Martin-Christian Kent, Executive Director, People 1st
The ‘intangibles’ – those things that make demonstrating the true return on investment (ROI) from training programmes so challenging!
An intangible measure is simply one that you purposefully don't give a financial figure for, because doing so would be meaningless and reduce the credibility of your results. When doing an ROI analysis, it's always best to report any intangible benefits alongside the financial ROI calculation.
While it might be tempting to ignore intangible benefits altogether, it’d be mistake, because they can often be just as important and illustrative as tangible benefits. For example, a reduction in staff stress levels can make a big difference to your business over time.
While intangible benefits won't appear on your balance sheet like the tangible benefits do, they can still deliver a competitive advantage. For example, low employee stress levels can give your company a good reputation, which can make a huge difference when it comes to attracting and retaining staff.
Intangible benefits can often be uncovered during a needs assessment, or by talking to stakeholders at the beginning of the evaluation process. They can also be revealed at the end of the process, as an unexpected benefit.
It's likely that all training programmes will show some intangible benefits. Common examples include:
- Increased employee satisfaction
- Increased organisational commitment
- Improved communication and teamwork
- Improved customer service and reduced complaints
- Reduced conflicts
- Reduced stress
Some people might worry that key stakeholders will ignore intangible benefits when the results are presented, and therefore they try to give every measure a financial value. While this means that they can be included in the ROI calculation, it's not always the best approach.
Phillips (2003) suggests a four-step process to help you decide whether to a convert a value to a monetary figure:
- Does an acceptable, standard monetary value exist for the measure? If yes, use it; if not, go to the next step.
- Is there a method to convert the measure to money? If not, list it as an intangible; if yes, go to the next step.
- Can the conversion be accomplished with minimum resources? If not, list it as intangible; if yes, go to the next step.
- Can the conversion process be described to an executive audience and get their buy-in in two minutes? If yes, use it in the ROI calculation; if not, list it as an intangible.
Sometimes, whether a benefit is considered to be tangible or intangible will depend on the organisation - for example, in the case of employee retention. Some organisations have figures readily available that allow them to calculate the cost of recruiting new staff members (e.g. advertising fees, HR time, induction training, etc.), so any increase in staff retention can be converted into a financial figure.
Smaller organisations may not have this information available - therefore any increases in employee retention would be better reported as an intangible benefit, alongside an ROI figure that has been calculated using other measures.
If you’re looking for support to measure the benefits of your training – both tangible and intangible – our ROI experts are here to help. Find out more about our training evaluation service, or enquire now.