MW Africa: Measuring the Return on Investment (ROI) – Technical Skills Certificate Programme

 MW Africa is an innovative textile manufacturing organisation operating in Namibia. The company’s 65 employees manufacture window-covering, filtration composite and energy-related fabrics that are sold to manufacturers and wholesalers. MW Africa deals with integrated textile mills and attributes its success to its ability to respond effectively to market changes in the design, testing and production of new textiles and products. This kind of flexibility is an essential survival prerequisite for the textile industry which has for many years struggled against wind gusts of adversity – technological change, highly competitive global market conditions, and unfavourable currency rates.

For a number of years, MW has recognised that maintaining a high level of workplace skills development is critical to surviving in the current markets and strengthens the company’s position and ability to adapt to future market dynamics. As part of the strategy to adapt to rapidly changing technologies, MW initiated a new learning initiative in January 2017, called the Technical Skills Certificate Programme (TSCP). The 90 hours of training, which was delivered in two-hour sessions twice a week, targeted basic technical manufacturing skills.

The training in mechanical power transmission was devoted to a variety of topics that relate to power transmission including blueprint reading, materials’ properties, lubrication, threads and fasteners, mechanical drives (belts, chains and gears), bearings, couplings and seals. The electrical fundamentals covered electrical basics such as units of electrical measurements, electrical code, alternating currents, and an introduction to electrical transformers. In the introduction to pneumatics the focus was on the basics of pneumatics, the basic theory of pneumatics, common uses of pneumatics in industry, and pneumatics systems and components (cylinders, air preparation units and control devices). Hydraulics training covered a range of hydraulic concepts and technologies such as pressure and flow, hydraulic fluids, piping and reservoirs, hydraulic pumps, cylinders, motors and control valves. The introduction to computer controls covered electronic signals, solid-state electronic control devices, computers and networks.

The training was delivered to eight production employees from different parts of the MW Africa plant. The format of the training included a blended delivery format utilising online modules from the learning portal such as an in-plant, instructor-led method for hands-on training, and on-the-job coaching activities with the production managers of MW Africa. The college instructor and MW Africa’s production manager provided classroom instruction supported by the online learning modules.

The following strategies and practices were identified by participants as having contributed positively to the learning:
• All communication about the training to employees – describing its purpose and importance – came directly from the President.
• The involvement of a production manager in classroom activities provided learners with a coach who could continuously relate the training to the participants’ work situations.
• The involvement of the line manager encouraged buy-in of other managers, resulting in an overall supportive environment for learning.
• Practical demonstrations were regarded as extremely engaging and generated substantial discussion.
• The availability of in-house training provided a quiet setting for learning.

In the following months, the senior production manager observed substantial improvement in several distinct areas of operations including more effective preventive maintenance, improved product quality and enhanced customer satisfaction. The most readily measurable (tangible) improvement, however, was reduced equipment downtime as a result of the production staff’s ability to provide more effective preventative maintenance on the textile looms. The production manager attributed this improvement to the increased levels of technical knowledge and skills of the production staff.

Business benefit from training

The loom arm equipment experienced five mechanical breakdowns annually as a normal consequence of the stress of continuous operations. Each loom breakdown required a two-day shutdown during which problems were identified and defective components were repaired or replaced. Importantly, each day of shutdown represented one lost day of production output to MW Africa.

The combined tally of lost production and parts replacement from a single breakdown has been calculated to be R6 800.00. In addition, each unplanned shutdown triggers an additional lost opportunity cost as loom technicians were diverted from their normal productive activities. As a consequence of more effective preventative maintenance, the breakdowns were reduced from five incidents to two per year. The total annual business benefits from the reduced downtime, therefore, amount to the cost saved by three (3) fewer loom shutdowns per year.

Total annual benefit: 3 shutdowns/years X R6 800.00/shutdown = R20 400.00

A meaningful way to judge the success of the Technical Skills Certificate Programme is to evaluate the impact on the organisation’s bottom line. This can be compared with the quantifiable business benefits that were directly attributable to the programme with the total cost of training – the return on investment (ROI).

The management of MW Africa calculated the following costs related to the implementation and delivery of the technical skills training. The cost of instructional materials and facilitation from the college is R15 000.00.

Cost of instructional materials and facilitation from the College: R15 000.00.

Internal costs are made up of:
• MW Africa facilitator’s salary: (class time, preparation time and meetings)
• Participants: (salaries and overtime wages to cover production demands)
• Pilot supplies: (laptops, binders and copying)
• Administration: (e-mails, letters, meetings and other administration – from February 2016 until June 2017)

Total internal costs: R20 000.00

The total cost of all training: R35 000.00

Total training: 90 hours
• A portion of training for Mechanical Power Transmission and the Introduction to Pneumatics: 45 hours
• Percentage of training of the two components: 50%
• Relevance Technical Skills Certificate Programme cost = 50% X R35 000 = R17 500.00

Source: Adapted from Gillis, L and Bailey, A.(2017)

Question 1

Calculate the return on investment (ROI) by using the ROI formula. Show all your calculations as well as the result. (7)

Interpret your final ROI figure in question 1.1. (3)

There are several reasons for evaluating training programmes to determine if they should be continued or dropped, learn how they can be improved, justify the training budget, ensure learning compliance, maximise the value of training and align training with strategy. Discuss Kirkpatrick’s four (4) levels of evaluation in your own words. (15)

Question 2

You are appointed as the first HRD manager responsible for quality management in your organisation or any organisation of your choice. The other HRD managers are responsible for the design, outsourcing and management of HRD interventions. Your primary role is quality assurance of all HRD interventions from both a business and legal perspective. Synthesise your knowledge of HRD quality management by discussing your role as a manager responsible for HRD quality management. Provide an introduction and a conclusion in your answer. (10)

HRD professionals are likely to engage in a number of different approaches to business and quality management when they initiate a process of business improvement. Consider your organisation or any organisation of your choice and discuss Six Sigma in implementing quality management for the HRD department in that organisation. (15) [25]

Answers to Above Questions

Answer to Question 1 Evaluation of the training program is essential in order to enhance its effectiveness. There are different models available in order to evaluate the effectiveness of a training program. One such model is known as the KirkPatrick model and it is a globally recognised method of evaluating the results of training and learning programs. There are four levels in this model and this include reaction, learning, behaviour and results. An analysis of all the four levels of evaluation of Kirkpatrick model is performed as follows: