How to Calculate and Maximise ROI on Training
Training is seen as something hugely valuable to employees and can go a long way in helping to retain them. Research has shown, for example, that training and mentoring are of a high degree of importance to young managers. But what can you do to measure how this perceived value translates into ROI? Here’s some ideas:
You’re step should be to work out what your training is worth.
Define objectives that align with overall business objectives
You should avoid taking a scattergun approach to training. Before allocating your budget, it’s essential to know exactly what you want to achieve and how this training aligns with current and future business goals. Are you looking to retain your staff? Is there a particular task that your employees need to be trained to do? Or do you need to focus and improve productivity and performance in a certain area?
Once you’ve defined your objectives, you’ll be able to get an idea of the monetary value they represent.
Decide the most effective way to train staff
Training shouldn’t be offered on a generalised, routine basis, but rather to those who need it and will use it in a way that benefits the business. Decide which employees need to be trained and how and where this will take place Things to consider include:
- who needs to be trained?
- should training take place in or outside the workplace?
- should you choose online or face-to-face training, or a mixture of both?
- Can you combine elements of in formalised, self-learning?
Look at the direct cost benefit
Understand the actual costs of training, including the costs of:
- training materials
- the trainer
- having people taken out of the workplace
- the training venue.
To get the benefit/cost ratio, divide the value of the training benefits by the cost. To get the ROI as a percentage, subtract the costs from the value of the benefits, then divide by the costs and multiply by 100.
Monitor achievement objectives in the long and short term
To prove the effectiveness of training, you’ll need solid data, so set up ways to measure it:
- assess employees’ performance and question them about their own perception of their performance/skills before the training
- collect feedback immediately afterwards
- look at employees’ performance and ask for their feedback a little while after the initial training course
Have the lessons learnt during the training programme been put into practice? Has there been an increase in customer satisfaction? Has there been a reduced staff turnover rate? And what is this worth in monetary terms?
Look at softer benefits
Not all training outcomes are measurable in terms of immediate ROI. Softer benefits, like boosting staff morale and increasing employee engagement, should also be considered to.
Align learning with business cycles
To improve ROI and demonstrate the worth and impact on performance, training should be in tune with business strategy cycles.
Use training as a reward
Employees value training and development highly, so it’s a great opportunity to offer something with a non-monetary value as a reward for exceptional performance. This in itself can help engage and retain staff.
Give staff control of their own development and training
Encouraging staff to have an input into their training and development will make them feel empowered and will ensure that training is targeted effectively.
This article is written by Guy Cooper, Managing Director of Euromoney Learning Solutions. Euromoney Learning Solutions is a world learning training provider of public courses, e-learning or tailored in-house programmes. They’ll help you to facilitate change in your business, enhance the skills of your employees, or accelerate your own performance and career.