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  • Dear Yodhia,
    Very useful information. Please can you send me by mail to
    alexiscs8@msn.com
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  • Very good presentation. Could you please send me the slide on vicky.wei@gmail.com Thanks very much!
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  • Very interesting. Could you please email me copy of this presentation at zuzana.indruchova@gmail.com ? Thank you
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  • Hello Yodhia,

    love the presentation, especially the trend analysis chart, Would you mind sending me a copy? srth@live.com.au

    Thank you very much.

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Measuring ROI of Training  Measuring ROI of Training Presentation Transcript

  • Measuring ROI of Training
  • Agenda
    • Measuring the Effectiveness of Training Program
    • Measuring ‘Return on Investment’ of Training
    • Enhancing the Effectiveness and ROI of Training
  • www.exploreHR.org You can download this presentation at: Please visit www.exploreHR.org for more presentations on leadership, personal development, and HR management.
  • Measuring the Effectiveness of Training Program
  • Training Need Analysis Training Objectives Training Delivery Training Evaluation Training Process What are the training needs for this person and/or job? Objective should be measurable and observable Techniques include on-the-job-training, action learning, etc. Measure reaction, learning, behavior, and results
  • The Four Levels of Evaluation Level 1 - Reaction Level 2 - Learning Level 3 – Behavior Application Level 4 – Business Impact Four Levels of Training Effectiveness
  • Test the trainees to determine if they learned the principles, skills, and facts they were to learn. Evaluate trainees’ reactions to the program. Did they like the program? Did they think it worthwhile? Level 1 - Reaction Level 2 - Learning The Four Levels of Evaluation If you find this presentation useful, please consider telling others about our site (www.exploreHR.org)
  • What final results were achieved in terms of the training objectives previously set? Did the number of customer complaints about employee drop? Did the reject rate improve? Was turnover reduced, and so forth. Ask whether the trainees’ behavior on the job changed because of the training program. For example, are employees in the store’s complaint department more courteous toward disgruntled customers than previously? Level 3 – Behavior Application Level 4 – Business Impact The Four Levels of Evaluation
    • Level
    • I. Reaction
    • II. Learning
    • III. Behavior
    • IV. Results
    Value of Information Frequency of Use Difficulty of Assessment The Four Levels of Evaluation Least valuable Most valuable Frequent Infrequent Easy Difficult
  • Level 1 - Reaction Evaluate trainees’ reactions to the program: Did they like the program? Did they like the facilitators? Did they like the training accommodation and facilities? Level 1 - Reaction
  • Guidelines for Evaluating Reaction
    • Determine what you want to find out
    • Design a form that will quantify reactions
    • Encourage written comments and suggestions
    • Get 100 percent immediate response
    • Get honest response
    • Develop acceptable standards
    • Measure reactions against standards, and take appropriate action
    • Communicate reaction as appropriate
  • Sample of Reaction Form
  • Level 2 - Learning
    • Measuring learning means determining one or more of the following :
    • What knowledge was learned?
    • What skills were developed or improved?
    • What attitudes were changed?
