How to measure the ROI of training and Development program


All too often when times get tough, staff training is the first thing to get cut. However, corporate training and development is a hugely important element of business growth. The difficulty for most businesses, is justifying the cost as many see it as being too difficult to quantify your return on investment.

Every business leader recognizes the importance of employee engagement and workforce development training programs as a valuable tool in engaging and motivating staff. Vocational training courses not only inject fresh skills into the business, but also help to generate new ideas and revenue streams while inspiring staff to achieve more.

In the current climate, there has to be a measurable return on investment for all staff training programs. But the big question is how can that be evaluated?

Seeking an ROI from training goes beyond the corporate world and is a major issue in the public sector, given that they are justifying the use of public funding.

The ROI approach to measuring training and development

The Phillips ROI/abdi model is the one among the top to evaluate ROI. The model was applied to learning and development first within the corporate context, before being used by international development and healthcare organizations.

This ROI approach to measuring training and development is highly regarded as one of the most comprehensive  methods, as it draws on a number of established theories and evaluation models, including Kirkpatrick’s learning evaluation model and Phillips’ ROI methodology, theories of change and the logical framework approach.

This model is about building a chain of impact to create a link between the specific learning/ training activity and the impact or ROI, which could work equally well for coaching as it does for a more traditional staff training programs.

Measuring impact with the ROI model of training and development

As Paul Stokes explains in his blog post on measuring the success of coaching programs, the measurements are unique to each organization, as their strategic objectives from the coaching will differ.

The approach generally most of the organizations use is about building a chain of measurements to try to demonstrate that impact. This can arise from any type of training intervention from leadership and management programs that develop coaching skills and workshops that develop customer service skills or machine operation, to those that develop advisory skills in health issues such as weight management or diabetes.

In the example of building coaching skills in managers, a business could use this as a development tool, which will result in the coach or coachee being more confident to take on more leadership responsibility or making decisions themselves rather than escalating them to the next level of management.

All of these different impacts have organizational-wide financial implications attached. For example, in the case above, a consequence would be that recruitment to leadership roles can occur from within the organization, rather than externally (saving on external recruitment consultancy fees), and the organization also saves senior leadership team time from decisions not needing to be escalated.

The five levels of impact for the ROI model

(1) Start at the lowest level with Engagement – checking that the individuals feel the training or coaching is worthwhile. Speak to them to ensure they are learning something new and that they see it as relevant to their role. Also make sure they are committed to taking actions from what they have learned.

(2) Following that is learning – checking or testing that they have developed new knowledge, skills, attitudes and that they have the confidence to apply it: this could be through a pre – and post-skills audit or a scenario/simulation test of their coaching skills.

(3) Application and Implementation is next – Are they demonstrating changes in behavior? This could be done through pre- and post-360 feedback or evidence that they have completed the planned actions from their coaching sessions.

(4) Business Impact is next. These measures are agreed with the business before the program starts and can involve HR, Finance, IT departments (Remember – this is about the involvement across the organization). Credibility comes from using the measures collected by the business already rather than starting from scratch, and reaching an agreement about what can be tied to the program. If work based projects are used in the learning solution, the financial impact of these can also be included at this level. The hard impacts are reported at this level where a financial figure can be applied so it can be used to calculate the ROI. Soft measures are reported separately. Isolation tools are also agreed upon with the business and applied to the impact measures before the ROI is calculated.

(5) Finally, ROI is then calculated. Fully loaded costs of the program are gathered (cost of program, participants’ time and on-costs) and the Net Program benefits are calculated: (Benefits – Costs)/ Costs x 100

Developing talent and your business

By employing a robust evaluation model, you cannot only ensure you maximize the return on your investment, but you can also ensure your business is improved way beyond the actual training program.

An evaluation model forces a business to take stock and identify its needs. In addition to highlighting the skills it is lacking, this process can also help to identify new opportunities.

The added bonus of assessing participants’ skills as a baseline measure means the training can be tailored to suit your needs and also makes sure the people who take part in the training are engaged and determined to succeed.

Leave a Reply

Your email address will not be published. Required fields are marked *