Contents:
One of the most common phrases regarding the evaluation of the effectiveness of corporate training is: "Everyone talks about ROI, but no one knows how to calculate it correctly." This problem is relevant for many organizations seeking to determine the real value of their training programs. Correctly calculating the ROI (return on investment) in training allows companies not only to evaluate the effectiveness of investments but also to optimize processes for better results. Without a clear methodology and understanding of the factors influencing ROI, organizations risk missing out on important data needed to make informed decisions in corporate training.
ROI (return on investment) is a key business metric that allows you to evaluate the return on investment in the creation, promotion, and delivery of training programs. Expressed as a percentage, ROI helps you understand how effectively resources were used. An ROI of less than 100% indicates that the training program was not worth the effort: the costs exceeded the benefits. Optimizing costs and improving the quality of training courses will help improve this indicator and make the investment more justified.
Evaluating the return on investment in employee training is a complex task, especially when it comes to hard-to-measure skills such as leadership or communication. Despite the theoretical clarity of the issue, the practical application of evaluation methods requires a careful approach. It is important to consider that developing these skills can significantly improve overall team performance and corporate culture. Using various assessment methods, such as questionnaires, peer feedback, and performance analysis, will help more accurately determine the impact of training on employee performance and, ultimately, the company's financial performance. Thus, systematic assessment and analysis of results will help create an informed training investment strategy aimed at long-term business development.
Paul Leone, a specialist in training effectiveness assessment and founder of MeasureUp Consulting, discusses an interesting case in his column for Training Industry. Although his example does not resolve all questions and doubts, it can serve as a useful guide in the field of training program evaluation.
What training program did this case concern?
Paul Leone describes a case of using immersive safety training developed by the training department of the British oil and gas company BP (British Petroleum) in 2023 with the participation of a third-party contractor. Despite its name, the training's primary goal was not only to practice safety procedures but also to develop the soft skills necessary for effective communication. Participants, primarily managers, learned skills related to communicating safety principles, building trust within the team, receiving feedback, and discussing complex risk-related topics. This approach helps improve overall safety in the workplace, as confident and prepared managers are better able to convey the importance of safety procedures to their subordinates.
The results of the training were assessed based on a sample of 82 managers. The evaluation was conducted using a six-stage model. The first five stages correspond to the levels of the Kirkpatrick-Phillips model, while the sixth stage allows for the assessment of an additional factor that influences the effectiveness of the training. This provides a deeper understanding of the training results and its impact on the participants.
How the evaluation was conducted
In the first stage of the training, called "Reaction", the participants were assessed. They gave their ratings on a scale of 1 to 5 immediately after completing the training. The final average rating was 4.8.
In the second stage, dedicated to "Knowledge" and "Learning", an assessment of the acquired knowledge and skills was conducted. The results showed that 95% of the participants successfully completed the training and received new, practical information that would be useful in their professional activities.
In the third stage of the evaluation, dedicated to "Behavior", changes in the behavior of the training participants were analyzed. For this purpose, six indicators were developed and a five-point scale was used, ranging from "no change" to "significant change." The author only mentions some of the indicators used in the article, but they may vary for each program depending on the goals and objectives of the training. It is important to note that behavioral changes were assessed not immediately, but two months after the course's completion. The results showed that the majority of participants improved their skills in conducting safety conversations (91%), developed more trusting relationships with colleagues (84%), and became more comfortable handling difficult conversations (81%). These data underscore the effectiveness of the training in enhancing professional skills and improving interpersonal relationships in the workplace.
Step Four – Results ("Business Impact"). Participants were asked to rate the percentage increase in their productivity and contribution to work. At this stage, the most challenging is separating the training effect from other factors influencing the outcome. In this case study, the following aspects were taken into account:
- responses only from those training participants whose behavior changed significantly;
- only the volume of their work that can be realistically impacted by the skills acquired during the training (we assume that isolating this volume for assessment is the most difficult part for evaluators, but Paul Leone does not describe how exactly this was done).
As a result of the training, the productivity of each participant increased by an average of 2%. While this may seem insignificant at first glance, the next stage of analysis shows that this increase has a significant impact on the financial result. This figure in monetary terms can lead to a significant increase in profits for the company, emphasizing the importance of investing in employee training and development.
Paul Leone does not provide specific formulas, but for a better understanding of the situation, he offers numerical data that illustrate what is happening. These figures help to understand the scale and dynamics of the processes described.
