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Measuring roi of training

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Measuring roi of training

  1. 1. MMeeaassuurriinngg RROOII ooff TTrraaiinniinngg
  2. 2. AAggeennddaa 1. Measuring the Effectiveness of Training Program 2. Measuring ‘Return on Investment’ of Training 3. Enhancing the Effectiveness and ROI of Training
  3. 3. AA..MMeeaassuurriinngg tthhee EEffffeeccttiivveenneessss ooff TTrraaiinniinngg PPrrooggrraamm
  4. 4. TThhee FFoouurr LLeevveellss ooff EEvvaalluuaattiioonn Level 1 - Reaction Level 2 - Learning Level 3 – Behavior Application Level 4 – Performance Impact FFoouurr LLeevveellss ooff TTrraaiinniinngg EEffffeeccttiivveenneessss
  5. 5. LLeevveell 11 -- RReeaaccttiioonn Evaluate trainees’ reactions to the program: Did they like the program? Did they like the facilitators? Did they like the training accommodation and facilities? LLeevveell 11 -- RReeaaccttiioonn
  6. 6. GGuuiiddeelliinneess ffoorr EEvvaalluuaattiinngg RReeaaccttiioonn 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
  7. 7. LLeevveell 22 -- LLeeaarrnniinngg Measuring learning means determining one or more of the following : • What knowledge was learned? • What skills were developed or improved? • What attitudes were changed? LLeevveell 22 -- LLeeaarrnniinngg
  8. 8. GGuuiiddeelliinneess ffoorr EEvvaalluuaattiinngg LLeeaarrnniinngg 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
  9. 9. GGuuiiddeelliinneess ffoorr EEvvaalluuaattiinngg LLeeaarrnniinngg 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
  10. 10. LLeevveell 33 –– BBeehhaavviioorr AApppplliiccaattiioonn • The frequency of application of new skills/knowledge/ attitudes (on the job) • The effectiveness of the skills/knowledge/ attitudes (as applied on the job) LLeevveell 33 –– BBeehhaavviioorr AApppplliiccaattiioonn
  11. 11. GGuuiiddeelliinneess ffoorr EEvvaalluuaattiinngg LLeeaarrnniinngg 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
  12. 12. LLeevveell 44 –– PPeerrffoorrmmaannccee RReessuullttss • 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 LLeevveell 44 –– PPeerrffoorrmmaannccee RReessuullttss
  13. 13. GGuuiiddeelliinneess ffoorr EEvvaalluuaattiinngg LLeeaarrnniinngg 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
  14. 14. PPeerrffoorrmmaannccee IInnddiiccaattoorrss HARD DATA INDICATORS • Duration involved • Number of defect products • Sales volume • Customer satisfaction index • Response time to orders • Others
  15. 15. PPeerrffoorrmmaannccee IInnddiiccaattoorrss SOFT DATA INDICATORS (intangible impacts) • Job satisfaction • Conducive working relationship • Effective communication • Stress rate • Quality in decision-making
  16. 16. Example :: MMeeaassuurriinngg TTrraaiinniinngg RReessuullttss Program : TTQQMM 200.00 TTrraaiinniinngg Results after 33 150.00 mmoonntthhss ooff ttrraaiinniinngg,, number of defects 100.00 dropped to 80 units/day 50.00 0.00 120 units 80 units BBeeffoorree ttrraaiinniinngg AAfftteerr ttrraaiinniinngg
  17. 17. Example :: MMeeaassuurriinngg TTrraaiinniinngg RReessuullttss 50.00 40.00 30.00 20.00 10.00 0.00 Program : SSaalleess TTrraaiinniinngg Results after 33 mmoonntthhss ttrraaiinniinngg, number of sales per salesman increase to 30 units/month. 20 units 30 units BBeeffoorree ttrraaiinniinngg AAfftteerr ttrraaiinniinngg
  18. 18. BB..MMeeaassuurriinngg RReettuurrnn oonn IInnvveessttmmeenntt ooff TTrraaiinniinngg
