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How to Measure the ROI of a Training Program

How to Measure the ROI of a Training Program

Leaders expect training programs to yield substantial ROI for their companies. Company training ROI is a measurement that indicates the benefits of a program versus its costs. A company training program often requires a significant monetary investment and time commitment, so it's important to be able to measure its impact.

While some companies implement training programs without calculating their return, this may hinder growth and undermine the program goals. That's why it's crucial to examine the results of company training programs and fully understand their ROI.

Why Measuring Company Training ROI Is Important

ROI calculations serve an important purpose; to determine whether trainees are learning enough to add value to the organization. Training ROI justifies the expenses associated with training, and it helps companies determine which aspects of a program may or may not have been effective. After all, the whole point of training is to grow the organization and its employees.

Measuring training ROI specifically, serves three purposes. First, it helps leaders justify company spending. Second, it enables leadership to form strategy and make decisions based on data. Finally, measuring ROI allows trainers to improve programs that produce a greater impact. This formula informs the creation of future training programs for employees.

How to Calculate ROI

When Leaders calculate training ROI, they may use the traditional formula which requires one to subtract the training costs from the program benefits (net profit) and then divide by the program costs. Afterward, multiply this amount by 100. The result is the monetary return for every dollar spent on a program.

There are several other ways to calculate the ROI of a training program. For instance, leaders can determine the payback period, or the total amount of investment recovered over time. Calculating this works well with long-term metrics such as improving retention or reducing costs. Alternatively, leaders could create a study to measure change brought about by the training, which can include sales, market share, customer feedback, or staff retention.

There is no best way to evaluate the ROI of a training program, so leaders can pick the method that works best for their businesses. Just keep in mind that the training program results may only become obvious over a longer period of time.

Determining Training Program Success

As mentioned above, there are several specific ways to calculate company training program ROI. Still, when it comes to measurement, company leaders must also look at the big picture. Here are a few ways to ensure the success of a training program as a whole:

1. Set reasonable training outcomes.

Before a program begins, leaders should set goals that are specific, measurable, and attainable. For example, a program could aim to improve employees' confidence levels in a job function or reduce workers' compensation claims. These goals, known as targeted SMART goals, should also be realistic and align with business strategy.

2. Understand the before and after.

Next, assess company and employee operations before the program begins. How are employees performing and what are current company processes? Leaders should determine the program goals and desired outcomes to compare results once the program concludes. This will help them identify areas for improvement while continuing to align training programs with their company's long-term strategy and goals.

3. Track training program money, time, and results.

Because ROI calculation hinges on cost versus benefit, it's important to collect data on how much time people spend on training as well as their engagement levels. It's also critical to consider the costs of the program in terms of initial investment and employee time in order to track overall results, including productivity and safety. Of course, leaders will also want to gauge how much money they saved by implementing the program.

When training programs are implemented without a specific goal in mind, it's nearly impossible to determine ROI. However, when companies begin training programs with an understanding of where they are versus where they want to be, they can better measure ROI and additionally identify which areas of a training program worked so that the company can continue to meet its future goals.

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