More than 40 years ago, Donald and James Kirkpatrick wrote Evaluating Training Programs, a book that is now regarded as a classic.
“Ensure Your Training Is Effective,” an excellent article that recently appeared in Training Today, does a very good job of explaining Kirkpatrick’s system of measuring the results of training. In today’s post, we would like to explore just one of the Kirkpatricks’ techniques that the article covers . . .
A simple formula for measuring training ROI
Here’s the ROI formula:
ROI = Monetary Benefits – Training Costs
After training, your monetary benefits could include:
- Generation of new leads
- Increased bottom-line income
- Increased average ticket sales
- Increased repeat business
- Increased production or productivity
- Labor and time savings
- Lower turnover costs
- Productivity increases
Your training costs could include:
- Administrative costs for running your training program
- Design and development costs
- Employee wages spent to develop or deliver training
- The cost of evaluating training results
- The cost of facilities used to deliver training
- The cost of time that trainees spend away from their jobs
- Travel and other costs
A Sample Analysis
Let’s assume that after a company invested $200,000 in training, assembly line employees achieved an increase in the number of the products they made which added $800,000 to the company’s annual revenue.
If we plug those numbers into the formula . . .
$800,000 monetary benefits – $200,000 in training costs = a ROI of $600,000.
To look at those numbers another way, the formula shows that for every dollar spent on training, the company got a net benefit of $3.00.
Bear in mind too, that training can offer ROI in ways that are not reflected in that analysis. Thanks to good training, companies often enjoy reduced employee turnover, increased customer loyalty and other benefits that can accrue over time.
Training that is well designed and smartly delivered offers results in more ways than many companies realize. To discuss your training needs and goals, we invite you to speak with a Tortal Training consultant today.