Top Ten Reasons to Get Beyond ROI

by Scott Watson, Founder of Beyond ROI, Inc.


People often ask me, "Scott, what do you have against ROI?"

Not a thing.

ROI (return on investment) can be an excellent decision-making tool for prudent executives, however, ROI is most useful for comparing options before you spend the money.  After training the nature of the question changes.  I still want to know, "Was this a good investment?"  As a senior executive, that question is best answered in terms of how much the training is growing my people and growing my business.  An ROI statistic doesn't tell me either.

Here's 1o more reasons to get beyond ROI.

Reason #1:  ROI is too big.

When calculated accurately, it's often so large that it invites skepticism.  The actual financial impact of well-designed, well-implemented training is immense.  Who would set foot in front of a senior executive and claim a 2,000 to 1 return?  Not me.  But that's exactly what you'd get if a $750 sales training program saved a modest-sized $1.5m deal from a competitor.

Reason #2:  ROI is too small.

Training can change lives, strengthen relationships, build loyalty, and lift morale, none of which can be expressed in a ROI statistic.  Well-designed and implemented training produces results that go far beyond simply an expense pay-off.

Reason #3:  ROI is too complex.

The more robust the calculation, the more confusion (at best) or suspicion (at worst) it will cause.

Reason #4:  ROI can be seen as self-serving.

Who does it make look good?  You or them?  Sure it may put some shine on the training department, but what about the line managers your're there to help.

Reason #5:  ROI emphasizes the expense.

What do companies do with expenses?  Expenses are managed, controlled, minimized, and eliminated whenever possible.  ROI is useful for controlling expenses before you spend the money, or for reminding people just how much training costs.

Reason #6:  ROI is unconnected to functional business goals.

Here's an overly simple question: What is the purpose of training?  If you said learning, you'd be half-right.  The purpose is performance.  I've never met a Vice President of anything (outside of training/HR) with a business goal of getting a 10:1 return on their training expenditures.  Have you? 

Reason #7:  ROI is defensive.

It assumes the management team is skeptical of the value of training, or worse, that they haven't made the connection between learning and business results.  The irony is that research shows that training can, in fact, produce the largest bang-for-the-buck of any investment, especially when compared to the millions spent on computers, software, etc.

Reason #8:  ROI puts accountability in the wrong place -- it doesn't hold management accountable.

If the single biggest factor in the adoption of new skills is manager involvement, they why doesn't that show up on Kirkpatrick's four levels?  Or in an ROI statistic?  Hmm??? 

Reason #9:  ROI creates a short-term focus.

In my experience, once there's some evidence of a positive payoff, we tend to declare victory and move on.  People quickly lose interest in the hard work of coaching and reinforcement.  Changing how people work together takes a lot longer than you'd think.

Reason #10:  ROI lacks a soul.

It does not tell the story of personal transformation - of changed lives.  Personal growth always precedes business growth.  You can't have one without the other.  Who in the rank and file will find sufficient inspiration for their personal journey in a statistic?

Deep down, you've always known that well-designed and implemented training can change lives and grow the business.  We can help you prove it. 

It's time to get beyond ROI.

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