- The initial estimate of the increase in productivity was 39%.
- The share of those who were high achievers (whose behavior changed significantly) was 51%.
- The share of total work tasks influenced by the change in their behavior was 10%.
- The overall increase in productivity was 2%.
In the fifth step, the return on investment (ROI) was calculated. For this, the results obtained in the previous step were converted into monetary equivalent and compared with the full costs of training. The basic approach was that an employee's productivity should at least correspond to their salary. If productivity after training exceeds the salary level, this brings significant benefits to the company. Thus, the ROI assessment allows us to understand the effectiveness of investments in employee training and development.
The standard ratio was chosen as the basis for the calculation : salary and productivity at a 1:1 ratio, assuming that it was at least equal to this value before the training. It was further found that the average productivity increase among all participants analyzed was 2%. This increase ultimately resulted in a benefit of $376 per participant.
When comparing this figure to the cost of training one participant, including the cost of their time, the return on investment was found to be 275%. This means that for every dollar invested in training, the company returns $3.75. This high ROI underscores the importance of investing in employee development and professional training to improve overall business performance.
In the sixth stage of the study, Paul Leone examined an additional aspect - the impact of a manager support program on training effectiveness. For this, training participants were divided into two groups: one with active support from management and one without it. The results showed that in the first group, productivity increased by 2.5%, while in the second group this figure was only 0.8%. As a result, the ROI for the first group was seven times higher than that of the second. These monetary figures highlight the importance of not only the training program itself but also the support provided to learners by their management for learning success. BP, through the successful implementation of a comprehensive measurement and data collection strategy, demonstrated the effectiveness of its immersive safety training. This case highlights the importance of proper data analysis for stakeholders and business leaders, demonstrating the value of employee training. Such initiatives not only improve workplace safety but also contribute to overall company performance.
Another brief example with the same evaluation framework
BP training is just one of many examples considered by the expert. In a similar article, he shares a case related to change management. Although Paul Leone did not indicate a specific company, he described in detail the methodology for evaluating the effectiveness and return on investment in the training process. The evaluation was conducted according to the previously mentioned framework, which suggests the universality of the approach to analyzing the results of training programs.
- Reaction. It was measured immediately after the training - 100% of participants were engaged and satisfied with the training.
- Knowledge. Here, four key areas were identified: for example, recognizing emotional signals of change as opportunities or creating an action plan that will allow you to accept and manage change. It turned out that 98% of participants gained new knowledge, and on average, when comparing "before" and "after" training, their performance increased by 38%.
- Behavior. An assessment was conducted three months after the training, using six criteria based on a five-point scale. For example, the assessment tracked whether participants began to see opportunities in change, whether they checked in with colleagues, and whether they learned how they manage change. Among the findings: 90% of participants demonstrated improvements ranging from "some" to "significant," and 67% demonstrated strong or significant changes across all six criteria.
- Results. As in the previous case, an attempt was made to separate the obtained results from the influence of other effects—this time using data on employee productivity and their contribution to the business, which were converted into percentages. This data was also adjusted, taking into account only the results of those who showed significant changes in behavior. It turned out that, on average, the productivity of each participant increased by 21% as a result of the training.
- ROI. At this stage, the return on investment was calculated: the obtained results as a percentage were expressed in monetary terms and then compared with the training costs. The ROI over three months was 57%, and every dollar invested should have brought the company $6.28 in profit.
In this case, Paul Leone investigated how post-training coaching affects the increase in return on investment (ROI). He divided participants into two groups: one that underwent coaching sessions after completing the training and one that did not. The results showed that employees who received coaching demonstrated twice the effectiveness, which directly impacted the return on investment. This confirms the importance of coaching as a tool for increasing productivity and improving a company's financial results.
Reading is also important for developing and broadening one's horizons. Immersing ourselves in literature enriches our inner world and helps us better understand the world around us. By exploring different genres, we can find inspiration and new ideas. Regular reading helps improve concentration and analytical thinking, which is a useful skill in any area of life. Don't forget to devote time to books, articles, and research that will help you stay up to date with the latest trends and discoveries.
- How to design a corporate course if the topic is extremely boring
- Adaptability coefficient: what it is and how it relates to personnel development
- How to develop leaders without interrupting them from work: the Gazprom Neft case
- What to replace boring courses with: the 5Di design model
- How to create conditions for developing desired behavior in employees