Measuring and Communicating Training ROI
Training is a form of education but it is significantly different from traditional education. Why? Training initiatives should have a clear and defined business purpose; which means training should also have an ROI that is measurable.
Depending on the size and scope of the project, it is not always practical to measure the ROI of a training project but it certainly can be done for many projects.
Keep in mind that measuring the business results of training is considered a Level 4 evaluation. And, in order to measure the fourth level, you must measure the previous three. Click here to learn more about measuring Level 3.
Defining Training ROI
While the formula to calculate a return on investment (or ROI) is simple enough, the data used for the calculation can be a little more confusing.
ROI = Return or Benefit / Investment or Cost
Typical costs to consider:
Time of employees and trainers (Loss of productivity including salaries paid during training and lessen operational productivity)
Cost of classroom space
Cost of materials (print materials/computers/iPads)
Design and development costs of training materials
Any fees paid to outside vendors
Typical benefits to consider:
Improved safety record
Improved customer satisfaction
Improved sales and/or productivity
Improved compliance and lessened regulatory risk
As you can see from the list above (especially the benefits list), some of these items can be difficult to monetize to calculate an ROI. While it is difficult, it is not impossible. It is also important to clearly state any assumptions that are made when calculating ROI. For example, we used an average of $x to calculate improved productivity per hour per widget.
If you really want to learn more about calculating ROI for training, you can study either the Kirkpatrick or Philips models of evaluating training. However, I find that as long as you measure all four levels and take a practical approach, you can calculate a decent ROI on your training programs.
Should we expect an ROI for training?
Yes, businesses should absolutely expect to see an ROI for their investment in training and developing their employees. I think one of the biggest disservices training professionals have historically done to themselves is not communicate the ROI of training well enough. As a result, businesses often see the costs of training without understanding its benefits.
Once we start measuring ROI, it is important we start communicating how training investments are improving the company. The better training departments can communicate their value to organizations, the more opportunities those departments can have to impact the organization in the future.
How can we improve our ROI for training?
This certainly depends on the circumstances. In order to improve training ROI, you should review evaluation data from levels 1-3 and consider the impact the training is having on the organization. Here are a couple of items to consider:
Can your company better leverage blended training delivery options. Classroom training is not always required and is the most expensive to implement.
Can you better use facilities and materials?
Is the time spent off of work productive training time? Or, should courses be shortened?
Are you purchasing training services when you could leverage internal resources instead?
Are you using learning technology to gain training efficiency in implementation and recordkeeping?
Are you training on the right topics based on need? How do you know which topics should be included in the training?
Are you training the right employees?
Looking for a training ally? Spark Training Solutions has provided a combination of learning technology, consulting, and content resources to ensure our short line railroads and contractors see an ROI on their training initiatives. Contact us at firstname.lastname@example.org to learn more.