ROI Goes to School

Liz Wheeler

Bellevue University in Bellevue, Nebraska recently created the Human Capital Lab to work with and for organizations on quantifying training’s return on investment.  Using a statistical methodology developed by Capital Analytics, in Durham, N.C., Capital Analytics isolates information to see how training has translated into dollars saved, increased retention or career mobility. The Lab, headed by Dr. Michael Echols--author of Creating Value of Human Capital Investment, then writes up the case study. Of course, the methodology can also indicate what isn’t working.

By using statistical rigor in setting up test and control groups, a company can see if the test group (the group going through the training) performs better than the control group (that didn't receive the training).  If the training is having an impact, this is good for the organization so it understands how its budget is being spent. In some instances, the control group performs better than those who had attended training. Discovering that can be a good thing so that a company understands what its investment in the training is doing, said Jennifer Murnane, Lab assistant director. “Companies need to spend 3-5 percent of the training budget measuring the impact of training and other learning interventions [to find out if] they need to revise curriculum, send more people through the program, or invest training dollars in other programs. Right now, most organizations have 0 percent of their budget for measuring impact.”

“As a nonprofit research organization, we’re trying to serve as many companies as we can,” said Murnane. In February, Bellevue received approval for the first human capital management doctoral degree of its kind. The Ph.D. focuses on practitioners so chief learning officers and learning organizations “can use their real company examples and learn how to focus on the impact of human capital investments on their own,” Murnane said. It’s beyond Kirkpatrick’s and Phillips’ evaluations, she said. The Lab also offers colloquiums and free newsletters which you can sign up for on their website at www.HumanCapitalLab.org.  

   The Lab worked with Chrysler and is working with US Bank and Sun Microsystems to create high-profile case studies. Technically put, the case studies are based on projects where a “multi-variate statistical analysis is used looking at multiple independent variables, including the learning intervention and dependent variables such as retention. Looking at all those variables and learning intervention is like a Rubik’s cube with all different variables and being able to isolate the impact the learning intervention had for a specific business measurement,” Murnane said. The company can then tie the results back to the learning to either change the objectives of the training or the process of how training is being done. Overall, “as far as helping organizations understand the impact of their human capital investments and ROI, we’re helping build the body of knowledge in this area.”