  19. 19. BBeenneeffiittss ooff RROOII ooff TTrraaiinniinngg • Measure contribution • Set priorities • Focus on results • Alter management perceptions of training
  20. 20. RROOII ooff TTrraaiinniinngg MMooddeell CCoolllleecctt DDaattaa IIssoollaattee tthhee EEffffeeccttss ooff TTrraaiinniinngg CCoonnvveerrtt DDaattaa ttoo MMoonneettaarryy VVaalluueess CCaallccuullaattee RROOII ooff TTrraaiinniinngg TTaabbuullaattee PPrrooggrraamm CCoossttss IIddeennttiiffyy IInnttaannggiibbllee BBeenneeffiittss
  21. 21. RReettuurrnn oonn IInnvveessttmmeenntt FFoorrmmuullaa NNeett PPrrooggrraamm BBeenneeffiittss PPrrooggrraamm CCoossttss XX 110000 RROOII == EExxaammppllee :: • CCoossttss ppeerr pprrooggrraamm ((2255 ppaarrttiicciippaannttss)) RRss 8888,,550000 • BBeenneeffiittss ppeerr pprrooggrraamm ((11sstt yyeeaarr)) RRss 223300,,662255 RRss 223300,,662255 –– 8888,,550000 RROOII == XX 110000 RRss 8888,,550000 RROOII == 116611 %%
  22. 22. CCoolllleeccttiinngg DDaattaa • Identify appropriate performance indicators • Develop a collection plan CCoolllleecctt DDaattaa
  23. 23. EExxaammppllee ooff PPeerrffoorrmmaannccee IInnddiiccaattoorrss OOuuttppuutt • Units produced • Items sold • Work backlog • New accounts opened • Productivity • Inventory turnover • Etc. TTiimmee • Equipment downtime • Overtime • Time to project completion • Processing time • Repair time • Lost time days • Etc
  24. 24. EExxaammppllee ooff HHaarrdd IInnddiiccaattoorrss • Unit costs • Variable costs • Overhead costs • Operating costs • Number of cost reduction • Etc. CCoosstt QQuuaalliittyy • Scrap • Waste • Rejects • Error rates • Rework • Product defects • Product failure
  25. 25. EExxaammppllee ooff PPeerrffoorrmmaannccee RReessuullttss • SSoommee ppeerrffoorrmmaannccee rreessuullttss aafftteerr ttrraaiinniinngg pprrooggrraamm:: • Rejections were reduced from 11 % to 7.4 % • Absenteeism was reduced from 7 % to 3.25 % • The annual turnover rate was reduced from 30 % to 16 % • Customer complaints were reduced by 65 %
  26. 26. Isolating tthhee EEffffeeccttss ooff TTrraaiinniinngg MMeetthhooddss ttoo IIssoollaattee tthhee EEffffeeccttss ooff TTrraaiinniinngg UUssiinngg CCoonnttrrooll GGrroouupp TTrreenndd LLiinneess PPaarrttiicciippaannttss EEssttiimmaattee SSuuppeerrvviissoorrss ooff PPaarrttiicciippaannttss EEssttiimmaattee
  27. 27. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg UUssiinngg CCoonnttrrooll GGrroouupp • 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.
  28. 28. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg TTrreenndd LLiinneess • 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.
  29. 29. TTrreenndd LLiinneess AAnnaallyyssiiss At the beginning of May, a Sales training Program session was held Actual sales performance Jan Feb Mar Apr May Jun Jul Aug Volume of Sales The difference represents the estimate impact of training. Trend Projection
  30. 30. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg PPaarrttiicciippaannttss aanndd SSuuppeerrvviissoorrss ooff PPaarrttiicciippaannttss EEssttiimmaattee ooff TTrraaiinniinngg’’ss IImmppaacctt • 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.
  31. 31. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg PPaarrttiicciippaannttss aanndd SSuuppeerrvviissoorrss ooff PPaarrttiicciippaannttss EEssttiimmaattee ooff TTrraaiinniinngg’’ss IImmppaacctt • TTyyppiiccaall QQuueessttiioonnss ttoo EEssttiimmaattee :: • 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?
