One of the biggest barriers a trainer faces is a resistance to training from both middle and upper management. Supervisors, managers, and top management are often frustrated at taking time away from work to train. They're also uncertain on the projected return on investment.
The reality, we train every day and hone our skills. Investing time to better a skill or learn a new way leads to improved productivity and employee satisfaction. All of which reduce employee turnover, the question is how to convince everybody of that fact.
Return-on-investment (ROI) analysis gives you the specific information you need about the financial impact training programs have on the organization. an ROI answers the vital question top management wants to know: "For every dollar, we invest in training, how many dollars are we getting back?" Since you want to be sure employee training is seen as beneficial to the organization, you must be able to answer that question with hard data. In other words, you need to know the percentage of profit made or savings earned for every training dollar spent. And that's exactly what calculating training ROI can do for you.
How to measure training ROI?
Here's the simple formula for measuring training ROI:
ROI (%) = ((Monetary benefits – Training Costs)/Training Costs) x 100
Example Sales Engineering Training ROI:
Assume that as a result of a new sales engineering training program focused on reducing post-sale support incidents over the first six months of a customer sales cycle. The support team's support cases decline 10 percent, yielding a total annual savings of $40,000 in terms of labor time alone (no soft cost of improved customer satisfaction or increased net promoter score). If the training program costs $10,000 to implement, the ROI would be 300 percent.
ROI = ((40,000 – 10,000) ÷ 10,000) x 100 = 300%
So in this example, for every $1 spent on training, the organization gained a net benefit of $3.
To get the figures for ROI analysis, keep track of training costs, including the cost of design and development, promotion and administration, delivery (staff or technology), materials and training facilities, trainee wages, and training evaluation. After training, keep track of monetary benefits, including labor savings, reduction in lost workdays and workers' compensation costs, productivity increases, and lower turnover costs.
If the presale engineer team in the example spent time training on the top-ten problems entering into pos-sale support they can work on reducing those items before sale. This improves the overall customer experience. Often the thought is shifting labor costs and that is not true. More critical support cases that would be incurred regardless of the training can now have more dedicated time and faster resolution. T
In short, results-oriented training is possible. Be sure you evaluate the business need and match the training to that business need by a thorough process of discovery, design, development, implementation, and execution for results. And always remember that training is not an event, it's a process.
Training ROI Resources
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