This document outlines the key aspects of determining return on investment (ROI) for training programs, including: identifying stakeholders and their needs; writing goals and measurable objectives; assessing learning and collecting data on costs, benefits, and impact over time; and reporting findings to justify the training budget and demonstrate value. ROI analysis aims to quantify the effectiveness of training and provide evidence of its business impact.

1. Return on Investment:
Training and Development
Session 1
ROI and Evaluation

2. Objectives
• At the completion of this unit, students will
be able to:
> Discuss the importance of determining ROI
in training environments.
> Identify stakeholders and develop questions
to determine their views and needs.
> Write training goals and observable
objectives based on stakeholders’ needs.

3. Objectives
> Describe the importance of the
assessment of learning for ROI.
> Recognize the differences between
short-term and long-term assessment.
> Identify items that belong on a training
budget sheet to determine ROI.
> Calculate expenses and ROI.
> Write a report on training that includes
all relevant data.

4. Return on Investment
• Rooted in manufacturing.
• Advanced to banking, health care, non-
profit, public and education sectors.
• Part of quality and efficiency
methodologies.

5. ROI Is Used To:
> Quantify the effectiveness of training.
> Manage the training budget.
> Provide evidence to management
and other stakeholders.
> Build trust and respect for ourselves
and our unit.
> Earn the ears of senior management.
> Identify areas for improvement.
> Provide data requested by senior
management.
> Keep our jobs.

6. Models
• Benefit/Cost Ratio
• ROI (%)
Costs
Program
Benefits
Program

BCR
100
(%) x
Cost
Cost
Benefit
ROI



7. Why is ROI important to you?

8. Evaluation Levels
1. Reaction and Planned Action
2. Learning
3. Application and Implementation
4. Business Impact
5. Return on Investment

9. Stakeholders
• Who are they?
> Anyone who pays for, participates in,
benefits from, or has decision-making
responsibility for HRD and training.
• What should they know?
> The need for training.
> The results from training.
> The costs of training.

10. Needs Assessment and Task Analysis
• Needs assessment: identifies gaps
between what is and what should be in
the organization.
• Task analysis: investigates the specific
skill(s), knowledge or attitudes and at
which point there is a breakdown in use or
performance. If the analysis uncovers a
lack of knowledge, skills or attitude, then
training is required. If it reveals faulty
equipment, poor work conditions or lack of
incentive, then another solution is needed.

11. Return on Investment:
Training and Development
Session 2
Goals, Objectives, Assessment

12. Goals
• Organizational Goals
These goals are typically targeted
toward the organizational level and
include such things as productivity, net
income, inventory and cash cycles, and
customer satisfaction.
• Learning Goals
These goals typically focus on the
individuals in the organization and their
performance, knowledge and skills.

13. Writing Objectives
Easy as A, B, C, D
Audience: Who?
Behavior: What do “they” do?
Condition: What is the setting and
method of evaluation?
Degree: Measurement to be met.

14. Example Objective
Audience
Behavior
Condition
Degree
At the completion of the course the learner
will be able to score 85% or better on a
written multiple choice 25 question test

15. Example Verbs
• Verbs to Use:
> Discuss
> Explain
> Demonstrate
> Identify
> List
> Perform
> Compare/Contrast
> Score (on an
assessment)
• Verbs to Avoid
> Understand
> Comprehend
> Know
> Do

16. Objectives in ROI
• Course objectives: What is it that the
learners will be able to do upon course
completion?
• Application objectives: What goals do
the HRD/training practitioner have for the
application of the skills gained in training?
• Impact objectives: What effect will
accomplishing the application objectives
have on the organization?

17. Example Objectives
• Course objective: Learners will
be able to make 15 entries in a
customer database in 15 minutes
with no more than 1 error.
• Application objective: Learners
will be able to reduce the data
entry error rate by 50 percent over
the next 6 months.
• Impact objective: Employee time
spent correcting database errors is
reduced by 25 percent from last
year’s rate.
Increasing
Scope

18. Learning Assessment
• Alignment between assessment and objective is
paramount.
> Easy to do with well-written objectives.
• Cognitive, psychomotor and affective domains
are assessed in different ways.
> Cognitive: written and oral tests; discussion;
compare/contrast exercises.
> Psychomotor: demonstration; performance.
> Affective: longitudinal observation and/or
discussion.
• Be sure to use the right type of assessment for
each objective of the learning event.

