In my latest articles we have discussed “Turnover” and “Time to hire” KPIs. Today I’d like to talk about training KPIs. The HR department is normally responsible for training as well, so along with “turnover” and “time to hire,” training KPIs are always on the HR dashboard.
- Find all the HR KPIs in the Balanced Scorecard project for HR in BSC Designer online.
Before getting to the KPIs, let’s talk a little bit about training objectives. I do this as a KPI by itself won’t tell us any story, it needs to be aligned with certain business objectives. The question is why do we need to train our employees?
The answer seems to be obvious: we want to improve their skills and efficiency so that they can help us execute our strategy better. If that is our business objective then training KPIs are supposed to help us measure our progress toward this objective. But do they actually help?
Training KPIs don’t help
The objective of any training program is to develop new skills and improve the efficiency of an employee. Let’s have a look at some popular KPIs and how they can a help us in this concern.
- Average training cost per full time employee, $. This KPI shows how much we invest in the training of each employee, but it doesn’t tell us anything about the results that we expect. If training was successful? Has an employee learned something new that allowed them to improve efficiency?
- Average number of hours per full time employee, hours. The same problem as with the previous KPI. Your employee might study full time for the MBA program, but will it help your employee deliver better results and to what extent?
- % of HR budget spent on training. Using this KPI we could have some approximate idea about a balance in HR department, if they spend 90% of the budget on finding new candidates, then probably your training program won’t be the best one. But still there is no required % of budget that company must spend on training. Excellent training might cost just 1% of your budget, but will result in high productivity growth.
- % of employees trained. This KPI will tell you about the number of employees that were trained. It makes sense using this KPI when you know the efficiency of certain training. But again, what worked excellent for employees of one department might not work for employees of another.
- Employee training satisfaction index. The problem of this KPI is that it is really subjective. I’m sure you’ve known this filling when after another excellent keynote speech on some conference you are inspired and excited by new ideas that you’ve just learned. In a few days, these ideas appear to be just engaging stories, which you cannot convert into the practice. This KPI might work, but it is better to measure the index 3 months after the training.
- Training ROI, %. To calculate a ROI you need to know your investment (I’m sure you can calculate this) and financial estimation of benefits your business obtained as a result of the training. That’s returning us to the initial question – how to calculate training efficiency. This KPI might work when objective training measures are available (see a paragraph below).
Tests and scores
The result of each training session is a test. Why not use test scores as a KPI to find out the efficiency of the training? The problem here is that the score shows how good the employee understood what was delivered in a training session. It is not a guarantee of the usage of obtained knowledge in practice; it is not a guarantee that the obtained knowledge will help achieve some of your business objectives.
Objective training measures
The situation is not as dramatic as it might seem for now. We could measure the efficiency of training if we could measure the performance of an employee.
For example, Mary from a call center is closing only 20% of her opportunities. After passing phone sale training she improved her performance. Now she is about to close more than 35% of her opportunities. Good training? At least it was good for Mary!
Copywriter Peter was trained to write sales copy, now emails written by him are converting 20% more in website visitors. Great results!
What about software engineer Andrew? He visited several conferences for software developers and participated in some workshops. Did these investments allow the company to achieve some valuable business objective or it was just done by HR in order to keep “% of HR budget spent on training” in a green zone? In this case you can estimate the quality of his job by the number of returning bugs or by the cost reduction achieved as a result of application of the new skills he learned.
There are positions in the company where efficiency and improvement in efficiency can be measured, but for the majority the measurement is a challenging task.
Result-oriented HR Training KPIs
Now, I’d like to list a few KPIs that might be actually aligned with the business objective which is: “Improve employees’ skills and efficiency so that they could help a company execute their strategy better.”
Let’s start with two basic ones. If you send someone from your company to participate in a training session or workshop you can expert that once he is back in the office that he will do something faster or with fewer expenses:
- Time reduction achieved, %. If the goal of the training was to do something more effectively or simply faster, then you might track it by a KPI.
- Cost reduction achieved, %. If the goal of the training was to do something in a more effective way then you might track direct cost reduction, which is result of the training.
Another typical expectation is that after the training employee will be able to do his job “better.” “Better” might mean an increase in speed and a decrease in costs as we discussed above, but it might be also relevant to the quality.
Are there quality metrics in your business niche? I would suggest one that is more or less general purpose:
- Reduce of the return problems rate, %. The KPI is applicable where the problem is clearly defined and linked to the final result. By the way, a repeated problem is one of the negative drivers of customer loyalty. If you will be able to decrease this number, you’ll make your customers happier.
The next KPI is specific for a certain business role. It is applicable for these roles where performance can be calculated:
- Performance improvement, %. The KPI must be linked to a specific performance index. For sales people it might be the number of sales generated, for a copywriter it might be readers to leads conversion.
Finally, some training programs have an excellent built-in examination tools. This KPI will help you to use them:
- Improved qualification/skills results, %. The KPI is applicable only to these training where actual qualification/skills are measured, not just the facts studied in the training.
For example, international language tests such as TOEFL, IELTS for English or DELE for Spanish have a rating system. Unfortunately, in such a soft niche as foreign language learning it is hard to give a precise score. Sometimes people are just mastering test passing skills. Unfortunately, the same applies to any education system.
- Find these HR training KPI in the Balanced Scorecard project for HR in BSC Designer online.
Using HR training KPI
The final word about HR training KPIs: don’t apply the same KPIs for all employees. Don’t measure process oriented KPIs like % of employees trained and average training costs. They are not aligned with your business objectives and won’t give you any actionable information.