The previous article listed five levels which Jack Phillips (author of over 20 books on ROI) considers important when evaluating a training course. A chain of impact needs to occur as skills and knowledge are learned (Level 2) and applied on the job (Level 3) to produce business impact (Level 4). The fifth level is the ROI itself. Let’s see how we arrive at the ROI. Then try it in practice: it can help you to justify further training expenditures.
Second collection of data: After the training
After a training programme has finished, the data collection continues. It can involve follow-up surveys and questionnaires, additional on-the-job observations, post-programme interviews or focus groups … it all depends on the situation.
Isolating effects of training
Control groups, which we mentioned in the previous article, are probably the best way you can attribute results to training. You might also analyse trends of pre- and post-training factors, be they employee turnover, grievances, sales, customer satisfaction or many others. The differences can usually be attributed to the training.
Determine costs and gains and calculate the ROI
Now you need to convert all the data into monetary value. Performance output, improvements in quality and all other factors have their value.
You also need to determine the overall cost of the training. Include the cost of designing and developing the training, materials provided, the cost of the instructor (including time for preparation), training facilities, travel, lodging, meals … plus the salaries of all the participants who attended the training.
Now you have your final number that represents the benefits of the training. You have the programme costs as well. Now divide the benefits by the costs and you have your cost/benefit ratio. To determine the ROI, multiply that number by 100.
-jk-