Assessing the ROI of training
and measuring benefits
THE FINANCIAL BENEFITS of training can not be measured in terms of student reactions, nor the amount of learning that has been achieved; not even the extent to which behaviour may have changed. The real benefits come from improved performance traditionally the hardest training outcome to forecast or measure.
So, what do we do when faced with this difficulty back away and focus our evaluation efforts on easier measures? No, we do the very best we can, because all other measures fail to reflect the financial reality that training must pay off in hard cash.
If it is any comfort, trainers are not alone in finding it difficult to calculate the benefits of what they do. Is it any easier to predict the benefits to be obtained from launching a new product, running an advertising campaign, initiating a research programme or changing the pay and benefits policy?
Let's look at the major categories of benefits. Note that these categories are not necessarily mutually exclusive - in some respects they provide alternative ways of looking at the same underlying benefit. Because of this, you should be extremely careful not to include the same basic benefit under more than one of these headings.
Labour savings will only be realised if the labour applied to a job can really be reduced, whether this comes as a result of redundancies, transfers of staff to new positions or re-allocations of work. If the time savings simply result in more slack, then there is no saving.
Examples of labour savings include:
Examples of productivity increases include:
Other cost savings
Other income generation
Make sure that you offset from the income any variable costs that are incurred as a result it is the net contribution that you are looking for.
Examples of other income include:
© Fastrak Consulting Ltd, 1999. All rights reserved. Last revised 4/2/99.