Training should be seen as a profit centre: Calculating training ROI (1/2)

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Most executives intuitively know that training has its value but few MBA programmes show them how this value might be calculated. Training can improve productivity, customer satisfaction and sales; however, calculating the return on each training investment is tricky. An article on the management-issues.com attempted to provide an overview of the process.

An in-depth analysis helps a company to improve the design of any training. It can also tell you which training methods provide the best impact for your employees. If you know the ROI of training, you will be able to justify the costs involved. It can be then accepted as a legitimate business tool.

Gather preliminary data

Preliminary data must be collected in order for you to see what impact the training had. To this end you can use surveys, questionnaires, interviews, focus groups, observations and tests.

Form a control group

If performance is to be assessed, you will need a control group. Control groups are employees who do not attend the training. Their performance is a subsequent baseline for the group of employees who did participate in the training. Any difference in performance between the two groups can be reasonably attributed to the training itself.

5 levels of evaluation

The following method of measurement was proposed by Jack Phillips - a U.S. ROI expert, director of the ROI Institute company, and author of many books focused on HR and training metrics.

1. Reaction/Satisfaction: How did participants react to the training and how do they plan to use it?

2. Learning: What knowledge, skills or attitudes have changed and to what extent?

3. Application: Is there a change in behaviour? Do participants apply on the job what they learned?

4. Business impact: Did the on-the-job application produce measurable results?

5. ROI: How does the monetary value of the results compare with training costs?

-jk-

Article source Management Issues - British website cntaining practical information, tips and advice to managers
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