Measuring Your Competency-Based Training Framework For Better ROI

Measuring Your Competency-Based Training Framework For Better ROI
Summary: Competency-based training needs to prove that it's profitable. Organizations must discover how to measure competency-based training and how employees' competencies can take a toll on the bottom line.

How To Effectively Measure The Competency-Based Training Framework

Competency-based training, like all other learning models, must prove its worth. To realize a Return On Investment (ROI) organizations need to know how to measure competency and how an employee's competencies affect the bottom line.

eBook Release: Competency-Based Learning: Increase Employee Skills Development Through Competency-Based Learning
eBook Release
Competency-Based Learning: Increase Employee Skills Development Through Competency-Based Learning
Create the competency-based learning program that is right for your organization.

As we described in our first article in this series, The Importance Of Competency-Based Learning In Employee Skills Development, a competency represents the ability to apply, transfer, and combine knowledge and skills in different situations and work environments to carry out the activities required at the workplace at the quality level specified by the organization. The assessment of professional competencies is the process of collecting the information necessary to demonstrate the requirements of the organization’s standards. Measuring the results of competency-based learning programs requires first the assessment of current performance at the time the project is started, followed by multiple assessments after the training is finished and the employee has had the opportunity to demonstrate how their performance has changed.

By building measurements into the project from the start, the program can be designed to facilitate the collection of performance data, and it can be easier to demonstrate ROI.

The evaluation of competency-based training is straightforward but requires commitment and collaboration from multiple teams, including leadership and operations.

1. Review The Competency Model

Ensure the competency-based program aligns with all strategic business objectives. Competencies should be clearly defined and measurable. Many companies have an overabundance of "common sense" competencies in their competency models. For example, while "relationship building" is an important skill, its contribution to the bottom line is not measurable, and this skill should therefore not be the focus of a competency-based learning program.

2. Must-Have Competencies

Choose them from the competency model and focus the program on those. Attempting to cover too many competencies with one program is not effective.

3. Define The Metrics You Will Use To Measure ROI

The learning program must always be designed with the end goal in mind. Examples of the most common metrics used to evaluate competency-based training include:

  • Change in performance ratings over time
  • Promotion percentage
  • Employee turnover/retention rates (job-specific)
  • Productivity rate trends over time
  • Error trends over time (better performance will be reflected in lower error rates)
  • Customer satisfaction trends over time
  • Overall revenue increase with specific increases in sales (used for sales teams)

4. Design The Assessment

Design and implement the assessment approach that will give you the best understanding of the program’s effectiveness. For competency-based learning, it’s critical that the evaluation approaches include all of the following:

  • Objectively scored assessments
    The most common type of evaluation, where a test including multiple-choice, open-ended, and matching questions is administered at the end of a learning module.
  • Performance-based assessments
    These are time-consuming, but also more efficient in demonstrating ROI. They include essays or reports, project work (individual or group), and simulated environments.
  • Real-world observations
    Conducted at the workplace, usually by the supervisor and manager, these types of assessments are spaced out over time after the learner has completed the training.

5. Conduct A Pre- And Post-Assessment

Before the training program begins, you should have a baseline to measure against. Along the same lines as the post-assessment, and using the same metrics, conduct a pre-assessment of your learners’ competencies. After the training is concluded, the post-assessment is conducted with the components listed above.

6. Gather 360-Degree Feedback

This takes the pre- and post-assessments a step further. This type of feedback provides insight from supervisors and peers and helps determine what behaviors have changed and how new behaviors are being applied to impact the company’s bottom line.

7. Measure ROI And Adjust The Program To Boost It

While the formula for ROI is well-known, performing the actual calculation involves several steps. Applying the following tips will enhance the reliability of your calculated ROI:

  • Isolate the effects of the training
    The impact of external factors can be misleading and should be discarded when calculating the ROI of competency-based learning. For example, if you use employee retention as a metric, the unemployment rate in certain regions can affect the measurable effects of training.
  • Gauge training effectiveness and job impacts
    This critical measure directly calculates the percent of performance improvement resulting from the training.
  • Measure business results
    Post-training, did you see increased sales? If in manufacturing, increased productivity? Did your top negotiators close an appreciably greater number of contracts?
  • Calculate the cost
    Training-related costs are not only the cost of program development but also the cost of seat time, lost productivity, etc.
  • Calculate the ROI
    Don’t be discouraged by low ROI results, just keep striving to improve through good design and strategy.

While consistently demonstrating the ROI of learning can be a challenging exercise, we believe that it’s imperative to show a clear and strong relationship between competencies and organizational profitability. Contrary to popular belief, the appropriate level of assessment is generally achievable within the allotted development budget. As Learning and Development professionals, our job is to build in the accountability of measuring success, reporting the results, and proactively adjusting learning programs as necessary. Download the eBook Competency-Based Learning: Increase Employee Skills Development Through Competency-Based Learning to discover more about this highly strategic approach to employee skills development.