ROI (Return on Investment) in Training

ROI (Return on Investment) in Training

ROI (Return on Investment) in Training– Attempting financial ROI assessment of training is a controversial issue. It’s a difficult task to do in absolute terms due to the many aspects to be taken into account, some of which are very difficult to quantify at all, let alone to define in precise financial terms. Investment – the cost – in training may be easier to identify, but the benefits the return are notoriously tricky to pin down. What value do you place on improved morale? Reduced stress levels? Longer careers? Better qualified staff? Improved time management? All of these can be benefits – returns – on training investment. Attaching a value and relating this to a single cause, i.e., training is often impossible. At best therefore, many training ROI assessments are necessarily ‘best estimates’.

If ROI-type measures are required in areas where reliable financial assessment is not possible, it’s advisable to agree a ‘best possible’ approach, or a ‘notional indicator’ and then ensure this is used consistently from occasion to occasion, year on year, course to course, allowing at least a comparison of like with like to be made, and trends to be spotted, even if financial data is not absolutely accurate.

In the absence of absolutely quantifiable data, find something that will provide a useful if notional indication. For example, after training sales people, the increased number and value of new sales made is an indicator of sorts. After motivational or team-building training, reduced absentee rates would be an expected output. After an extensive management development programme, the increase in internal management promotions would be a measurable return. Find something to measure, rather than say it can’t be done at all, but be pragmatic and limit the time and resource spent according to the accuracy and reliability of the input and output data. Also, refer to the very original Training Needs Analysis that prompted the training itself – what were the business performance factors that the training sought to improve? Use these original drivers to measure and relate to organizational return achieved.

The problems in assessing ROI are more challenging in public and non-profit-making organizations – government departments, charities, voluntary bodies, etc. ROI assessment in these environments can be so difficult as to be insurmountable, so that the organization remains satisfied with general approximations or vague comparisons, or accepts wider forms of justification for the training without invoking detailed costing.

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