!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd"> Streamline Training & Documentation: Simplified ROI Measurement for Training

Monday, November 09, 2009

Simplified ROI Measurement for Training

The November 2009 issue of Chief Learning Officer has an article by Howard Prager and Susan Vece, Directors of Corporate Education at Lake Forest Graduate School of Business, that offers a practical method for calculating the ROI for a training program.

The process has seven steps, details of which you will find in the article. The steps, in edited form, are:
  1. Identify the one or two key skills or competencies that most directly relate to the business driver you need to impact in order to achieve desired improvement in business performance.

  2. Tie the key skills or competencies to one or two metrics that are reliable indicators of success. For example, a training program intended to help increase sales to current customers might focus on customer satisfaction and sales per account.

  3. Create an ROI survey to get needed data from training participants, their managers, and clients quickly and simply. Prager and Vece emphasize the importance of keeping the survey short in order to encourage response and to shorten the time required to analyze the results.

  4. Conduct the survey.

  5. Calculate the costs of the training program. Measure costs as fully as possible in order to strengthen the validity of your reported results.

  6. Analyze the quantitative and qualitative information on training impacts produced by the survey. Measure impacts net of cost.

  7. Calculate the ROI for the training program by dividing net quantified program impacts by program costs.
Note that the final step involves quantified impacts. It is important to take due account of all impacts, including any that do not particularly lend themselves to quantification.

For example, the training program might encourage more interaction amongst employees in communities of practice. It's hard to put a dollar value on this outcome, but bolstering of such communities is likely to be a significant plus. The key is to identify in some detail how the more robust communities of practice are contributing to business performance, so that when management are briefed on what their training investments are producing, they find the reported qualitative impacts credible.