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.
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.