How Much Does a Company Earn for Every Dollar it Spends on Training?
Study Proves Ace Hardware Negotiations Training Pays Off
Can a company rely upon a training program to help it meet its strategic goals and its financial goals? To find out, Ace Hardware chose Lake Forest Corporate Education as its training partner, and together they conducted a needs analysis.
Ace Hardware and LFCE designed a two and a half day program, "Negotiating to Achieve Better Results," that included case studies that simulated common, field-based negotiation challenges, and specific steps to create win-win solutions.
Their conclusion was that improving the collaborative negotiation skills of 200 Ace field managers could improve Ace's ability to achieve its corporate strategic goals and return of cash value on their investment.
Return on Learning Investment (ROLI)
Beyond achieving strategic goals, Ace Hardware wanted to know how much cash value - both cost savings and new revenue - could accurately be considered a result of the training. This dollar amount would help them determine whether the benefits of training outweighed the costs. Ten sessions were earmarked for this ROLI study, a detailed analysis that pinpoints how much a company actually earns as a result of every dollar spent on training. According to Susan Vece, Director of Lake Forest Corporate Education, "ROLI studies prove whether training generates dollars to a company's bottom line.
"To calculate ROLI," Vece continued, "load in all costs associated with training-even less obvious ones like participants' salaries during the sessions. Also, results must be tied carefully to the skills taught. For example, a field manager uses a technique learned in class to negotiate a reduction in fees that saves the Ace/Retailer $40,000 annually. If the training, fully loaded with all costs, totals $20,000, then for every $1 Ace spends on the training, they save $2 in operating costs and the training would be cost-justified based on that single order."
Why invest in ROLI? Ron Wagner, Director of People Development and Learning Systems at Ace Hardware explains, "When corporate budgets are tight, some executives view training as expendable. You can only tell them, 'Trust me, it's working,' for so long. I think it's important for training departments always to have one ROLI study going at any time."
Wagner expressed confidence in the results of the current ROLI study. "I have already received lots of positive comments through e-mails and post-workshop feedback," he reports. "Many say this program is the best they've ever attended."
