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The £2.5 Million Question

Your organisation spends £250,000 annually on training. Twelve months later, what have you got to show for it?

If you’re like most UK businesses, the honest answer is: “We’re not entirely sure.”

Research reveals that only 10% of training transfers to measurable workplace behaviour change. That means £225,000 of your investment evaporates.

Multiply this across a decade, and you’ve wasted £2.25 million on training that didn’t stick.

As a Finance Director, you wouldn’t tolerate this waste in any other budget line. Why accept it in training?

The ROI Measurement Crisis

The Association for Talent Development reports that companies investing in comprehensive training programmes see 218% higher income per employee.

Yet most organisations can’t demonstrate any meaningful return on their training investment.

Why? Because they’re measuring the wrong things - or not measuring at all.

What Most Organisations Measure: - Attendance rates - Participant satisfaction (“Did they enjoy it?”) - Course completion rates - Number of training hours delivered

What Actually Matters: - Behavioural change (Are they doing things differently?) - Performance improvement (Are results better?) - Business impact (Did it affect revenue, costs, quality, retention?) - Return on investment (Did we make or save more than we spent?)

The work of Bersin, Fitz-enz, and Phillips introduced rigorous metrics for calculating training ROI. Their research proves that organisations measuring transfer of learning achieve 3-4x better returns than those relying on subjective feedback.

Here at MLR, we’ve built our entire approach around measurement-driven development. Our assessment tools and experiential learning programmes enable precise tracking of capability improvement and business impact.

The True Cost of Ineffective Training

Let’s calculate what poor training actually costs your organisation:

Direct Costs: - Training fees: £250,000 - Participant time (50 managers × 5 days × £500/day): £125,000 - Travel, venue, materials: £25,000 - Total direct cost: £400,000

Opportunity Costs: - Delayed performance improvement (6-12 months vs. 1-3 months with effective methods): £150,000 - Continued inefficiencies whilst waiting for capability development: £100,000 - Repeated training attempts because first approach didn’t work: £75,000 - Total opportunity cost: £325,000

Hidden Costs: - Employee disengagement from ineffective training: £50,000 - Management time managing performance issues that training should have addressed: £40,000 - Customer impact from inadequately trained staff: £60,000 - Total hidden cost: £150,000

Grand total: £875,000 for a £250,000 training budget with 10% transfer rate.

Now compare this to evidence-based training with 40% transfer:

• Direct costs: £300,000 (20% premium for quality methods)
• Opportunity costs: £50,000 (accelerated capability development)
• Hidden costs: £20,000 (engaged employees, faster performance improvement)
• Grand total: £370,000

Net saving: £505,000 annually because you invested in effective training methods.

The Phillips ROI Methodology: Making Training Accountable

Jack and Patti Phillips pioneered a five-level evaluation framework that extends Kirkpatrick’s model:

• Level 1: Reaction – Participant satisfaction
• Level 2: Learning – Knowledge acquisition
• Level 3: Application – Behavioural change
• Level 4: Impact – Business results
• Level 5: ROI – Financial return vs. investment

Most organisations stop at Level 1. Sophisticated organisations measure through Level 5.

The ROI Calculation:

Sounds simple. But most organisations can’t complete this equation because they don’t measure benefits.

Real ROI: The DHL Case Study

In 2002, we worked with DHL to improve team performance and operational efficiency. Here’s the financial breakdown:

Programme Costs: - Facilitation and materials: £12,000 - Participant time (23 people × 2 days × £400/day): £18,400 - Total investment: £30,400

Measured Benefits (9 months): - 8% productivity improvement: £320,000 - Reduced costs £450,000 - Total benefits: £770,000

ROI Calculation:

This isn’t theoretical. This is documented, measured, and verified.

The difference? We used experiential learning (business simulation), pre-assessment (identifying specific capability gaps), structured measurement (tracking behavioural change and business metrics), and follow-up coaching (ensuring transfer to workplace).

The Five Questions Finance Directors Must Ask

Before approving any training investment, demand answers to these five questions:

1. What specific business problem will this training solve?

Vague answers (“improve leadership”, “build skills”) are red flags. Demand precision: “Reduce staff turnover from 23% to 15%”, “Increase sales conversion from 18% to 25%”, “Cut project overruns from 40% to 20%”.

2. How will you measure success?

If the answer is “participant feedback” or “course completion rates”, reject the proposal. Demand behavioural metrics and business outcomes.

3. What’s the expected transfer rate?

If they can’t answer this, they’re guessing. Research-based training methods can predict transfer rates: lectures (10%), e-learning (15%), workshops (20%), simulations (40%), coaching (70%).

4. What’s the total cost including participant time?

Training fees are typically 30-40% of total cost. A £50,000 programme costs £150,000+ when you include participant time, travel, and opportunity cost.

5. What’s the expected ROI and payback period?

Demand a financial projection with assumptions clearly stated. Good training should deliver 200-400% ROI within 12 months.

The Evidence-Based Investment Framework

As a Finance Director, you need a decision-making framework for training investments.

Here’s what research proves works:

1. Demand Measurable Outcomes
2. Match Method to Outcome
3. Require Pre- and Post-Assessment
4. Calculate Cost Per Successful Outcome
5. Demand Transfer Support

Research proves that the 90 days following training determine whether investment pays off. Require: - Manager briefings on supporting transfer - Structured follow-up at 30/60/90 days - Accountability mechanisms for applying learning - Measurement of behavioural change

Training without post-session learning transfer support money is wasted.

