Management Roi

The idea of quantifying training can be a difficult task. Both the employee and organization can benefit from formal training in many ways. I have personally benefitted from ongoing formal training early in my career. The company would train us in many varies sales and customer service modules. In particular, Leadership for Manager by Dale Carnegie which was performed by an outside consulting group has served me well as I continued my career. Unfortunately, other companies viewed training as an unnecessary expense. What I observed is employees learned bad habits through Behavior Modeling (pg 302, Cascio) because the person or persons they were observing were never taught properly to begin with.

In this exercise unlike many other trainings that a company can implement we have concrete numbers in order to evaluate the Return on investment (ROI). The equations below show each weeks ROI when you calculate the cost of a mistake $2.50 and total cost of training for $49 per employ multiplied by5 employees = $249. The company fails to break even in week 5 as it is not greater than 100%. In fact both charts show a decrease in mistakes whether the employees are trained or not. If you plot the line graph below you will need to wait until you get to week 7 at 99.6 mistakes in order to reach a breakeven point.

[pic 1]                Week 1

[pic 2]                Week 2

[pic 3]                Week 3

[pic 4]                Week 4

[pic 5]                Week 5

[pic 6]

In conclusion, the training implemented will not show immediate impact but over time will show a return on the company’s investment into training. This example has numbers to calculate ROI and the company will save money over time which speaks to 5th element of Kirkpatrick’s level of evaluation added by Phillip of ROI. I feel it is very important for a company to take into Kirkpatrick’s 4 levels of evaluation. This way a company can evaluate and more importantly measure why, how and what is learned.