Several years ago, I read a study concerning the value of “Training Evaluation” that has particular relevance for the challenges of evaluating all types of HR ROI interventions, including Employee Training, and Diversity Training interventions. It was published by the American Society for Training and Development (ASTD). The study focused on the notion of “making training evaluations more effective and queried organizations regarding how well training evaluation was meeting business needs. Responses to the 26 questions led to disturbing conclusions. “The pursuit of excellence in learning evaluations continues, but so far few organizations think they have mastered them”. The report stated, “Only about one-quarter of respondents…agreed that their organization got a solid bang for the buck from their training evaluation efforts.”
The Accountability Trend Over the years, I have heard similar comments made by CHRO, HR Directors, HR VPs, Chief Diversity Officers, Diversity practitioners, and unfortunately, by many CEO, key leaders, stakeholders, and sponsors about HR and Diversity ROI evaluation efforts. Yet, the only way to determine that a HR initiative or skill development effort and diversity training are having the desired effect is to use formal evaluation processes and cost-benefit analysis methods. The results of these activities can confirm the positive effects of the HR intervention and identify improvements to make it better. It is imperative to “master” the processes to measure the impact of HR initiatives in order to have any credibility with the organization. Finance, Marketing, Sales, or Operations and the like, cannot get a “pass” on showing their results and effectiveness and neither should HR if we want to be taken seriously. Mastering HR ROI and Diversity ROI measurement and evaluation strategies can contribute to maximizing an organization’s overall return on investment (ROI or return on mission (ROMtm), thus showing its value to the bottom-line.
For years, HR and Diversity managers convinced top executives that the impact of HR couldn’t be measured, at least at the monetary contribution level. However, today, many executives are now aware it can and is being measured in many organizations. Top executives are subsequently demanding the same accountability from their Employee and Diversity training functions. With the acceptance of ROI as a mainstream measurement tool for HR and Diversity functions, the debate has shifted from whether ROI should be conducted to how it should be conducted on a consistent, standardized basis.
Barriers to Diversity ROI Implementation ROI is a familiar term and concept for managers, particularly those with business administration and management degrees. Today’s Chief HR and Diversity Officer (CHRO, CDO) who is aligned as a strategic business partner is more aware of bottom-line issues in the organization. They are pleased to see the ROI Methodology applied to the evaluation of HR and Diversity performance improvement interventions.
Many enlightened business managers often take a professional business approach to HR and Diversity, with ROI being part of the strategy. Top executives who watched their diversity budgets continue to grow without appropriate accountability measures have become frustrated with this approach. In an attempt to respond to the situation, they have turned to HR and Diversity Return on Investment (HRROI, DROI®). Top executives are now demanding HRROI and DROI® calculations from HR, Talent Management and Diversity departments where they were not required previously. So, what factors prevent us from mastering HR and Diversity ROI measurement? Here are a few that consistently challenge HR and Diversity practitioners:
- Lack of Skills and Orientation Many HR and Diversity staff members neither understand ROI nor do they have the basic skills necessary to apply the process within their scope of responsibilities. HR and Diversity ROI Measurement and evaluation is not usually part of the preparation for the HR and Diversity job or taught as part of a university education focused on HR Management. Also, the typical Employee and Diversity training program or intervention does not focus on results, but more on building awareness concepts, activities, or other issues. Staff members attempt to measure results by measuring learning only instead of the full range of HR and Diversity performance intervention outcomes (at all 6 levels). Consequently, this is a tremendous barrier to implementation that must be changed such that the overall orientation, attitude, and skills of the HR and Diversity staff member is focused on results, impact, and/or outcomes.
- Faulty Needs Assessment Many existing HR and Diversity interventions are not based on an adequate needs assessment. Some HR and Diversity interventions have been implemented for the wrong reasons based on management requests alone or efforts to chase a popular fad or trend in the industry. If the intervention is not needed, the benefits from the program will be minimal. HRROI, and DROI® calculations for an unnecessary program will likely yield a negative value. This is a realistic barrier for many HR and Diversity interventions.
- FEAR Some Diversity departments do not pursue HRROI and DROI® measurement implementation due to fear of failure or fear of the unknown. Fear of failure appears in many ways. Designers, developers, facilitators, and program owners may be concerned about the consequences of a negative HR or DROI®. They fear that the HRROI or DROI® measurement process will be a performance evaluation tool instead of a process improvement tool. Also, the HRROI and DROI® processes will stir up the traditional fear of change. This fear, often based on unrealistic assumptions and a lack of knowledge of the process, becomes a real barrier to many HR and DROI® measurement efforts.
