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Measuring ROI of Training
Agenda ,[object Object],[object Object],[object Object]
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
[object Object],[object Object],[object Object],[object Object],[object Object],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 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Sample of Reaction Form
Level 2 - Learning ,[object Object],[object Object],[object Object],[object Object],Level 2 - Learning
Guidelines for Evaluating Learning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Guidelines for Evaluating Learning Pretest and Posttest Scores on Change Management Training Example :
Level 3 – Behavior Application ,[object Object],[object Object],Level 3 – Behavior Application
Guidelines for Evaluating Learning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
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 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Level 4 – Business Results
Guidelines for Evaluating Learning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Performance Indicators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Performance Indicators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
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  ,[object Object],[object Object],[object Object],[object Object],[object Object]
Benefits of ROI of Training ,[object Object],[object Object],[object Object],[object Object]
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 = ,[object Object],[object Object],[object Object],$ 230,625 – 88,500 $ 88,500 ROI = X 100 ROI =  161 %
Collecting Data ,[object Object],[object Object],Collect  Data
Example of Performance Indicators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Output ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Time
Example of Hard Indicators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Cost ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Quality
Example of Performance Results ,[object Object],[object Object],[object Object],[object Object],[object Object]
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 ,[object Object],[object Object],[object Object],Isolating the Effects of Training
Trend Lines ,[object Object],[object Object],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 ,[object Object],[object Object],[object Object],Isolating the Effects of Training
Participants and Supervisors of Participants Estimate of Training’s Impact ,[object Object],[object Object],[object Object],[object Object],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 ,[object Object],[object Object],[object Object]
Converting Data to Monetary Values Converting Data to Monetary Values ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Steps to Convert Data to Monetary Values An example to illustrate the steps to convert data to monetary values 1. Focus on unit improvement ,[object Object],Steps Illustration 2. Determine a value of each unit  ,[object Object]
Steps to Convert Data to Monetary Values 3. Calculate the change in performance data ,[object Object],[object Object],Steps Illustration 4. Determine an annual amount for the change ,[object Object]
Steps to Convert Data to Monetary Values 5. Calculate the annual value of improvement ,[object Object],Steps Illustration
Tabulating cost of the program ,[object Object],Tabulating Cost of the Program
Tabulating cost of the program ,[object Object],[object Object],[object Object],[object Object],[object Object],Tabulating Cost of the Program
Tabulating cost of the program ,[object Object],[object Object],[object Object],[object Object],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 ,[object Object],[object Object],[object Object],[object Object],[object Object]
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 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Trainer Before Training ,[object Object],[object Object],[object Object],[object Object]
Trainee Before Training ,[object Object],[object Object],[object Object]
Manager During Training ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Trainer During Training ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Trainee During Training ,[object Object],[object Object],[object Object],[object Object],[object Object]
Manager After Training ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Trainer After Training ,[object Object],[object Object],[object Object],[object Object]
Trainee  After Training ,[object Object],[object Object],[object Object],[object Object]
Recommended Further Readings ,[object Object],[object Object],[object Object]
End of Material

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Measuring ROI of Training

  • 1. Measuring ROI of Training
  • 2.
  • 3. www.exploreHR.org You can download this presentation at: Please visit www.exploreHR.org for more presentations on leadership, personal development, and HR management.
  • 4. Measuring the Effectiveness of Training Program
  • 5. 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
  • 6. The Four Levels of Evaluation Level 1 - Reaction Level 2 - Learning Level 3 – Behavior Application Level 4 – Business Impact Four Levels of Training Effectiveness
  • 7. 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)
  • 8. 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
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  • 10. 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
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  • 15. Guidelines for Evaluating Learning Pretest and Posttest Scores on Change Management Training Example :
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  • 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
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  • 23. 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
  • 24. 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
  • 25. Measuring Return on Investment of Training
  • 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
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  • 29. 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
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  • 35. Isolating the Effects of Training Methods to Isolate the Effects of Training Using Control Group Trend Lines Participants Estimate Supervisors of Participants Estimate
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  • 38. 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
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  • 41. 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 %
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  • 50. An Example to Illustrate ROI analysis Average Weekly Sales
  • 51. An Example to Illustrate ROI analysis Annualized Program Benefits Note : 46 participants were still in job after 3 months
  • 52. An Example to Illustrate ROI analysis Cost Summary : An Illustration ROI (%): $ 71,760 - $ 29,090 $ 29,090 146 % x 100 = =
  • 54. 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.
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  • 56. 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
  • 57. The Transfer Matrix Before During After Manager Trainer Trainee Time Periods Role Players
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