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

You can also download spreadsheet to evaluate application of particular behaviors after training on customer relationship.

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

How to get best out of training programs conducted in your organization?

Training is an integral part of employee skill development plan. Now days, companies are serious about training programs happening and kind of returns organization is getting. As HR, it is our responsibility to plan, execute, document and evaluate training happening in our establishment.  We can do it casually or align it with business so that company gets benefited out of it. Choice is yours. Aligning training with business need is always tougher than doing it for sake of doing it. 

If you wanted to choose tougher way then this post will help you to get ready for it. I am sharing some points which you should look into before planning your training activities.

Always keep organization, department and individual training need in mind

Normally, training programs conducted in organization are meant for meeting followings:

• Organizational training needs
• Departmental training needs
• Individual training needs
• Training needs arising due to changes in external factors

Hence, we need to classify every training program in above categories to see number of training programs conducted in each segment and ensure that it is in line with company objective. Example, Few years back, when banks started moving to computerized system to save cost, making banking system faster and robust and in line with government vision of e commerce. Bank identified that one of the biggest challenge is computer ill-literacy of its employees , hence it became organizational training need of company to train all its employees on computer skills. In that year, HR has given higher weight-age to organizational training need and ensured that employees are trained on basis software like MS Office, MS Outlook, net surfing etc. After that, employees are trained on banking software which they are expected to use in day to day operations.

We also need to ensure that individual training needs are in sync with departmental training need and departmental training needs are in sync with organizational training needs.

Spend good time in identifying TNI-Training Need Identification

TNI (Training Need Identification) is one of the process which is not given due importance by most of us. We get some paper filled by employees and managers and god knows what we do with it. I have come across many cases where HR is asking employees and managers to fill Training Needs for the upcoming year in their appraisal form and 90% of them do not bother to forward the same to training department so that some actions can be taken on it. 

We need to pay extra attention to this process. It is very important tool to identify individual level training needs. We can use competency mapping to find out skill gap in employees and type of training which can be conducted to fulfill that gap, so that employee can be prepared better to deliver his/her KRA, which benefits both individual and organization at large.

This is a time consuming process and that’s the reason most of us do not want to pay attention to it or even if someone who dare to start get busy with other operational issues and forget about it. End of the day, TNI is neglected. No doubt, you need to spend your bandwidth to get it completed.

Always look for right method of training which gives maximum return in low cost

Training can be imparted in various ways. Some of them are:

• Classroom training
• Online Training
• Video Training/ Webinar 
• On Job Training etc.

We need to choose which method is most suitable to execute a particular kind of training program by which we achieve our objective in minimum cost. 

Training programs are designed either to deliver knowledge to participants or develop skills in them. I have experienced that, if it is about delivering knowledge to employees like making them aware about company policies, training on energy saving methods, Awareness on AIDS and HIV etc, where our objective is to make them know about something, then online training or video training (pre recorded) are economical yet effective. We need not to call employees in a conference room and deliver the same presentation. This way, we will incur more cost and may or may not get the same result as doing it online.

But, when you are planning for a training program, where objective is to develop a particular skill in participants then classroom or On the Job Training method are more effective. You can also try combination of Online and Classroom training in such training.

Always push for maximum participation of employees

Well, this is one the biggest pain area of HR professional –Low turn up of participants in training program due to various reasons like busy in meeting / work or un-willingness to participate in training programs. Hence we need to ensure that we exercise all ways to ensure that turn up is maximum, so that more employees can be trained at one time. 

One of the major factor of employee unwillingness to participate in training programs is NO understanding of how this training will benefit me or in other word what are the take away of this training program? Hence HR needs to ensure that they communicate effectively about learning which an employee can get from the training program and how this will help him as a professional? 

I would like to share one of the example, where I have seen drastic change in participants turn up after communicating them about usefulness of a particular training program. We have organized a training program on EXCEL which has 3 levels i.e. Beginner, Advance and Expert level. We communicated employees, asking nomination for the training program. We hardly got 4-5 nominations. I was surprised to see so low nomination as I was aware that this is very useful training and employees need it for their day to day tracking of activities. When I sat with my training coordinator to understand the reason, I found that we have not effectively communicated about usefulness of Excel training. We re-designed our training EDM (Electronic Direct Mailer) focusing on learning which employee will get after getting trained on each level followed by person meetings with managers. We have seen overwhelming nomination from employees for same training program.

Don’t forget to calculate ROI of training

Very difficult but most important thing-ROI (Return on Investment)- we need to determine for each training program. Management is always interested to know what is the return on various training programs which we have conducted in a quarter or a year? It can be in form of skill development, behavioral change or knowledge gain, which directly or in directly impact company revenue.

You need to use different methods to evaluate ROI of a training program. For a knowledge based training program, you can have pre and post test papers. In this, you can take test of participants on a training topic before or after training. Difference in marks scored will let you know improvement in knowledge of participants for that topic. 

In case you are conducting a skill based training program then trainer should rate employees on the skill developed after the training. Example, if you have conducted a training program on MS-Excel, then you can give some exercise to employees and give marks according to their performance in given exercise.

Check out my post How to measure ROI (Return on Investment) of training programs in your organization? for more details.

Ensure 100% documentation of each and every training program.

Documentation is very important and it gives a base for analyzing various training programs conducted in organization at any point of time. In absence of data, you will not be able to know what kind of training programs are conducted in past and what did organization achieved out of it? You may create same training programs once again which are already conducted in past. It will be waste of time.

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