Measuring the effectiveness of training is a process that requires meticulous planning, execution and analysis. However, many impatient stakeholders wrongly assume that calculating return on investment (ROI) starts with measuring execution post training.
In a rush to get their hands on statistics supporting training’s effectiveness, stakeholders can lose sight of the all-important planning phase pre-training.
Steps to Measuring Training ROI
In the training function, training managers have ownership over the entire process, from beginning to end. They are responsible for ensuring clarifying learning expectations and organizational alignment. This leads to the delivery of meaningful data points to stakeholders. This active involvement can better guarantee a streamlined and effective training process.
Here are five steps to measuring learning ROI prior to training so stakeholders can receive a thorough analysis of training’s effectiveness.
No. 1 Define clear objectives and KPIs.
The first step to measuring ROI of traning is to define what is being measured. Use a needs analysis to systematically identify and evaluate training that should be done and/or the specific business needs. When planning training, pull this data to ensure business alignment. This can help set learning objectives and/or goals for learners.
Setting SMART (Specific, Measurable, Achievable, Relevant and Time-Bound) goals pre-training can help define metrics to track during the entire training process. When a stakeholder provides objectives, the training manager’s responsibility is to scrutinize these objectives, rather than accepting them as they are. This is to ensure that the training objectives align with business goals. While many managers may wish to assess whether their employees have improved at a specific task following training, it’s important to note that “better” is not a quantifiable result. Instead, specific, measurable outcomes should be identified for effective evaluation.
Once training objectives are defined, the next step is to determine the key performance indicators (KPIs) that can provide quantifiable measurements aligned with the objectives. Setting up KPIs can steer training managers toward significant data points. For instance, if a manager aims for their employees to improve at a task, potential KPIs could encompass the time taken to finish a task, the number of errors made or regulatory metrics such as quality control pass rates.
No. 2 Implement data collection.
To paraphrase a common adage: The best time to start collecting data was yesterday, and the second-best time is now. When gathering data, training managers can review training-specific data from pre- and post-assessments or survey data gleaned from a learning management system (LMS), for example.
However, objectives and KPIs are likely to be tied to business-focused areas such as employee performance evaluations, productivity, customer satisfaction, error rates and task-specific metrics. If there were no data collection methods established prior to a training event, the training manager should review historical data gathered by other departments or sources. This can allow them to establish correlations with new data that can be collected, ensuring a comprehensive evaluation process.
It’s crucial to focus on data collection over a prolonged period after the completion of training to monitor long-term effects. Stakeholders may attempt to expedite this process, but collecting certain data too soon post-training may not provide a comprehensive view of the improvements. A training manager should leverage their field expertise and business insight to champion the most suitable data collection point, aligning it with the initial requirement. This approach ensures a more accurate and meaningful evaluation of the training’s impact.
No. 3 Measure training costs and benefits.
The costs associated with a training program are often estimated upfront as part of the process of obtaining executive buy-in. This is the time to update those earlier projections to determine the true cost of training. This includes development costs (instructional design, materials, software and instruction) as well as costs incurred due to the employee’s attendance in training (wage costs and potential losses due to an unproductive employee).
Numerically determining the benefits (improvements or change) after a training outcome can be trickier as they are closely tied to the chosen KPIs. If an employee is doing a given task more quickly, or with less errors, that positive change needs to be quantified in a way that makes sense for the business. As an example, if a line worker is completing an assembly with less errors than before, there might be cost savings tied to less rework to fix the errors. However, if the objective of the training was to reduce to cost savings from customer returns due to errors, that is the metric that should be used instead as it will have the most impact for the business.
No. 4 Calculate ROI.
The simplest way to calculate the ROI of training is to take the training costs and benefits and run them through a formula such as this one:
ROI = Training Benefits – Training Costs
Training Costs
Then you can multiply the result by 100% to display ROI as a percent. This will show the value generated by the training, as derived from the KPIs attributable to training.
No. 5 Communicate findings to stakeholders.
When preparing data for stakeholders, don’t underestimate the value of a well-formatted chart. A visual representation of ROI will prove more impactful than statistics, especially when dealing with C-suite executives who don’t have time to parse complex concepts. Start by presenting the overall ROI of training, then use the data collected to show the changes pre- and post-training. A positive ROI coupled with clear indicators of improvement will open the door to stakeholder confidence in the training function as well as commitment to further investments.
By defining clear objectives and KPIs, implementing data collection mechanisms, and carefully calculating costs and benefits, training managers pave the way for an insightful ROI analysis. Key to all of these activities is taking the appropriate amount of time during the planning stages to ensure organizational alignment.
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