Determining Training Return-on-Investment
Return on investment (ROI) measures whether the benefits of training are worth its cost. Expressed as a percentage, it lets a business compare what it spent on training against what it gained.
Questions you may have include:
- What is training ROI?
- How is it calculated?
- What counts as a cost or a benefit?
The basic calculation
Training ROI is usually figured as:
ROI (%) = (Net benefit ÷ Cost) × 100
where the net benefit is the monetary value of the gains minus the cost of the training. A result above zero means the training returned more than it cost.
Identifying costs
Costs include developing or buying the material, the trainer or platform, and the value of the time employees spend in training instead of working.
Valuing the benefits
Benefits include higher productivity, fewer errors, less rework, improved safety, and reduced turnover. The challenge is assigning a monetary value to these, since some are easier to measure than others. Estimating carefully — and being honest about what cannot be measured precisely — keeps the figure credible.
Summary
Training ROI compares the monetary benefits of training with its cost, calculated as net benefit divided by cost, times 100. Identifying all costs and putting a reasonable value on benefits such as productivity and retention shows whether the training paid off.