Assessing training ROI is perhaps the single question that keeps most Learning and Development managers up at night. Despite all the stats out there telling us that training is effective, some nagging questions remain in the back of our heads. In what ways is my company really benefiting from training investments? And what kind of training will be more effective in achieving my goals?
Retail giant Walmart provides an answer – a loud “yes” for training.
In 2015, the company implemented a general pay raise and creation of 200 training centers: the “Pathways” program. With an investment of about $2.7 billion, the question is whether the program will generate bottom-line results.
Impact on revenues were immediately recorded, with a $5 billion increase in sales. Beyond that, stores saw improvement in customer surveys and decrease in employee turnover. This should translate into lower hiring and training costs in the future. A Forbes story identifies benefits directly related to training investments, such as attracting better caliber of workers who are eager to achieve management status, more orderly stores, brand loyalty from employees, and friendlier environments contributing to employee morale.
The Brick-and-Mortar Success for Training ROI
This begs another question. What kind of training is Walmart using to achieve these results? The new academies mix four days of classroom training with practical in-store training. With so much talk recently about eLearning and mobile, some would consider this approach obsolete. But Walmart is proving that face-to-face training is key to many of the benefits they seek in training. It also sheds some light on the trend we see in the best companies creating Corporate Universities. Jordan, an employee in the Arizona academy, noted team-building activities as her favorite aspect of training, according to the Arizona Republic. Granted, what employees prefer is not necessarily what is the most effective. But all the following aspects of training, which were central in improving in-store experience and employee loyalty, rest on face-to-face interaction. Aspects include:
- Building a company culture
- Fostering leadership as a core value in employees
- Cultivating employee satisfaction and loyalty through relationships
- Exposing employees to the kind of interaction they will experience on their day-to-day job, in order to improve in-store experience
Next Step: Optimize for Training ROI
So what’s the next step for Walmart? The company is following through in establishing 200 academies before December 2017. They’re aiming to provide academy training for 140,000 employees. This is no small task. Walmart has proven that face-to-face training is effective. But the $5 billion increase in sales has not yet had a positive effect on the bottom line. In fact, operating income was brought down in 2016 by higher labor costs and training investments.
For Walmart to translate the increased revenues into profits, one of the main challenges ahead will be to make this training more efficient and make the most of its 200 training academies, instructors, and resources. The gains from in-person training are enormous. But, unlike online learning, it requires complex logistics, resource optimization and careful budgeting to achieve maximum efficiency. This is just the start for Walmart. As it learns to rationalize training processes, it should be on its way to reaping even more results in the next few years.
Training more with a smaller budget: Using the Course Management System
Walmart is a clear example of how effective Instructor-Led Training (ILT) can be; but yes, it remains costly. Training ROI is about efficiency as much as effectiveness. How can companies train more and better with less? In a recent study based on its experience in managing more than $1.5 billion of training budgets for some of the best companies, Training Orchestra has found that the channels to optimize training investments are the following:
- Maximizing session occupancy rates and resource use
- Tracking costs in real-time
- Building a robust training plan and forecasting future investments
- Automating administration to increasing productivity
- Accessing precise reporting
Surprisingly enough, while most of the largest companies invest in costly LMSs, they do not have tools to manage these ILT processes. Why is that? One of the main reasons is that companies expect their LMS to help them optimize ILT. This is something that LMSs are not built to do. They are tools designed primarily to manage eLearning. There are many differences between a training management system and learning management system. Implementing a Course Management System and streamlining these specific processes can enable 15 to 20% of training budget optimization.
So next time the nagging training ROI question comes back, you’ll have two more answers to give. Yes, face-to-face training is effective. And yes, it can be well-managed.
Training Orchestra is a leader in Course Management System and provides an integrated full web solution dedicated to the entire training ecosystem: Training Departments, Corporate Universities, Extended Enterprises and Training Companies. Covering the whole training process: finance, logistics, administration, sales and portal, Training Orchestra has proven its efficiency with over 600 satisfied clients and 6 billion of training budgets managed. Training Orchestra allows its users to drive their training activities, track and optimize forecasts, enhance productivity, ensure employee satisfaction and customer loyalty.
Feel free to download our white paper on assessing ROI of a Course Management System