19. Return on Investment:
Training and Development
Session 3
Costs, Budgets, Accounting

20. Costs, Budgets, Accounting
• Quantifying ROI means accounting for all
the costs of the program.
> Fixed costs: independent of the number
of participants.
> Variable costs: Dependent on the
number of participants.
• There are costs at every step – make sure
to account for them all.

21. Output Measures
Outputs are product-driven and include
data that are not performance-based but
rather outcomes of changes in
performance or investment in equipment.
Examples include:
> Units built.
> Time it takes to build the units.
> Income from sale of units.

22. Benefits and Soft Skills
• Change in:
> Attitude, work climate, leadership,
teamwork.
• We desire these changes because they
ultimately effect productivity.
> Allow time for change in attitude or
behavior, then measure these changes
and report qualitatively.
> Allow time for change in productivity,
then measure for data and report
quantitatively.

23. Karen Kaminski
Tobin P. Lopes
Models
• Benefit/Cost Ratio
• ROI (%)
• Phillips – See Figure 2-2 in text.
Costs
Program
Benefits
Program

BCR
100
(%) x
Cost
Cost
Benefit
ROI



24. Benefit/Cost Ratio Example
• Data entry clerks’ average wage: $9.50/hr.
• Five hours per week were spent correcting errors before
training.
• 20 percent less time correcting errors saves one hour each
week.
• 40 clerks.
BCR = .076 for one week. What about 13 weeks? 26 weeks?
076
.
$5,000
hr
9.50x40x1


BCR

25. Now with ROI%
• Data entry clerks’ average wage: $9.50/hr.
• 20 percent less time correcting errors saves one hour each
week.
• 40 clerks.
• When clerks use their skills for 26 weeks, ROI% is almost
100%!!
%
4
.
92
100
5000
4620
100
5000
5000
1
380
(%) 




 x
x
x
ROI
%
6
.
97
100
5000
4880
100
5000
5000
)
26
380
(
(%) 


 x
x
x
ROI

26. Create a Data Collection Plan
• What?
• New information that needs to be
recorded?
• Who?
• When?
• How?

27. Additional Thoughts
• Access to learners after training:
> Do you have access to learners to
follow up on application and use of the
knowledge and skills developed during
the training?
• Isolating training effects:
> Consider what else may have occurred
at the same time as the training that
may have made a difference.

28. Trend Line Example
Trend Line
35
Y axis: 30
Number of
Customer Complaints 25
Projected Value 20
Before Training
15
Training Intervention
10
New Projected Value
After Training J F M A M J J A S O N D
X axis: Months

29. Return on Investment:
Training and Development
Session 4
Reporting Your Findings

30. Review of ROI
> Justify the training budget.
> Quantify effectiveness of training.
> Provide evidence to management and
other stakeholders.
> Build trust and respect for ourselves
and our unit.
> Earn the ears of senior management.
> Identify areas for improvement.
> Respond to management directive.
> Keep our jobs.

31. Stakeholders: Review
• Customer
• Employee
• Supervisor
• Subordinate
• President
• Board of Directors
• Stockholders

32. Reporting
• Needs to be:
> Timely, targeted and unbiased.
• The purpose is to:
> Illustrate success.
> Secure approval.
> Gain acknowledgement/agreement on
solutions.
> Build credibility.
> Enhance marketing.

33. Reporting
• Who needs to know?
• What do they need to know?
> How will you inform them?
• Presentation.
• Briefing paper.
• Detailed report.
• Letter.
• When and where?
• Who will present?
• Feedback?

34. Items to Include in a Report
• Executive summary.
• Title of training.
> Goals and objectives.
> Who participated, when/where, length.
• Assessment and outcomes.
• Evaluation.
• Budget.
• Recommendations.

35. Summary
• Know your audience:
> Who, existing and desired skills,
knowledge and attitude (audience
analysis).
• Expectations of/from organization:
> Goals and objectives, stakeholders.
• Assessment and evaluation:
> Budget, data collection.
• Reporting.

36. Finally
Take action on the data collected.
Use it to enhance your training and
therefore your organization.