UNESCO’s International Centre for Technical and Vocational Education and Training has just released a practical guide to help stakeholders understand and measure the return on investment (ROI) from VET.
This guide is new, but the concept isn’t
In late 1990s the NCVER commissioned a body of work on ROI.
This included one of its popular Getting to grips with… and also a Research at a glance… publication on the topic, both of which were published in 2001. They, and the original research, are still worth a look!
More recently, the Victorian TAFE Association commissioned KPMG to value TAFE’s contribution to the Victorian economy. They found that “every $1 spent by Victorian TAFEs and dual sector universities supports $2.19 of value-added in the Victorian economy.” We wrote this one up in VDC News in 2018, and also highlighted a related study from Queensland in another article.
This new practical guide has been published by UNESCO-UNEVOC and authored through NCVER. It was released in April this year. A related publication, published in 2017, looks at a “framework to better measure the return on investment from TVET.” The framework identifies three main stakeholder groupings for measuring ROI – individuals, business and the broader national economy.
What is ROI?
The guide defines ROI as:
“a measure of the benefit of an investment relative to the cost of that investment. Therefore, in the [VET] context, the ROI is the benefit derived by individuals, firms and nations from investing in training.”
These returns may be both social and economic.
Why measure it?
One of the first reasons for doing it is accountability for public spending. It also provides information about the performance of VET systems. (We highlighted the work the Productivity Commission does on this in this very issue of VDC News.) However, it can also be used to assist strategic planning and for promoting business improvement and efficiency for small to large businesses. “It can help guide choices, communicate impact, and assist in attracting investment and inform public policy.” For individuals, it can help make career choices and life decisions by basing these on “sound information on the economic and employability returns from [VET] courses.”
At the end of the day, though, to ‘do’ ROI well you need good, reliable and valid data that is comprehensive and accessible and gets to the heart of what the return on investment for particular stakeholders actually is. The difficulty is that measuring the return is only as good as the range and quality of the data you have.
About the guide
The guide has been prepared for those wanting “to better understand the social and economic value being generated by their training activities, or by the programmes or activities they are funding.”
Its 70 odd pages contains information on mapping the nature of the investment returns, planning the calculation of ROI and then implementing the plan. The guide also has a series of proforma resources and attachments to help its users.
What are the returns, though?
According to the related publication we highlighted, “the key types of ROI for individuals arising from [T]VET are primarily employment and productivity supporting higher wages.” Other ROI information might cover the attainment of employability skills and improved labour force status. However, non-job-related indicators can focus on well-being measures such as self-esteem and confidence, foundation skill gains, along with social inclusion and improved socio-economic status.
For employers key ROI measures cover employee productivity, business profitability, as well as improvements to the quality of products and services and business innovation. Employers may also generate social and environmental benefits, including employee well-being and engagement, safe working conditions and environmental sustainability.
Finally, “the key indicator of ROI in the economy from [T]VET is economic growth. This relates to labour market participation, reduced unemployment rates and a more skilled workforce.” In addition, education and training brings other returns and benefits to society, “including improved health, social cohesion … and improved social equity, particularly for disadvantaged groups” This all serves to strengthen social capital.
