Measuring ROI of Training

Slide 1: Measuring ROI of Training 1 www.exploreHR.org

Slide 2: Agenda 1. Measuring the Effectiveness of Training Program 2. Measuring ‘Return on Investment’ of Training 3. Enhancing the Effectiveness and ROI of Training 2 www.exploreHR.org

Slide 3: You can download this presentation at: www.exploreHR.org Please visit www.exploreHR.org for more presentations on leadership, personal development, and HR management. 3 www.exploreHR.org

Slide 4: Measuring the Effectiveness of Training Program 4 www.exploreHR.org

Slide 5: Training Process Training Training Training Training Need Evaluation Objectives Delivery Analysis What are Objective Techniques Measure the training should be include on- reaction, needs for measurable the-job- learning, this person and training, behavior, and/or job? observable action and results learning, etc. 5 www.exploreHR.org

Slide 6: The Four Levels of Evaluation Level 1 - Reaction Level 2 - Learning Four Levels of Training Level 3 – Behavior Effectiveness Application Level 4 – Business Impact 6 www.exploreHR.org

Slide 7: The Four Levels of Evaluation Evaluate trainees’ reactions to Level 1 - Reaction the program. Did they like the program? Did they think it worthwhile? Test the trainees to determine if Level 2 - Learning they learned the principles, skills, and facts they were to learn. If you find this presentation useful, please consider telling others about our site (www.exploreHR.org) 7 www.exploreHR.org

Slide 8: The Four Levels of Evaluation Ask whether the trainees’ behavior on the job Level 3 – changed because of the training program. For Behavior example, are employees in the store’s complaint Application department more courteous toward disgruntled customers than previously? What final results were achieved in terms of the Level 4 – training objectives previously set? Did the number Business of customer complaints about employee drop? Did Impact the reject rate improve? Was turnover reduced, and so forth. 8 www.exploreHR.org

Slide 9: The Four Levels of Evaluation Difficulty of Value of Frequency of Assessment Information Use Level Frequent Easy Least valuable I. Reaction II. Learning III. Behavior Difficult Infrequent Most IV. Results valuable 9 www.exploreHR.org

Slide 10: Level 1 - Reaction Evaluate trainees’ reactions to the program: Did they like the program? Level 1 - Did they like the Reaction facilitators? Did they like the training accommodation and facilities? 10 www.exploreHR.org

Slide 11: Guidelines for Evaluating Reaction 1. Determine what you want to find out 2. Design a form that will quantify reactions 3. Encourage written comments and suggestions 4. Get 100 percent immediate response 5. Get honest response 6. Develop acceptable standards 7. Measure reactions against standards, and take appropriate action 8. Communicate reaction as appropriate 11 www.exploreHR.org

Slide 12: Please give us your frank reactions and comments. They will help us to evaluate this program and improve future programs. Sample of Program : Reaction Facilitator : Form 1. How do you rate the subject (interest, benefit, etc) a. Excellent b. Very Good c. Good d. Fair e. Poor 2. How do you rate the facilitator? (knowledge, ability to deliver and communicate?) a. Excellent b. Very Good c. Good d. Fair e. Poor 3. How do you rate the facilities? (comfort, convinience, etc) a. Excellent b. Very Good c. Good d. Fair e. Poor 4. What would have improved the program? ………………………………………………………………………………… ………………………………………………………………………………… ………………………………………………………………………………… 12 www.exploreHR.org

Slide 13: Level 2 - Learning Measuring learning means determining one or more of the following : • What knowledge was Level 2 - Learning learned? • What skills were developed or improved? • What attitudes were changed? 13 www.exploreHR.org

Slide 14: Guidelines for Evaluating Learning 1. Use a control group if practical 2. Evaluate knowledge, skills and/or attitudes both before and after the program 3. Use a paper-and-pencil test to measure knowledge 4. Use a performance test to measure skills 5. Get 100 percent immediate response 6. Use the results of evaluation to take appropriate action 14 www.exploreHR.org

Slide 15: Guidelines for Evaluating Learning Pretest and Posttest Scores on Change Management Training Example : Experimental Group Control Group Pre Test Score 45 46 Post Test Score 55 48 Gain 10 2 15 www.exploreHR.org

Slide 16: Level 3 – Behavior Application • The frequency of application of new skills/knowledge/ Level 3 – attitudes (on the job) Behavior • The effectiveness of the Application skills/knowledge/ attitudes (as applied on the job) 16 www.exploreHR.org

