How to Measure Return on Investment (ROI) in Training
The ROI guru Jack Phillips defined return on Investment (ROI) as “a measure of the financial benefits obtained by an organisation over a specified period in return for a given investment in a training programme.” There comes a time where management needs to review and reflect on its training and development activities against its mission and vision. This process allows for critical questions to be asked, such as how relevant is the HRD function, how effective and most of all is the money invested adding any value?
Throughout my training career, I have observed how training professional focus on measures of attendance, completion, and delegates satisfaction to determine the success of training initiatives. The biggest challenge with this approach is that over the years it has failed to help business understand the impact of training on the organisation. Measuring the return on investment of training programmes is not only a necessary exercise but also an effective way to show the powers that be, that there’s financial value in training investing in training. So how do you determine if your investment in training is worthwhile?
Here are some useful step on how to calculate your return on a training investment (or the ROI in training):
STEP 1: UNDERSTAND THE BUSINESS NEED
You need to ask yourself what are the challenges the business is facing, this could range from customer services issue, performance management, conflict situations in the workplace. This is a critical step as defines the way forward.
STEP 2: IS TRAINING IS THE RIGHT SOLUTION
When most organisation experience challenges, the assumption is always that training can fix those challenges; training isn’t always the solution to problems. Do determine if training is a need; ask yourself the two questions, do employees know how to perform the job? Do they know the product? The answer to this will determine if training is indeed a need.
STEP 3: DEFINE THE OUTCOMES FOR THE TRAINING
STEP 4: DESIGN THE TRAINING PROGRAM
STEP 5: DEFINE YOUR METRICS
STEP 6: CONDUCT THE TRAINING & MEASURE YOUR RETURN ON INVESTMENT