Assessing the ROI of training
by Clive Shepherd
If people really are your greatest asset, isn't it time to look at your training programmes as investments in your organisation's human capital and not just as an expense? In this article, Clive Shepherd argues the case for return on investment (ROI) as a primary tool for forecasting and evaluating the benefits of training and explains the steps involved in conducting an ROI analysis.
• Measuring the success of training • Forecasting and measuring costs • Forecasting and measuring benefits • Calculating return on investment • Making ROI work for you
Measuring the success of training
The evaluation of training, like motherhood and apple pie, is inherently a good thing. But, because short term priorities always crowd out their longer term competitors, it's typically something we plan to do better next year - after all, we've got away with it so far, so another year won't hurt!
And even if training evaluation is undertaken, it is usually at the easiest and lowest level - the measurement of student reactions through happy sheets. Reactions are important and the happy sheets serve a purpose, but will they be enough to back up your arguments when there is a need for a greater investment in training, when major changes need to be made in direction, when there is stiffer competition for resources, when times get tough?
Why evaluate training?
Let's summarise the main arguments for better evaluation of training:
To validate training as a business tool
Training is one of many actions that an organisation can take to improve its performance and profitability. Only if training is properly evaluated can it be compared against these other methods and expect, therefore, to be selected either in preference to or in combination with other methods.
To justify the costs incurred in training
We all know that when money is tight, training budgets are amongst