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Friday, 14 June 2013

How to measure ROI (Return on Investment) of training programs in your organization?


One of the challenging tasks, which very few HR professionals dare to do is to determine ROI of training program. I was one of them for around initial 8 years of my professional experience. I use to conduct training programs, take feedback from participants, update my training calendar and that’s it. I never thought of determining ROI of training programs, which I have conducted in my organization. Later on, I realized that all efforts put in by me and my team is of no use, if we can’t measure ROI (Return on Investment) of training. We should know whether we have achieved our objective or not? If not, then where we were wrong and redo it. If yes, then how much and how it is benefiting organization as well as individual?

Management is also interested to know about returns they got after investing so much money on various training programs conducted across organization. 

Today, I am sharing my experience on how to determine ROI of training programs. As mentioned in my previous post “How to get best out of training programs conducted in your organization?” training programs are conducted to enhance knowledge of participants, developing skills in participants or moving them to a particular behavioral change.  Hence we should keep in mind the type of training program we have conducted to find ways to determine ROI.

You can measure ROI of training in following ways:


  • Enhancement in Learning / Knowledge gain of participants
  • Positive change in behavior of participants
  • Impact on business due to skill development of participants
  • Return on investment of training program


Enhancement in Learning / Knowledge gain of participants


After conducting a training program, which focus on enhancing knowledge of participants, you should evaluate impact in the terms of knowledge increase among participants. You can do it simply, by taking pre and post test of participants and measuring improvement in their knowledge. 

For example, if you have to conduct a training, on Awareness of AIDS-HIV (Download presentation on AIDS-HIV), you can design two question papers- one for pre test and second for post test. Download sample test paper to evaluate effectiveness of training on AIDS-HIV.

You can see the impact of the same by comparison of both pre and post test marks. You can download spreadsheet to determine effectiveness of knowledge based training programs.


Positive change in behavior of participants


In case of training based on behavioral change, you can check participants applying those behaviors, taught during training, in their day to day to operation. Also you can see degree of application of such behavior before or after training program. 

As trainer, you can observe it by yourself, while participants are on shop floor or you can also take help of their supervisors to give their inputs. It is time consuming process and trainer or training co-ordinator spends good amount of time in evaluating each and every person.

For example, if you have conducted a training program on customer relationship for a team of sales person who are suppose to sale mobile phones on mobile counter, then you can prepare a list of behavior taught to them during training program and evaluate them on application of those behaviors when they are live on sale counter.

You can evaluate them on following behaviors. 
  • Greeting customer in nice way
  • Listening customer queries/ requirement/ grievance before replying
  • Keeping calm even if customer is angry on you
  • Addressing customer as SIR And MADAM
  • Getting customer feedback form filled by customer
  • Thanking customer for visiting you



Impact on business due to skill development of participants

Every training program, directly or indirectly, should impact business in some way whether it is to enhance knowledge, change behavior or develop skill, it should lead to increase in company business. You should determine impact of training on business. It has to be tangible. Only tangible impact can be quantified. Also there are non-tangible impacts of training on business.                                                  




Tangible impact of training can be determined by improvement in followings:
  • Increase in sales
  • Reduction in wastage
  • Increase in quality of production / work
  • Increase in production
  • Increase in Customer satisfaction rating
  • Increase Turn around time of an activity
  • Reduction in error while working


Non Tangible impact of training can be determined by improvement in followings:
  • Increase in customer delight
  • Increase in Job satisfaction of our employees
  • Effective communication etc


Return on investment of training program



I would not suggest you to determine ROI of each and every training program. I would suggest that first of all you should find out training programs, for which you want to determine ROI. 

You can choose such training programs keeping following in mind:

  • How much time, energy and money, company has spent on a particular training program?
  • How important this training program is for achieving company objective. 

This way, you will choose training programs where management is keen to know ROI and these programs impacts organization overall growth. I have shared an example of a training program on computer skill during time when banks were going automated in my previous post. These kinds of programs should be evaluated and ROI should be determined.

You can determine ROI by following method:

ROI = ( Net Benefit from training program / Cost of training program ) x 100

Example:

Cost of training program on running a new machine     : Rs 20,000/-

Benefit in production after training program (in a year) : Rs 2,00,000/-

Net Benefit = 2,00,000- 20,000

ROI = ( (2,00,000-20000) /  20,000) x 100 = 900%

You can also visit Training and Development section of our HR Forum www.hrsuccesstalk.com  to find out many other things about training and download useful material.



If you are really serious about learning HR and want to grow then visit our web page LEARN HR THROUGH PRACTICAL IMPLEMENTATION


15 comments:

Saurabh Dave said...

good one sir.it helps lots to understand ROI and how to determine ROI

Govind Negi said...

Thanks Saurabh for appreciation.

abha sharma said...

Simple and valuable inputs Mr. Negi ..
If you can also share your thoughts on "Can behavioral training be measured"? and if not then should a company invest on such training?

Govind Negi said...

Dear Abha,

Behavioral training programs can also be measured.I will surely give a thought to write about it.

preeti said...

Thank you for sharing,.There is a buck load amount of money in this field. If people use their brains and some techniques. Energywise Properties are proving training classes and providing with some free ebooks.

Govind Negi said...

Do agree preeti

Manoja said...

great information for hr peoples ,,,,,,,,,,

Govind Negi said...

Thanks Manoja

Preeti said...

Thank you for the information. I stay in los angeles and deals in short sales.
I didn't knew about roi untill i went for a Training Couse which benefited me greatly.

Govind Negi said...

Welcome Preeti

Anonymous said...

How we can check or evaluate behavioural training in case of production dept. employees.
preeti

Govind Negi said...

Dear Friend,

I would suggest you to post your query on our HR forum. Link is www.hrsuccesstalk.com/forum.

In brief, it is difficult to evaluate impact of behavioral training but possible. You need to know what was the training on and what is the impact on business or any other aspect. If you give training to tele caller on courtesy then you can see impact by having a look at quality report.

albert crook said...

I have been visiting various blogs for Best returns on Investment. I have found your blog to be quite useful. Keep updating your blog with valuable information... Regards

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iDeal HR Service said...

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