“Our franchise has five locations in two states, and we are expanding. How can we measure the results of our training? At present, all we know is that “things seem to be getting better.” – Paula, Connecticut
It is difficult to measure training. The problem is that too many things are happening simultaneously. At any one time, you could be changing your marketing, remodeling and upgrading a location, or hiring employees with tremendously positive attitudes. So how do you isolate and evaluate the results of training? The simple answer is you can’t.
I work with some very large franchise systems, and they’re able to measure training by looking at the amount of training done per franchisee and comparing the franchisees in the top quartile of training execution versus those in the bottom quartile of training execution. Depending on the size of the system, they can really hone down on training’s economic impact.
One of things you can do is look at a break-even analysis on your training. As a company, how much are you investing in training? Here’s an example. Your company is spending $25,000 year on training and you work on a 66% contribution margin; if you improve business by $75,000 in the first year, you have broken even and anything more than that is return on your investment. Generally, an analysis like that shows you how low an increase you need to get a positive return on your training investment. That will let you know that your training has been a good investment.
Having said this, there are ways to measure improvement. The reality is, training impacts improvement. I always recommend that franchisees look at how they compare to the aggregate franchise system. I.e., if the system is growing at 3%, and if you’re growing at 10%, you know that your outperforming the market. You then will recognize the part of that will be from training and perhaps other things that you’ve done.
Here are some suggestions on how to look at the impact of improvement on your business.
Measure the measurables – If you are training retail salespeople, for example, is the ticket size of their average sale increasing? Same is true for servers in a restaurant. Also, in a restaurant, you can measure the percentage of people who upgrade to dessert. Look at your business, define your key performance indicators and monitor them.
Measure soft metrics – Keep an eye on your online reviews, your Net Promoter Score and other indications of customer satisfaction. If possible, compare what was happening before training began against post-training results. It not possible, measure whether things are now improving.
The bottom line is, training is perhaps the most effective use of time and money in a business. But it’s extraordinarily hard to precisely measure the results. We know it improves results, we know it improves retention, and we know it improves repeat and referral business.
Understanding your break-even will give you comfort and understanding that you’re getting a good return on your training. You might ask if your franchise system has done any macro analysis on the impact of training, to get a better understanding of the true ROI.
A Note from Evan . . .
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Evan Hackel the creator of the Ingaged Leadership concept, is a recognized franchise expert and consultant. Evan is CEO of Tortal Training, a leading training development company in Charlotte, North Carolina, and Principal and Founder of Ingage Consulting, a consulting firm in Woburn, Massachusetts. Follow @ehackel. To learn more about Ingage Consulting and Evan’s book Ingaging Leadership, visit Ingage.net.