  32. 32. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg EExxaammppllee ooff aa PPaarrttiicciippaanntt’’ss EEssttiimmaattiioonn Percent Improvement Caused by Confidence Expressed as a Percent Factors Which Influenced No. Improvement 1 Training Program 50% 70% 2 Change in Procedures 10% 80% 3 Adjustment in Standards 10% 50% 4 Revision to Incentive Plan 20% 90% 5 Increased Management Attention 10% 50% 6 Other - - The confidence percentage is multiplied by the estimate (50 % x 70 %) to produce aa uussaabbllee ttrraaiinniinngg ffaaccttoorr vvaalluuee ooff 3355 %%
  33. 33. IIssoollaattiinngg tthhee EEffffeeccttss ooff TTrraaiinniinngg EExxaammppllee ooff aa PPaarrttiicciippaanntt’’ss EEssttiimmaattiioonn Percent Improvement Caused by Confidence Expressed as a Percent Factors Which Influenced No. Improvement 1 Training Program 50% 70% 2 Change in Procedures 10% 80% 3 Adjustment in Standards 10% 50% 4 Revision to Incentive Plan 20% 90% 5 Increased Management Attention 10% 50% 6 Other - - • 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
  34. 34. Converting DDaattaa ttoo MMoonneettaarryy VVaalluueess CCoonnvveerrttiinngg DDaattaa ttoo MMoonneettaarryy VVaalluueess • SStteeppss ttoo CCoonnvveerrtt DDaattaa ttoo MMoonneettaarryy VVaalluueess 1. Focus on a unit of improvement 2. Determine a value of each unit 3. Calculate the change in performance data 4. Determine an annual amount of change 5. Calculate the annual value of improvement
  35. 35. Steps to Convert DDaattaa ttoo MMoonneettaarryy VVaalluueess An example to illustrate the steps to convert data to monetary values SStteeppss IIlllluussttrraattiioonn 1. Focus on unit improvement • One grievance reaching step two in the four-step grievance resolution process 2. Determine a value of each unit • Using internal experts, the cost of an average grievance was estimated to be Rs,500 when considering time and direct costs
  36. 36. Steps to Convert DDaattaa ttoo MMoonneettaarryy VVaalluueess SStteeppss IIlllluussttrraattiioonn 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) 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)
  37. 37. Steps to Convert DDaattaa ttoo MMoonneettaarryy VVaalluueess SStteeppss IIlllluussttrraattiioonn 5. Calculate the annual value of improvement • Annual value = 84 x Rs500 = Rs42,000
  38. 38. TTaabbuullaattiinngg CCoosstt ooff tthhee PPrrooggrraamm TTaabbuullaattiinngg ccoosstt ooff tthhee pprrooggrraamm • 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
  39. 39. TTaabbuullaattiinngg CCoosstt ooff tthhee PPrrooggrraamm TTaabbuullaattiinngg ccoosstt ooff tthhee pprrooggrraamm • 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
  40. 40. CC..EEnnhhaanncciinngg TTrraaiinniinngg EEffffeeccttiivveenneessss
  41. 41. How Effective iiss YYoouurr TTrraaiinniinngg PPrrooggrraamm?? Broad and Newstrom (1992) report studies have shown less than 3300%% ooff wwhhaatt iiss aaccttuuaallllyy ttaauugghhtt ttrraannssffeerrss ttoo tthhee jjoobb iinn aa wwaayy tthhaatt eennhhaanncceess ppeerrffoorrmmaannccee. Source : Broad, M., & Newstrom, J. W. (1992). Transfer of training: Action packed strategies to ensure high payoff from training investments. Reading, MA: Addison- Wesley.
  42. 42. SSoouurrccee ooff BBaarrrriieerrss ttoo TTrraaiinniinngg TTrraannssffeerr • 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
  43. 43. TThhee TTrraannssffeerr PPaarrttnneerrsshhiipp 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
  44. 44. AAfftteerr TTrraaiinniinngg MMaannaaggeerr • 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
  45. 45. AAfftteerr TTrraaiinniinngg TTrraaiinneerr • Provide follow-up support • Conduct evaluation surveys and provide feedback • Develop and administer recognition system • Provide refresher/problem-solving sessions
  46. 46. AAfftteerr TTrraaiinniinngg TTrraaiinneeee • Practice self-management • Review training content and learned skills • Develop a mentoring relationship • Maintain contact with training ‘buddies’
  47. 47. TTHHAANNKK YYOOUU

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