Calculating the ROI of your Training Programmes

The leadership team in all businesses need to know the return on investment any given department offers and in learning, development and training it can be difficult to gauge. Employee training programmes are essential for a wide range of reasons, but how you can prove their value?

Organisations can’t afford not to train their team but where is the proof of what each training programme achieves? Organisations vary in the value they put on training. A study by Accenture found their training programmes delivered 353% ROI which sounds more than worth the investment but how do we get to these kinds of figures?

The formula for calculating training ROI is commonly known:

ROI = (Net benefits of training / cost of training) x 100

However, when it comes to pinning down the numbers, it isn’t always quite that straight forward. The following five steps should help you on your way.

1.     Collect Post Training Data

Through knowledge questionnaire, employee feedback, performance metrics and assessments of skills on the job, you can collect data which reflects the effectively of the training. This data helps to quantify the effects of your training and whether it’s being put into action.

2.     Pinpoint the Impact of Training

This step is crucial to determining the output which is directly related to the training programme. You will need to compare pre-training and post-training performance data or compare the trained employees with those who have yet to go through the training programme. This helps to provide more accuracy for your final calculations.

3.     Turn Data into Money

Converting your data into a monetary figure can be difficult. You need to convert your output data into profit contribution or cost savings. This requires looking into historical costs, payroll and benefits and assessments of improvement from the senior team. This helps to ascertain the training programme’s financial benefit to the business. It is difficult as your data doesn’t naturally translate into a monetary figure, but it is essential in proving the ROI of the programme.

4.     Work Out Programme Costs

All of the related costs of your programme need to be added up, giving you an end figure for your calculation. This calculation needs to include the design and development costs, programme materials provisions, fees relating to the programme, instructor wages, costs of facilities including electronics and any travel, accommodation, or meals provision.

5.     Calculate your ROI

At this point you have the two figures you need to finish your ROI calculation. Your % ROI equals the net benefits of your data turned into a monetary figure divided by your programme costs and then multiplied by 100.

With the right planning and organisation, you should have a figure you are happy to present to the leadership team and prove that your training programmes deliver more than satisfactory ROI and are worth the investment.