Analysing enterprise returns on training

Recent studies indicate that enterprises receive beneficial returns from their investment in training. Human resource practitioners, employers, governments and researchers also agree that more needs to be done to demonstrate the returns to enterprises from this investment. However, many enterprises appear unwilling or unable to actually evaluate these returns and most reported Australian studies have been completed by researchers, rather than enterprises.

This report provides an extensive review of recent Australian and overseas studies in order to identify:

• key issues that need to be addressed to encourage increased evaluation of training benefits by enterprises
• successful approaches that may inform future 'enterprise friendly' studies of returns to enterprises from investment in training

As many of the models advocated in the literature appear more suited to large enterprises and specialist human resource researchers, the promotion and use of more practical, creative and cost effective approaches is advocated. The report concludes by identifying principles to inform future return on training approaches so that their use becomes more widespread within Australian enterprises of all sizes. These principles include:

• the need for a broad definition of training which incorporates all forms of learning and skill formation
• the merits of using the term 'return on training investment' (ROTI) when evaluating and discussing enterprise returns from training, rather than the narrower, quantitative term, return on investment (ROI)
• the importance of ROTI approaches which provide decision-makers with timely, useful and accessible qualitative and quantitative evidence of the contribution of training to the operational and strategic priorities of the enterprise, rather than always attempting to isolate absolute, quantitative proof of the impact of training on enterprise productivity and profits
• undertaking studies in which a small number of qualitative and quantitative training outcome measures are selected and used, with a focus on the use of existing enterprise data (such as personnel records and safety, quality and sales data), where feasible
• maximising the returns from training by ensuring that training decisions and initiatives complement other human resource policies and practices, together with corporate and operational priorities

Drawing from a large range of Australian and overseas training and management studies, a taxonomy of possible training outcome indicators is provided for use in future ROTI studies. Over 50 possible training outcome indicators are identified using seven headings: productivity and efficiency; sales and profitability; quality of products and services; customer service and satisfaction; occupational health and safety; organisational learning and development; and organisational climate, culture and practices. The taxonomy is designed to provide a range of possible training outcome indicators that may be selected, amended, or rejected, depending on enterprise priorities and resources, including the availability of existing enterprise data.