How to calcluate the return on learning investment (ROI). Companies allocate certain amount of funds and resources to the training budget, what they want to see is how the training impacts their core business objectives (eg. growth, reduce risk etc...) Learn how…

1. Measuring ROI of Training & Development

3. Measuring the Effectiveness of Training Program

4. 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

5. The Four Levels of Evaluation Level 1 - Reaction Level 2 - Learning Level 3 – Behavior Application Level 4 – Business Impact Four Levels of Training Effectiveness

6. 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

7. 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

9. 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

11. Sample of Reaction Form

14. Guidelines for Evaluating Learning Pretest and Posttest Scores on Change Management Training Example :

17. 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

22. 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

23. 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

24. Measuring Return on Investment of Training

25. 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

28. 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

34. Isolating the Effects of Training Methods to Isolate the Effects of Training Using Control Group Trend Lines Participants Estimate Supervisors of Participants Estimate

37. 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

40. 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 %

49. An Example to Illustrate ROI analysis Average Weekly Sales

50. An Example to Illustrate ROI analysis Annualized Program Benefits Note : 46 participants were still in job after 3 months

51. An Example to Illustrate ROI analysis Cost Summary : An Illustration ROI (%): $ 71,760 - $ 29,090 $ 29,090 146 % x 100 = =

52. Enhancing Training Effectiveness

53. 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.

55. 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

56. The Transfer Matrix Before During After Manager Trainer Trainee Time Periods Role Players

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