    Level 2 - Learning
  • Guidelines for Evaluating Learning
    • Use a control group if practical
    • Evaluate knowledge, skills and/or attitudes both before and after the program
    • Use a paper-and-pencil test to measure knowledge
    • Use a performance test to measure skills
    • Get 100 percent immediate response
    • Use the results of evaluation to take appropriate action
  • Guidelines for Evaluating Learning Pretest and Posttest Scores on Change Management Training Example :
  • Level 3 – Behavior Application
    • The frequency of application of new skills/knowledge/ attitudes (on the job)
    • The effectiveness of the skills/knowledge/ attitudes (as applied on the job)
    Level 3 – Behavior Application
  • Guidelines for Evaluating Learning
    • Use a control group if practical
    • Allow time for behavior change and application to take place
    • Evaluate both before and after the program if practical
    • Survey and/or interview one or more of the following : trainees, their immediate supervisor, their subordinates, and others who often observe their behavior
    • Get 100 percent response or a sampling
    • Repeat the evaluation at appropriate times
    • Consider cost versus benefits
  • Example of Survey to Measure Behavior Application Instruction: The objective of this questionnaire is to determine the extent to which those who attended the recent program on Leadership have applied the principles and techniques that they learned there to the job. Circle the answer that you consider appropriate for each question. 5 = Much more 4 = More 3 = Same 2 = Less 1 = Much less
  • Level 4 – Business Results
    • Indicate the extent to which you think this program has influenced each of these measures in your work unit, department, or business unit:
      • Productivity
      • Quality
      • Customer Response Time
      • Cost Control
      • Employee Satisfaction
      • Customer Satisfaction
      • Other
    Level 4 – Business Results
  • Guidelines for Evaluating Learning
    • Use a control group if practical
    • Allow time for results to be achieved
    • Measure both before and after the program if practical
    • Repeat the evaluation at appropriate times
    • Consider cost versus benefits
    • Be satisfied with evidence if proof is not possible
  • Performance Indicators
    • HARD DATA INDICATORS
    • Downtime duration
    • Number of defect products
    • Sales volume
    • Production unit
    • Customer satisfaction index
    • Response time to orders
    • Number of accidents at work
    • Others
  • Performance Indicators
    • SOFT DATA INDICATORS (intangible impacts)
    • Job satisfaction
    • Conducive working relationship
    • Effective communication
    • Stress rate
    • Quality in decision-making
  • Example : Measuring Training Results Program : TQM Training Results after 3 months of training, number of defects dropped to 80 units/day 120 units 80 units Before training After training
  • Example : Measuring Training Results Program : Sales Training Results after 3 months training , number of sales per salesman increase to 30 units/month. 20 units 30 units Before training After training
  • Measuring Return on Investment of Training
  • Level 5 : Return on Investment of Training Level 1 - Reaction Level 2 - Learning Level 3 – Behavior Application Level 4 – Business Impact Level 5 – Return on Investment of Training
  • Criteria for Selecting Programs for Levels 4 and 5 Evaluation
      • Importance of the program in meeting the organization’s goals
      • Cost of the program
      • Visibility of the program
      • Size of the target audience
      • Extent of management interest
  • Benefits of ROI of Training
      • Measure contribution
      • Set priorities
      • Focus on results
      • Alter management perceptions of training
  • ROI of Training Model Collect Data Isolate the Effects of Training Convert Data to Monetary Values Calculate ROI of Training Tabulate Program Costs Identify Intangible Benefits
  • Net Program Benefits Program Costs X 100 Return on Investment Formula ROI =
    • Example :
    • Costs per program (25 participants) $ 88,500
    • Benefits per program (1st year) $230,625
    $ 230,625 – 88,500 $ 88,500 ROI = X 100 ROI = 161 %
  • Collecting Data
    • Identify appropriate performance indicators
    • Develop a collection plan
    Collect Data
  • Example of Performance Indicators
    • Units produced
    • Items sold
    • Work backlog
    • New accounts opened
    • Productivity
    • Inventory turnover
    • Etc.
    Output
    • Equipment downtime
    • Overtime
    • Time to project completion
    • Processing time
    • Repair time
    • Lost time days
    • Etc
    Time
  • Example of Hard Indicators
    • Unit costs
    • Variable costs
    • Overhead costs
    • Operating costs
    • Number of cost reduction
    • Etc.
    Cost
    • Scrap
    • Waste
    • Rejects
    • Error rates
    • Rework
    • Product defects
    • Product failure
    Quality
  • Example of Performance Results
    • Some performance results after training program:
      • Scrap was reduced from 11 % to 7.4 %
      • Absenteeism was reduce from 7 % to 3.25 %
      • The annual turnover rate was reduced from 30 % to 16 %
      • Lost time accidents were reduced 95 %
  • Isolating the Effects of Training Methods to Isolate the Effects of Training Using Control Group Trend Lines Participants Estimate Supervisors of Participants Estimate
  • Using Control Group
    • A control group arrangement can be used to isolate training impact.
