Assessing the ROI of training
return on investment
RETURN ON INVESTMENT tells you the percentage return you have made over a specified period as a result of investing in a training programme. On the assumption that benefits will continue to accrue some time after the training, then the period that you specify is critical to the ROI figure you will obtain. You may like to specify a period that fits in well with your organisations planning cycle perhaps a year or two years. On the other hand, you may wish to calculate the period to correspond to the lifetime of the benefit, in which case you will need to know how long the average student stays in a position in which they can continue to apply the knowledge and skills being taught.
It is relatively simple to calculate return on investment:
Payback period is a powerful measure. If the figure is relatively low perhaps only a few months then management will be that much more encouraged to make the training investment. As a measure, it also has the advantage of not requiring an arbitrary benefit period to be specified.
Here's an example of the final results for a ROI analysis:
Simplifying the process
To make this a little easier, I have developed, in conjunction with the Institute of IT Training, a 'Training ROI Calculator'. This provides, in spreadsheet form, a template that applies well to any training process, regardless of content or method. The primary purpose of this calculator is to support the Institute's one-day course on 'assessing the ROI of training' and the corresponding e-learning course 'the ROI of training', although educational establishments can obtain a free copy separately. If you are interested in the calculator or the courses, contact the Institute on +44 (0)24 7641 8128 or email@example.com.
© Fastrak Consulting Ltd, 1999. All rights reserved. Last revised 6/8/01.