How to calculate ROI on Training

Investment in training has always been a difficult measure to quantify – particularly from the training providers perspective who usually only have the details from the ‘happy sheet’ to go by. Does a delegate giving 10/10 for the tuna and mayo sandwich really give you powerful MI data to send to clients? For forward thinking providers finding a way to calculate roi on training is an asset that can keep you ahead of the competition.

Capturing business justification during the order process can be just as useful for the provider as it is for the client, it can also be used to benchmark personal objectives and allow time for the trainer to prep on certain areas of the course rather than delivering something generic that covers topics individuals already know.

I’m sure many of us are aware of Kirkpatrick’s method of analysing pre and post evaluation feedback, this data has normally been geared towards departments and corporate companies rather than the side of the training provider. However, by using the evaluation data post course, and knowledge assessment pre-course, training providers can now offer ROI reports to their customers.

Background case study…

3 years ago I was lucky enough to be part of a project whereby a global Managed Service Customer was asked to come up a ways to calculate ROI on training, based on post course evaluation data for their client with an employee base of 15,000 staff. This presented a few challenges…

  • Engagement on their generic evaluation was low.
  • People didn’t have faith that the evaluation data was of any real use.
  • The generic evaluation template was long and monotonous to fill in, done on paper at the end of the course.
  • There was little or no matrix to calculate anything other than exceptional or terrible feedback ratings.
  • No financial information could be calculated based on the response.

ES worked with the training provider to develop a performance element to the system that would meet these challenges and provide ROI data to their managed service customer (as well as bringing it online saving time and admin costs!.

Instead of reinventing the wheel we turned to Kirkpatrick’s methodology to create an automated evaluation system that used multiple templates, allowing multiple course specific questions and allowing the client to set the reminder and frequency to ensure individuals were filling them out.

The number of evaluations needed to be configurable, as standard we provided 6 templates, in reality the following are normally widely used…

  • In order business justification
  • Pre course assessment (in order to gauge their existing knowledge of the subject)
  • Last day (containing the same questions as the pre course assessment)
  • 3 Month (How the person has taken their new found knowledge and applied this to their job role)
  • 9 Month (Has the individual witnessed skills fade and is there a requirement to offer refresher training?)

Results from project…

Using data from all 5 or a combination of pre and post course allows the provider to run an Improvement analysis report, this then benchmarks the improvement levels by person, question or sub question sub group…

(Image below shows pre, post and 6 month follow-up – Detailing skills fade)

By analysing the improvement data on a regular basis the training provider found the following benefits…

  • Immediately identify individuals with a higher understanding of the course being offered.
  • Increase in evaluation fill rates – this is partly to the end user seeing the benefits.
  • More tailored course content.
  • Greater opportunity to offer follow up skill nugget enhancements.
  • Increased sales through targeted refresher training.

Using data in an intelligent way is key to all performance monitoring, (society doesn’t need any more pointless data) not only should the information benefit the customer but if re-fresher training is identified by the provider, this can give another sales route to the customer.

The Formula…

By quantifying the % by person against the investment by customer and the resulting increase in sales activity (data that the client should hold) it is then possible to establish the ROI based solely on the training workshop.

The method doesn’t have to be applied solely for sales training, this can be used in a manner of technical and soft skills training – working with the client to use appraisal data to replace conversion measures, tracking empowerment and motivation levels instead of profits.

The key is to ensure users have an easy way of recording data, on the move, using any device – quickly.

So next time you get a comment about the tuna mayo sandwiches, perhaps think about how you can change the questions and provide more powerful data to your customer, the end user and profits…

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The goal of Enterprise Study is to make it easy for buyers and sellers of training to transact in harmony, in a cost effective way. We continually innovate, whilst already delivering a powerful suite of learning, compliance and talent management tools to support organisations of all sizes.