    • With this strategy, one group receives training, while another, similar group does not receive training.
    • The difference in the performance of the two groups is attributed to the training program.
    Isolating the Effects of Training
  • Trend Lines
    • Trend lines are used to project the values of specific output variables if training had not been undertaken.
    • The projection is compared to the actual data after training, and the difference represents the estimate impact of training.
    Isolating the Effects of Training
  • Trend Lines Analysis Jan Feb Mar Apr Jul Jun May Aug At the beginning of May, a Sales training Program session was held Volume of Sales The difference represents the estimate impact of training. Trend Projection Actual sales performance
  • Participants and Supervisors of Participants Estimate of Training’s Impact
    • This method rests on the assumption that participants (and their supervisors) are capable of estimating how much a performance improvement is related to the training program.
    • Because their actions have produced the improvement, participants (and their supervisors) may have very accurate input on the issue.
    • They should know how much of the change was caused by applying what they have learned in the program.
    Isolating the Effects of Training
  • Participants and Supervisors of Participants Estimate of Training’s Impact
    • Typical Questions to Estimate :
      • What percent this improvement can be attributed to the application of skills/techniques/knowledge gained in the training program?
      • What confidence do you have in this estimate, expresses as a percent?
      • What other factors contributed to this improvement in performance?
    Isolating the Effects of Training
  • Isolating the Effects of Training Example of a Participant’s Estimation The confidence percentage is multiplied by the estimate (50 % x 70 %) to produce a usable training factor value of 35 %
  • Isolating the Effects of Training Example of a Participant’s Estimation
    • The confidence percentage is multiplied by the estimate (50 % x 70 %) to produce a usable training factor value of 35 %
    • This adjusted percentage is then multiplied by the actual amount of improvement (post-program minus pre-program value) to isolate the portion attributed to training
    • The adjusted improvement is now ready for conversion to monetary values, and used in the return on investment
  • Converting Data to Monetary Values Converting Data to Monetary Values
    • Steps to Convert Data to Monetary Values
    • Focus on a unit of improvement
    • Determine a value of each unit
    • Calculate the change in performance data
    • Determine an annual amount of change
    • Calculate the annual value of improvement
  • Steps to Convert Data to Monetary Values An example to illustrate the steps to convert data to monetary values 1. Focus on unit improvement
    • One grievance reaching step two in the four-step grievance resolution process
    Steps Illustration 2. Determine a value of each unit
    • Using internal experts, the cost of an average grievance was estimated to be $ 6,500 when considering time and direct costs (V = $ 6,500)
  • Steps to Convert Data to Monetary Values 3. Calculate the change in performance data
    • Six months after the program was completed, total grievances per month reaching step two declined by ten.
    • Seven of the then grievance reductions were related to the program as determined by supervisors (isolating the effects of training)
    Steps Illustration 4. Determine an annual amount for the change
    • Using the six month value, seven per month (grievance reductions), yields an annual improvement of 84 (7 x 12 months)
  • Steps to Convert Data to Monetary Values 5. Calculate the annual value of improvement
    • Annual value = 84 x $ 6,500 = $ 546,000
    Steps Illustration
  • Tabulating cost of the program
    • Tabulating the costs involves monitoring or developing all of the related costs of the program targeted for the ROI calculation.
