Training Evaluation - Roi

Today’s companies are faced with many challenges like retiring workforce, talent retention, increased competition globally, and to face these challenges, companies look to provide training to their current workforce, and prepare the next generation of skilled workers. Training our current workforce whether it is new skills, or keeping up to date within the industry, or compliance training is very important. But to the top executives training might seem to be a time consuming, costly endeavor with no accurate measurable benefits. It is crucial for HR to be able to evaluate training based on training effectiveness, measure training effectiveness and show how training can impact the bottom line. HR needs to determine how well training plans and programs contribute to mission accomplishment and meet organizational performance. In addition, demands to demonstrate training program efficiency, program effectiveness and public accountability are increasing. Use of evaluation data meets these demands in various ways.

Training evaluation is a systematic process of assessing the value or potential value of a training course, activity or event. Results of the evaluation are used to guide decision-making around various components of the training (e.g. instructional design, delivery, results) and its overall continuation, modification, or elimination.

Companies are accustomed to dealing with the bottom line, material costs can be calculated and the volume of products produced can be counted. The cost of purchasing and installing a new machine can be weighed against the increased production it will yield. The products are a tangible item, sold for a net profit. The return on investment (ROI) can be clearly calculated. An investment in employee training is often viewed as something that is much more difficult to calculate for ROI. Managers see the upfront costs of training and are afraid they will not realize any measurable return on their investment. Building upon the Kirkpatrick model, Jack Phillips added the fifth level the Return on Investment (ROI) produced by training and has demonstrated correlations between investing in training and net returns on that investment.

Changes in output are the goal of many training programs. In most situations the value of increased output can be easily calculated, while in a few instances it may be difficult. For example, Wells Fargo has an extensive training program for their new Personal Bankers, before they are assigned to a local branch. This training program lasts for one month where all the trainees are trained in a group rather than individual training. Once the trainees are in their respective branch for one month, their productivity, number of new businesses they brought with them, number of loans and lines of credit opened, number of referrals made to other Wells Fargo businesses (e.g. mortgage, financial) are tracked by the system. After the one month period, the Banker is sent to a second