Havre Job Service Employers' Committee                                        Employer Resource Guide                            

Return on Investment

Assessment and Computing Training ROI:

The more money a company spends on employee training, the greater the concern that these highly skilled people will leave and take their knowledge somewhere else. This results in a loss of knowledge and a poor return on the organization’s investment in training. However, research has shown that training actually reduces turnover and absenteeism. Employees will stay where they can grow and develop. 


Assessment of training may be conducted at 5 different levels: 

(1) Evaluating the reaction of participants, 
(2) Measuring the learning that occurred, 
(3) Assessing the on the job behavior, 
(4) Identifying business results of training, and 
(5) Calculating the return on investment (ROI).

Sample “Hard” Data for Determining the Effects of Training:  

ü      Productivity measures (quantity or market value) 

ü      Quality measures (number of rejects or cost of rejects) 

ü      Materials costs (amount per unit of production or amount of waste or scrap) 

ü      Labor hours per unit of production 

ü      Labor costs per unit of production 

ü      Hours of “down time” due to equipment failure, etc 

ü      Absenteeism and tardiness rates 

ü      Turnover rate 

ü      Workers compensation claims - nature and number of injuries or illnesses, days of lost work or “light duty” work 

ü      Number of grievances/legal claims/lawsuits 

ü      Time required to fill vacant positions 

ü      Time required to fill an order; respond to a telephone call; resolve a complaint, etc. 

ü      Number of sales or dollar value of sales per customer 

ü      Percent of market share 

ü      Customer satisfaction rating or index 

ü      Number of repeat customers 

ü      Number of accounts or dollar value of accounts more than 30, 60, 90 days past due 

 Sample “Soft Data” Effects or Benefits of Training: 

ü      Improved job satisfaction 

ü      Improved teamwork 

ü      Increased organizational commitment 

ü      Improved succession planning 

ü      Increased communication regarding career paths 

ü      More clearly defined promotion opportunities

SUGGESTIONS FOR IMPROVING THE RETURN ON INVESTMENT (ROI) OF TRAINING 

HR managers can improve the actual ROI of training by utilizing the following tips: 

ü      Understand that business needs will change over the duration of the project. The longer it takes to do a project, the more likely that change will occur. Be prepared to switch gears or re-tool. Stay alert for indications of learning gaps or obsolescence of course materials created by changes in technology, economic factors, or employee demographics. 

ü      Use the experience of senior managers and employees in estimating the results of training. Estimating requires a little math and lots of experience. 

ü      Anticipate and plan for glitches. They will happen. Do not get discouraged. Deal realistically with unexpected events and surprises. Some of them will be problems that may reduce expected outcomes. Others may stimulate creativity and produce very positive results. 

ü      Keep an eye on costs and monitor any deviations from estimated or budgeted expenditures. Quick action or adjustments may enable the HR manager to curtail or reduce costs and keep the project within or near budget. 

ü      Balance short term and long-term goals. The pressure to deliver consistent short-term financial performance may limit the resources available for investment in growth opportunities, such as the “development” of employees for future roles. 

ü      Secure managers’ and supervisors’ support for training. Effective training depends on three persons: the trainer, the trainee and the supervisor or manager. All three must agree on expected outcomes and how and when they will be measured. 

ü      Align training initiatives with strategic business plans. Training should improve your organization’s competitive edge, which may be efficiency, first class service, or creativity and innovation. 

ü      Track training costs by employee for ‘career pathing’ and succession planning 

 Levels of Evaluation for Determining Return On Investment

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