Many companies do a great job of defining their specific learning objectives and desired behavior changes while accounting for schedule and budget constraints, but very few are successful in demonstrating the business value or benefit that was realized after the training has been completed.
I was speaking with a client last week about how difficult it is to show the financial and non-financial benefits of investments made in training events and programs. This is the case with many different types of projects and programs, not just those related to training. Many, but not all, companies take the time before a project is started to document the benefits that should be realized. Few companies measure or revisit the intended, and unintended, business outcomes of the project. Why is this?
Gartner research has been very vocal on the topic of investment success rates. Gartner found that investment success rates are below 60%, benefits related to revenue growth have less than 50% success rates, and transformational project success rates are less than 25%. Deloitte has also been vocal in its Enterprise Cost Management Survey Report by stating that nearly 50% of all cost initiatives fail to achieve their goals. With these odds no one in their right mind would want to have his/her stated benefits measured and reported.
Projects are investments. They take time, consume resources and cost money. The projects we chose to do stand in the way of other projects we could also do. If I invested money in a certain stock, I would want to track the value of that stock over time to determine whether my dollars were well-invested. I wouldn’t consider those dollars to be spent and lost forever. The dollars I invest are meant to create more dollars.
Just because something is hard to do or most companies are not doing it well doesn’t mean that it can’t be done or we shouldn’t try to do it well. I think most of us would agree that improving benefits realization is the right thing to do. We should identify the business benefits before the start of a project and track those benefits throughout the course of the project. Any argument to the contrary would seem silly. While difficult, I don’t believe benefits realization is insurmountable. By introducing and institutionalizing the practices shared below we can move in the right direction.
- Have investments driven by business objectives to begin with the business perspective and goals before shopping for investments to meet the set objectives and budgetary constraints.
- Create relevant business cases to avoid funding the wrong investments in the first place and gain valuable confidence from all stakeholders.
- Utilize a benefits realization process with governance to create a portfolio view of investments, focus on the change in the business indicators and establish accountability and responsibility through frequent meetings and stage gating.
- Establish reliable metrics to overcome the fear of not knowing what is going on and better control the investments.
- Introduce a technology capable of digitizing aspects of benefits realization as an engine for delivering the business case, enabling the process and governance and better recognizing which projects contribute to improving which business metrics.
By aligning process, governance, behaviors, technology and data we can take a more active role in realizing the benefits of our investments.