Slide 17: Guidelines for Evaluating Learning 1. Use a control group if practical 2. Allow time for behavior change and application to take place 3. Evaluate both before and after the program if practical 4. Survey and/or interview one or more of the following : trainees, their immediate supervisor, their subordinates, and others who often observe their behavior 5. Get 100 percent response or a sampling 6. Repeat the evaluation at appropriate times 7. Consider cost versus benefits 17 www.exploreHR.org

Slide 18: 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 Time and energy spent after the prgram compared to time and energy spent before the program Understanding and Motivating 1. Trying to understand my subordinates 5 4 3 2 1 2. Listening to my subordinates 5 4 3 2 1 3. Praising good work 5 4 3 2 1 4. Talking with subordinates about 5 4 3 2 1 their family and personal interests 5. Asking my subordinates for their ideas 5 4 3 2 1 6. Applying \"Management by Walking Around\" 5 4 3 2 1 18 www.exploreHR.org

Slide 19: Level 4 – Business Results • Indicate the extent to which you think this program has influenced each of these measures in your work unit, Level 4 – department, or business unit: Business • Productivity Results • Quality • Customer Response Time • Cost Control • Employee Satisfaction • Customer Satisfaction • Other 19 www.exploreHR.org

Slide 20: Guidelines for Evaluating Learning 1. Use a control group if practical 2. Allow time for results to be achieved 3. Measure both before and after the program if practical 4. Repeat the evaluation at appropriate times 5. Consider cost versus benefits 6. Be satisfied with evidence if proof is not possible 20 www.exploreHR.org

Slide 21: 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 21 www.exploreHR.org

Slide 22: Performance Indicators SOFT DATA INDICATORS (intangible impacts) • Job satisfaction • Conducive working relationship • Effective communication • Stress rate • Quality in decision-making 22 www.exploreHR.org

Slide 23: Example : Measuring Training Results 200.00 Program : TQM Training Results after 3 150.00 120 units months of training, number 80 units 100.00 of defects dropped to 80 units/day 50.00 0.00 After training Before training 23 www.exploreHR.org

Slide 24: Example : Measuring Training Results Program : 50.00 Sales Training 40.00 Results after 3 30 units months training, training number of sales 30.00 per salesman 20 units increase to 30 20.00 units/month. 10.00 0.00 Before training After training 24 www.exploreHR.org

Slide 25: Measuring Return on Investment of Training 25 www.exploreHR.org

Slide 26: 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 26 www.exploreHR.org

Slide 27: 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 27 www.exploreHR.org

Slide 28: Benefits of ROI of Training • Measure contribution • Set priorities • Focus on results • Alter management perceptions of training 28 www.exploreHR.org

Slide 29: ROI of Training Model Isolate the Convert Data Collect Effects of to Monetary Data Training Values Identify Calculate ROI Intangible of Training Benefits Tabulate Program Costs 29 www.exploreHR.org

Slide 30: Return on Investment Formula Net Program Benefits ROI = X 100 Program Costs Example : • Costs per program (25 participants) $ 88,500 • Benefits per program (1st year) $230,625 $ 230,625 – 88,500 ROI = X 100 $ 88,500 ROI = 161 % 30 www.exploreHR.org

Slide 31: Collecting Data • Identify appropriate Collect performance indicators Data • Develop a collection plan 31 www.exploreHR.org

Slide 32: Example of Performance Indicators Output Time • Equipment downtime • Units produced • Overtime • Items sold • Time to project • Work backlog completion • New accounts opened • Processing time • Productivity • Repair time • Inventory turnover • Lost time days • Etc. • Etc 32 www.exploreHR.org

Slide 33: Example of Hard Indicators Cost Quality • Scrap • Unit costs • Waste • Variable costs • Rejects • Overhead costs • Error rates • Operating costs • Rework • Number of cost • Product defects reduction • Product failure • Etc. 33 www.exploreHR.org

Slide 34: 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 % 34 www.exploreHR.org

Slide 35: Isolating the Effects of Training Using Control Group Trend Methods to Lines Isolate the Effects of Participants Training Estimate Supervisors of Participants Estimate 35 www.exploreHR.org

Slide 36: Isolating the Effects of Training • A control group arrangement can be Using used to isolate training impact. Control Group • 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. 36 www.exploreHR.org

Slide 37: Isolating the Effects of Training • Trend lines are used to project the Trend values of specific output variables if Lines training had not been undertaken. • The projection is compared to the actual data after training, and the difference represents the estimate impact of training. 37 www.exploreHR.org

Slide 38: Trend Lines Analysis Actual sales performance At the beginning of The May, a Sales training difference Volume of Sales Program session was