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Collecting Information For Calculating ROI In Training

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Collecting information for calculating ROI in training

Collect Information – Gains and Costs

Calculating the Return on Investment (ROI) as far as training is concerned goes through four steps: – Collecting Information-Gains and Costs, “Isolate” results of training, Putting money value on gains and Calculate ROI. Let us see how to collect information.

Collect information on the benefits of training via predesigned forms like questionnaires, assignment sheets, performance contracts, etc. Essentially, you are trying to find out the gains at the bottom line or at the top line, i.e.:

  • The amount of costs saved
  • The amount of time that is more valuable now
  • The amount of wastage that has decreased
  • By how much Sales have improved?
  • By how much profits have increased?
  • What are the productivity gains?

So, this kind of data will be available with the relevant people-whether trainees or supervisors or some kind of experts-through pre-designed formats. Remember, you are only capturing the absolute gains before and after training.

Gains Costs
Hard:

  • Quality
  • Cost
  • Time
Hard:

  • Cost to design and develop programs
  • Cost of materials
  • Costs of instructors
  • Cost of the facilities
  • Cost of travel, lodging and meals
Soft:

  • Increase in Sales
  • Increase in Profits
  • Increase in Quality
  • Increase in Production
  • Improved Retention
  • Improved Work Culture
Soft:

  • Salaries of people involved

And then, the training cost is a pretty simple and straightforward thing. Get the answers to: what’s the cost of designing and developing the program, cost of material, cost of instructors, cost of facility, cost of travel, logistics and cost of meals for participants. Now, one cost which most of us ignore and don’t take into consideration is the opportunity cost of people who are sitting in the training program and not working in the field or the shopfloor. So, while calculating the ROI for training, measure both the hard and soft costs and the tangible and intangible benefits of training.

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  • If you measure the performance gap (between desired performance and observed performance) before the training intervention is designed, developed, and delivered (you do detailed up-front analysis, right?), and if the training intervention is effective in narrowing the performance qap, then the results should be easy to quantify (e.g., time saved, increased production, less errors, or some such criteria) that can be expressed in a dollar amount.

  • Pingback: Calculation of ROI for Training | Custom Training and eLearning Blog()

  • I have worked with providers on a model of bottom line benefits analysis which is a simplified form of return on expectations and can be used with SMEs. The problem with ROI is there can be some many variables and it can be really time intensive to measure and track.
    This is not a quick win scenario but can be valuable in building longer term relationships.
    Put in its simplest form:
    1. Establish the business drivers – what does the employer want to see as their aims in the medium term
    2. What are any impediments to achievement e.g. are there production line issues, low sales target hits, wastage, accident rates whatever is appropriate to the nature of the business or alternatively what would be needed for growth be achieved?
    3.Get the customer to give a ballpark figure for that loss or growth desired
    4. Could a training input improve worker performance and achievement of those aims?
    5. Design and deliver the package with positive learning outcomes that relate to these issues
    6. Track back after a relevant period of time – was there an improvement in waste control, was there a better rate of sales?
    6. You would hope that the gain sufficiently outweighs the cost of training and the client will see this in terms they can understand. Added to this the soft benefits of improved employee satisfaction, commitment to role and you have a return on investment for the employer customer.

    Can work with an internal client too.