- Discipline and Planning A successful HR and DROI® evaluation implementations require much planning and a disciplined approach to keep the process on track. Implementation schedules, evaluation targets, HR or DROI® analysis plans, measurement and evaluation policies, and follow-up schedules are required. The HR and Diversity Change Management teams may not have enough discipline and determination to stay on course. This becomes a barrier, particularly if there are no immediate pressures to measure the return. If the current senior management group is not requiring a HRROI or DROI® evaluation, the HR or Diversity Change Management team may not allocate time for planning and coordination. Also, other pressures and priorities often eat into the time necessary for an effective HR or DROI® evaluation implementation. Only carefully planned implementation efforts succeed.
- False Assumptions Many HR and Diversity staff members have false assumptions about the HRROI and DROI® process that keep them from attempting a calculation of HRROI and DROI®. Typical assumptions include: (a) The impact of intervention cannot be accurately calculated, (b) Operating managers do not want to see the results of HR or Diversity expressed in monetary values. They won’t believe it, (c) If the CEO does not ask for the HRROI or DROI®, he or she is not expecting it, (d) CHRO, and CDO denial – “I have a professional, competent staff. Therefore, I do not have to justify the effectiveness of our programs”, (e) Learning or this type of intervention is a complex but necessary activity. Therefore, it should not be subjected to an accountability process, etc. These false assumptions form perceptible barriers that impede the progress of a HR or DROI® evaluation implementation.
What to Do About Them To overcome these barriers, it will be critical to:
- Build HRROI and DROI® Skills and Measurement Orientation Don’t wait until you are asked about the HRROI and DROI® of your HR or Diversity intervention to gain competency and business acumen in this area, start learning about HRROI and DROI® today!
- Learn the Detailed Steps to Conduct a Comprehensive Needs Assessment Needs analysis is the cornerstone of any HR or Diversity performance analysis effort. It provides you with appropriate justification for either developing or not developing your HR and Diversity interventions. You must conduct a needs analysis, no matter how abbreviated, before any HR or Diversity intervention takes place. The objectives of a needs analysis are to: • Describe the exact nature of a performance discrepancy • Determine the cause(s) of the discrepancy • Recommend the appropriate solution(s) • Describe the target population
- Overcome FEAR by Taking Action The best way to overcome FEAR is by (a) taking action, (b) generating results, (c) evaluating the outcome, and (d) implementing improvements. FEAR is often based on a lack of knowledge so the antidote is to “learn” and “master” the HRROI and DROI® skills and processes.
- Build DROI® Discipline and Planning Focus There is really no substitute for implementing a thorough approach to a HR or DROI® evaluation process. It must be implemented using effective project planning and management skills as well as following the HRROI and DROI® methodology according to each step in its design.
- Eliminate Any False Assumptions Let’s face it; the HRROI and DROI® evaluation process and its associated analytics are here to stay. It’s only realistic that HR and Diversity practitioners eliminate any false assumptions, wishful thinking and/or outdated measurement paradigms. In the future, there is likely to be even more demand for HRROI and DROI® analysis feedback, demonstrated credibility and intervention performance value ties to the bottom line.
Benefits of a DROI® Evaluation
The HRROI and DROI® Methodologies are the most accurate, credible, and widely used process to show the impact and results of a HR or Diversity intervention. The HR and Diversity Change Management teams will know the specific contribution from a select number of programs. Preparing a HRROI or DROI® study will determine if the benefit of the program, expressed in monetary values, has outweighed the costs. It will determine if the program made a contribution to the organization.
Calculating HRROI and DROI® in different areas can show which interventions contribute the most to the organization, allowing priorities to be established for high-impact performance. Successful programs can be expanded into other areas-if the same need is there-ahead of other programs. Inefficient programs can be redesigned and redeployed. Ineffective programs can be discontinued. Using this process has the added benefit of improving the effectiveness of all HR and Diversity interventions we conduct. Only those HR and Diversity practitioners who can operate as full strategic business partners will survive for the long term. We can ill-afford to let the aforementioned barriers trap and derail us.
Dr. Ed Hubbard is the President & CEO of Hubbard & Hubbard, Inc., and recognized as the Founder of the Diversity Measurement and Diversity ROI Analytics fields. For more information about the Hubbard Diversity ROI Institute, log onto http://www.hubbardnhubbardinc.com/certification-workshps.html