The Evidence-Based Training Portfolio

Not all training methods deliver equal ROI. Here’s what research tells us:

Low ROI Methods (10-15% transfer): - Lectures and presentations - Self-paced e-learning - Reading and written materials - Video-based training

Medium ROI Methods (20-30% transfer): - Facilitated workshops - Group discussions - Case study analysis - Role-play exercises

High ROI Methods (40-70% transfer): - Business simulations - Assessment-driven development - Structured coaching - Action learning projects - Peer accountability groups

At MLR we promote the use of high-ROI methods because we’re accountable for results, not just delivery.

The Assessment-Driven Difference

Here’s why assessment transforms training ROI:

Without Assessment: - Generic content delivered to diverse populations - Some participants learn what they already know - Others miss critical foundational knowledge - No baseline for measuring improvement - No personalisation based on learning style or motivation - Transfer rate: 10-15%

With Assessment: - Precise identification of capability gaps - Personalised development pathways - Baseline data for measuring improvement - Alignment of training method to learning style - Predictive insight into training success - Transfer rate: 40-70%

Our Birkman assessments, CliftonStrengths, and Motivational Maps aren’t optional extras. They’re the foundation of ROI-driven training.

The Simulation Multiplier Effect

Business simulations deliver ROI that traditional training cannot match. Here’s why:

• Compressed Learning Cycle: Participants experience months of learning in a single day. Our Slingshot simulation delivers process improvement capability that would take 6-12 months to develop through traditional methods.
• Immediate Application: Participants leave with specific action plans for applying simulation insights to real organisational challenges. Implementation begins within days, not months.
• Emotional Engagement: Simulations create memory anchors that lectures cannot match. Six months later, participants vividly remember the simulation experience and embedded lessons.
• Measurable Outcomes: Simulation performance provides objective data on capability development. You can measure problem-solving speed, collaboration effectiveness, and process improvement capability.

The Competitive Advantage Equation

Here’s what sophisticated Finance Directors understand: training isn’t a cost—it’s a capability multiplier.

The Association for Talent Development’s research showing 218% higher income per employee isn’t about training volume. It’s about training effectiveness.

The Capability Multiplier Effect:

Year 1: - Investment: £300,000 in evidence-based training - Transfer rate: 40% - Capability improvement: 40 employees performing at higher levels - Productivity gain: 15% × 40 × £80,000 = £480,000 - Net benefit: £180,000

Year 2: - Previous year’s capability improvements compound - New investment: £300,000 - Additional capability improvement: 40 employees - Cumulative productivity gain: £960,000 - Net benefit: £660,000

Year 3: - Compounding effect accelerates - Cumulative productivity gain: £1,440,000 - Net benefit: £1,140,000

Three-year ROI: 640%

This is why top performing organisations invest in evidence-based / assessment-based / experiential training. They understand the multiplier effect.

The Board Presentation: Making the Business Case

When presenting training investment proposals to the board, use this structure:

1. State the Business Problem “Our employee engagement scores are 15% below industry benchmark, costing us £2.1M annually in turnover and productivity loss.”
2. Propose Evidence-Based Solution “We’re recommending a £75,000 leadership development programme combining Birkman assessment, experiential simulations, and 90-day follow-up measurement.”
3. Cite Research Evidence “Research proves this approach delivers 40% transfer vs. 10% for traditional methods. Similar programmes have achieved 8% productivity improvement and £450k cost reduction.”
4. Project ROI “Expected outcomes: 15% engagement improvement, 10% turnover reduction, 10% productivity gain. Conservative ROI: 8:1 in year one, compounding thereafter.”
5. Define Measurement “We’ll measure success through 90-day behavioural assessments and business impact analysis. If we don’t achieve projected outcomes, we’ll adjust approach.”

That’s a business case that gets approved.

Your Action Plan: Maximise Training ROI

If you’re ready to stop wasting money and start building capability, implement these five changes:

1. Audit Your Current Training Portfolio: Calculate the true cost (including participant time) and transfer rate of each programme. Eliminate low-ROI methods.
2. Demand Measurement: Require pre-assessment, post-assessment, and 90-day behavioural tracking for all training investments over £10,000.
3. Shift to High-ROI Methods: Replace lectures and e-learning with simulations, assessment-driven development, and structured coaching.
4. Calculate ROI: For every training programme, quantify business impact and calculate return on investment. Make training providers accountable for results.
5. Build Internal Capability: Invest in train-the-trainer programmes and assessment tools so you can deliver high-ROI training internally.

Or partner with specialists who are already accountable for ROI.

Your Strategic Decision

You face a choice:

Option A: Continue current approach - Spend £250,000 annually - Achieve 10% transfer - Waste £225,000 - Fall further behind competitors

Option B: Adopt evidence-based approach - Invest £300,000 annually (20% premium) - Achieve 40% transfer - Generate £480,000+ productivity gain - Build sustainable competitive advantage

The research is clear. The business case is compelling. The tools exist at MLR.

The only question: will you continue treating training as an expense to minimise, or start treating it as an investment to optimise?

Stop wasting money. Start building capability. Contact us at [email protected] / 01793 686512 to discuss evidence-based training ROI for your organisation.

Bob Hayward has spent 25+ years helping Finance Directors and Boards make evidence-based training investment decisions. His work with Be More Effective and MLR proves that training ROI isn’t a mystery - it’s a methodology. 

Discuss ROI-Driven Training:
📞 +44 (0)1793 686512
📧 www.bemoreeffective.com

Browse Assessment-Driven Tools:
🌐 www.mlruk.com/online-assessments-3

Experience the Slingshot Simulation:
🌐 www.mlruk.com/slingshot