    Tabulating Cost of the Program
  • Tabulating cost of the program
    • Cost components that should be included are :
      • The cost to design and develop the program
      • The cost of all program materials provided to each participant
      • The cost for facilitator
      • The cost of the facilities of the training program
    Tabulating Cost of the Program
  • Tabulating cost of the program
    • Cost components that should be included are :
      • Travel, lodging, and meal costs for the participants
      • Salaries, plus employee benefits of the participants who attend the training
      • Administrative and overhead costs of the training function, allocated in some convenient way
    Tabulating Cost of the Program
  • An Example to Illustrate ROI analysis Average Weekly Sales
  • An Example to Illustrate ROI analysis Annualized Program Benefits Note : 46 participants were still in job after 3 months
  • An Example to Illustrate ROI analysis Cost Summary : An Illustration ROI (%): $ 71,760 - $ 29,090 $ 29,090 146 % x 100 = =
  • Enhancing Training Effectiveness
  • How Effective is Your Training Program? Broad and Newstrom (1992) report studies have shown less than 30% of what is actually taught transfers to the job in a way that enhances performance . Source : Broad, M., & Newstrom, J. W. (1992). Transfer of training: Action packed strategies to ensure high payoff from training investments. Reading, MA: Addison-Wesley.
  • Source of Barriers to Training Transfer
    • Lack of reinforcement on the job
    • Interference from immediate (work) environment
    • Nonsupportive organizational culture
    • Trainees’ perception of impractical training programs
    • Separation from the inspiration or support of the trainer
  • The Transfer Partnership Trainee Trainee recognizes need for new skills Trainee Trainer Trainer designs and/or delivers learning experiences Trainee Trainer Manager supports learning and application on the job Manager
  • The Transfer Matrix Before During After Manager Trainer Trainee Time Periods Role Players
  • Manager Before Training
    • Build transfer of training into supervisory performance standards
    • Collect baseline performance data
    • Involve supervisors and trainees in needs analysis process
    • Involve trainees in program planning
    • Brief trainees on the importance of the training (course objective, content, process, and application on the job)
    • Review instructional content and materials
    • Plan to participate in training sessions
    • Encourage trainees attendance at all sessions
  • Trainer Before Training
    • Align the training plan with the organization's strategic plan
    • Systematically design instruction
    • Provide proactive opportunities
    • Design a peer coaching component for the program and its follow-up activities
  • Trainee Before Training
    • Provide input into program planning
    • Actively explore training options
    • Participate in advance activities
  • Manager During Training
    • Prevent interruptions
    • Transfer work assignment to others
    • Monitor attendance and attention to training
    • Recognize trainee participation
    • Participate in transfer action planning
    • Review information on employee in training
    • Plan assessment of transfer of new skills to the job
  • Trainer During Training
    • Develop application-oriented objectives
    • Answer the “WIIFM” question
    • Manage the unlearning process
    • Provide realistic work-related tasks
    • Give individualized feedback
    • Provide job performance aid
  • Trainee During Training
    • Maintain an ideas and application notebook
    • Participate actively
    • Form support groups
    • Plan for applications
    • Create behavioral contracts
  • Manager After Training
    • Plan trainees’ reentry
    • Provide opportunities to practice new skills
    • Have trainees participate in transfer-related decisions
    • Reduce job pressures initially
    • Give positive reinforcement
    • Schedule trainee briefings for co-workers
    • Set mutual expectations for improvement
    • Arrange proactive (refresher) sessions
    • Provide and support the use of job aids
  • Trainer After Training
    • Provide follow-up support
    • Conduct evaluation surveys and provide feedback
    • Develop and administer recognition system
    • Provide refresher/problem-solving sessions
  • Trainee After Training
    • Practice self-management
    • Review training content and learned skills
    • Develop a mentoring relationship
    • Maintain contact with training ‘buddies’
  • Recommended Further Readings
    • Donald Kirkpatrick, Evaluating Training Programs : The Four Levels , Berrett-Koehler Publishers
    • Jack J. Phillips and Patricia Phillips, In Action : Measuring Return On Investment , American Society for Training & Development
    • Mary Broad and John Newstrom, Transfer of training: Action P acked S trategies to E nsure H igh P ayoff from T raining I nvestments , Addison-Wesley.
  • End of Material