linked to strategic initiatives. ■ Expensive to implement. ■ Highly visible and sometimes controversial. ■ Targeted at a large audience. ■ Of interest to top executives and administrators. ROI is seldom appropriate for programs that are short in duration, inexpensive, required by regulation or serve as a basis to teach required skills for specific jobs. This is not meant to imply that an ROI objective cannot be implemented for these types of programs. However, when considering the limited resources for measurement and evaluation, careful use of these resources and time will result in evaluating more strategic types of programs. Table 3 presents an example of the six levels of objectives set for a software implementation program. Next Steps To ensure programs are aligned with the business, needs must be clarified, beginning with the highest level of need and objectives established at all levels. Identify a program that meets the criteria for ROI above. Review your objectives and answer the following questions: ■ Do these objectives represent the chain of impact beginning with clear input objective and ending with an ROI objective? ■ Are they well-written, including conditions and criteria? ■ Do the objectives tell the evaluator what to measure, how and from whom to collect data and when to collect the data? ■ Do they indicate how we will isolate the effects of the program and convert impact measures to money? If you answer, “yes” to any of these questions, you are on your way to moving beyond learning objectives. Patti Phillips is president & CEO of the ROI Institute, Inc. and an expert in evaluation of workplace learning and performance programs. Patti can be contacted at patti@roiinstitute.net. Jack Phillips is developer of the ROI Methodology and chairman of the ROI Institute, Inc. Jack can be contacted at jack@roiinstitute.net. Figure 1: Business Alignment Model START HERE Payoff Needs 5 ROI Objectives 5 END HERE ROI Business Needs 4 Impact Objectives 4 Impact Performance Needs INITIAL ANALYSIS 3 Application Objectives 3 Application MEASUREMENT AND EVALUATION Learning Needs 2 Learning Objectives 2 Learning Preference Needs 1 - Reaction Objectives - 1 Reaction Business Alignment and Forecasting PROJECT The ROI Process Model 26 Training Industry Quarterly, Winter 2009 / A Training Industry, Inc. ezine / www.trainingindustry.com/TIQ http://www.trainingindustry.com/TIQ
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