Good businesses would never open a new office, buy a new asset, or take on a new staff member without knowing what return on investment (ROI) they can expect. With training, businesses need to ensure the money they spend in this area is also going to give them an acceptable return. Some experts report that training produces returns of around 30% while others put the figure as high as 600%. Whatever your expectation, it is all speculation until you get it measured. What’s an acceptable return for you?
Measuring training ROI begins with knowing the objectives and goals of your training programme. While not all training has a clear and direct link to bottom-line results, all training should have an outcome so you can quantify the results. For example you may provide safety training with the goal of reducing accident rates or reduce costs associated with this. Customer Service training might be aimed at boosting customer satisfaction, improving customer loyalty and/or generating lifetime customer value. Sales training may have a number of different objectives such as increasing sales volume, increasing margins, reducing the cost of sales, reducing the impact of competitor activities, changing your mix of business or any number of other things.
To calculate training ROI, you must know the total benefit gained from each programme. And the best way to do this is to compare measures within a group of employees, both before and after training. Measures could include average sale value per customer, time spent with each customer, wastage, product returns or employee retention. Then you must tally up your costs – including training fees, materials and trainee’s time away from work.
In the long term, you will be able to quantify the success of your training programme by comparing the investment in training with total cost benefits over a period of time.
A Simple Formula
A simple formula to calculate the net gain derived from your training budget (as a %):.
Net Gain (Total Benefits – Total Costs) x 100
Total Cost of Training
Ten Tips to Boost Training ROI
1. Clearly and carefully identify the outcomes and results you want to target for improvement.
2. Produce updated KPIs (where needed) to hold people accountable after training.
3. Ensure outcomes/KPIs are aligned with the business unit’s strategic goals and objectives.
4. Involve a training professional early in the process so they fully understand your needs.
5. Have your training professional develop the material and then run a pilot to fine tune training
6. Ensure managers and supervisors attend sessions to demonstrate the importance of training.
7. Elect internal advocates to ‘sell’ the training and support change.
8. Ensure managers lead change by modifying their own behaviours in line with training.
9. Finish training with commitments to action – set measurable targets and time frames.
10. Give new skills time to master and develop, provide necessary support for change to happen