When Does Training Maximize ROI?

Consider the following situation: Leasing consultants at an apartment community are not performing up to standard. Management notices the weekly lease-up rate is at a crawl and decides to enroll the staff members in a top-of-the-line training class that will condense into a few sessions all the best tricks-of-the-trade in leasing techniques. That course of action sounds logical, but did the company make the right decision? Not necessarily.

Training professionals today are, ironically, not prescribing training in many cases. They say that too often, training may not be the most appropriate solution to what are, in fact, performance issues. “Training is often the equivalent of ‘corporate aspirin,’” says Deb Bronson-McGrath, CEO of Discover True North LLC, a management and performance consultation company. “By prematurely prescribing training without a performance improvement analysis and defining expected ROI, companies fail to get desired results.”

Examining the need for training the staff before embarking on the process constitutes a best practice from the field of training and development. This “best practice” actually connects training to tangible results—and ultimately, return on investment. “It is important to tie training to some sort of return,” agrees Ray Acay, director of learning & development, Promethean Services, at Prometheus Real Estate Group Inc. “If the company invests ‘x’ dollars, how much will they obtain in return?”

Acay acknowledges that isolating the numerical ROI of training can be difficult. However, there are ways that ROI can be ascertained, if more informally. “There are many cases I can point to and say that the training has increased the bottom line performance,” says Alexandra Jackiw, president of Buckingham Management LLC. Even at the most general level, explains Jackiw, training supervisors through coaching or mentoring, for example, can lead to reduced employee turnover—and thereby happier residents. These results translate to improved bottom lines.

Jackiw says that Buckingham Management has also found, for example, that maintenance expenses fall when personnel are correctly trained. One reason is that maintenance technicians may repair, rather than unnecessarily replace, items—because they now know how to perform repairs.

Models improves results

Even if companies are not scientifically measuring ROI, there are measures they can take to help ensure that training ultimately improves the bottom line. Corporate managers are reminded to look at the specific effects of the training from start to finish. In other words, before the training is embarked upon, the company needs to analyze whether it is needed in the first place. And after the training has been completed, the results should be evaluated. According to Bronson-McGrath, training that does not include these two critical steps—at the beginning and at the end of the training process—“perpetuates poor ROI and makes little or no impact on improved performance.”   

When faced with a perceived need for educating their staff, apartment companies need to first analyze the cause of the unsatisfactory performance—and it is not always a lack of training. “If the performance shortfall was caused by a deficiency in skill, knowledge or experience, then training is the solution,” says Bronson-McGrath. But rather than just lack of training, the issue could have been motivational, organizational, procedural or one related to workplace capacity. “By first conducting an analysis, you may discover that, in fact, training is not the most effective solution to any given challenge,” says Bronson-McGrath.

She says a company may have, for example, a policy requiring leasing consultants to respond to Internet inquiries within 30 minutes during business hours. “A vice president reviews the quarterly report generated from their third-party shopping service, and realizes that less than 24 percent of employees shopped via the Internet met or exceeded the standard,” she says. At the next staff meeting, the vice president asks the training department to put together something that addresses the considerable shortfall in performance.

“Within a short time, the training department delivers and executes an engaging module or classroom segment, but the next quarterly report shows little improvement. What is the problem?” she asks. In this case, says Bronson-McGrath, the cause of the underperformance may not be lack of training, but an unrealistic staffing level. The solution could have been expanding the 30-minute response time to two to four hours, creating an auto-response for inquiries and easy-to-edit email responses.

When the necessity for training is still being evaluated, it must be remembered that any training the company provides has to be strategic in nature, suggests Bronson-McGrath. If it is determined to be necessary, the training needs to be matched with the overall goals of the company, explains Acay. “First, you have to define what the objective of the training is and make sure it is aligned with the organizational goal,” he says. “An initial assessment of the situation and an alignment with the goals before starting the training intervention is absolutely key.”

Whenever Acay receives training requests, he first helps the company perform an assessment of the business situation that led to the perceived need for an educational program. “We do not automatically prescribe training,” he says. “When we receive a training request, we say, ‘Yes, but tell me what you want to achieve as a result of the training so that we can deliver something on target.’ We do a really good assessment of the situation and align it to the business objectives and the client’s goals, as defined by the client,” he says.

The objectives of the training must also be specific. The company’s goal may be, for example, to develop team members who are more knowledgeable about the community, or the company may want to help team members convert more calls to actual visits, or improve their presentation skills. These training objectives may have to be discovered in conjunction with the training consultant. The training curriculum is then modeled on these specific goals.

In the design of the course, Bronson-McGrath advises that the learning gap—between the desired level of knowledge and skill and the present level of knowledge and skill—should first be determined. It also has to be ascertained what type of “intervention” is preferred: instructional or non-instructional. And the method of instructional delivery has to be decided on—for example, on-the-job training, online course, coaching, mentoring  or classroom instruction.

The educational program should not be “one-size fits-all,” agrees Jackiw. “We have a very diverse workforce. Adults learn in different ways.” Sometimes, says Acay, the analysis will reveal that a simple “teach sheet” would suffice, thus saving the apartment company money. “Instead of building an online program, for example, you can create a job aid outlining what the employee needs to know and how to do it,” says Acay.

When it is actually needed, training can deliver tangible results impacting the bottom line. Jackiw, of Buckingham Management, cites one example at her company in which leasing consultants’ sales training closing ratios were originally 30 percent before attending classes. After undergoing training, their scores were “consistently” above 40 percent. Training was no doubt  just the right solution in this particular case—but it is not necessarily the right prescription for all corporate situations that seem to warrant it.