Comprehensive Guide To Measuring Training ROI - The Full Guide

Training in the workplace is one of the most important aspects of recruitment and development. It helps to ensure that employees know how to do their jobs to the best of their ability and also ensures that they have the option to progress into different roles. 

However, the downside of employee training is that it can be expensive. Training programs cost money, and employers are understandably unwilling to spend more money on the business than is necessary so as not to decrease their overall profits. 

This is why measuring training ROI is so important. The ROI, or Return On Investment, of training helps to justify the costs and also has other benefits for the workplace as a whole. 

Here’s what you need to know about calculating training ROI, from why you should do it to the best methods for doing so. 

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Measuring Training ROI: Why Should You Do It? 

Before we go over the most effective methods for measuring the ROI of training in the workplace, it’s important to understand the importance of measuring it in the first place. 

One reason why measuring training ROI is so important is because it justifies the money a company spends on training. Training programs need to be approved by leadership within the company, and in order to get leadership to approve more training, its efficacy needs to be demonstrated. Convincing leadership to prioritize training is one of the most important aspects of measuring training ROI. 

Additionally, if your company uses multiple training methods of programs, you can measure the ROI in order to determine which method or program is the most effective. Your company might not necessarily have the budget for multiple training programs, so if you need to cut the budget for one, it helps to be able to compare returns on investment. 

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The Best Methods to Measure Training ROI 

Now that you know why it’s essential to measure ROI when it comes to training, here are the best ways to do it: 

 

1. Business Impact Study 

One of the easiest methods to measure training ROI is to conduct a business impact study. This type of study basically measures changes, both positive and negative, that happen as a result of incorporating training programs into the business model. 

The first step is called evaluation planning, which just means determining what kind of data you want to study and how you're going to collect it. Then, you need to collect the data, which might involve consulting different sources. For example, you may need to ask a sales consultant how many products were sold and also ask the person holding the training session how many employees attended.

After you’ve done this, it’s time to analyze the data. That could mean calculating the dollar value of sales made and comparing it to the dollar value of the training. Once you have your data, you can create a report consisting of both quantitative and qualitative data. 

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2. Kirkpatrick Model of Training Evaluation

Many businesses use the Kirkpatrick Model of Training Evaluation to measure training ROI. 

The first stage of this model is asking learners how they feel about the training session. This is a type of qualitative data that can be very useful because if employees are not satisfied with the training that’s being provided, this is a good reason to reconsider your training methods. You can also use quantitative data such as rates of participation to measure this. 

The next thing you’ll need to do is see whether the training has actually been effective. You can do this by measuring performance (this could be done through assessments or peer reviews) and also taking note of any behavioral changes. 

From the data you have collected, you can then effectively measure the impact, and therefore the return on investment, that training is having on your business.  

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3. Phillips Model of Training Evaluation 

Alternatively, you could use the Phillips Model of Training Evaluation to measure ROI for training. 

This model actually builds on the previous one and starts similarly with collecting data on employee reactions to training programs. This can be done via a survey. Like the previous model, this one also involves assessing learning and skill application by measuring performance as well as using self-report surveys. 

The Phillips Model of Training Evaluation involves using control groups to see how much measurable impact can be attributed to training compared to other factors. This means you won’t simply attribute any improvements to training without considering other factors. 

The data collected from the previous steps can then be combined to calculate the ROI of training in a business.

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What to Bear in Mind When Measuring Training ROI 

• If you want to successfully and accurately measure training ROI, you need to start with a set of goals and know how you will collect your data. It’s also helpful to have benchmarks in place so you can compare post-training results to pre-training performance. 

• Make sure you’re able to isolate the impact of the training and consider other factors that could contribute to improvements. Using a control group helps with this.

• Try to figure out a way of converting your data into a monetary value since this will be the bottom line for the people making financial decisions regarding the business. If you don’t determine a way to do this, you might find it difficult to communicate your returns on investment in an effective way.

Final Thoughts 

When it comes to training in the workplace, calculating the return on investment is essential. Measuring ROI will help your company to determine if training is working, if it’s worth the money, and what changes need to be made to the current training methods (or whether they can remain the same moving forward). 

Using any of the three methods listed above can help you to measure training ROI, but make sure you have a strategy in place for converting data to monetary value and isolating training impact by taking account other factors that could contribute to post-training performance and behavioral changes. 

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