How to Measure the ROI of Your Training Program
It’s been said that if you don’t have a goal, you’ll reach it every time. When it comes to your training program, the focus is on employee education and development. However, the end goal for your business is to achieve a profitable bottom line on your budget spreadsheet.
Some aspects of employee training and development will provide more idealistic outcomes that are practically impossible to measure. With an effective training system, you might discover that your employees perform better as a team. They might be happier in their job and, thus, be loyal for the long haul. Of course, teamwork and satisfied employees are advantageous, but they are not straight-forward standards to measure your ROI (Return on Investment).
The ability to measure ROI in any business venture is vital. Here are ways for your training program to produce returns for your employee development and, ultimately, for your end goal.
By Collecting Data
To measure your training program’s ROI, you need to know how much time your employees are spending on training. How many modules have they completed (or not completed)? Are they engaging with the curriculum? Sure, your training department can do the recordkeeping; however, consider that a computer-based training software, such as an LMS, can easily capture and track all of your data, eliminating data management issues and providing quick access to current data reports.
By Considering the Costs
Will executing and maintaining a training program provide a desirable return? Is it more cost-effective to outsource your program or host it in-house? These are just a couple of the questions your management team will need to discuss when considering what your employee development system costs and how much you are willing to invest. Unless you have a highly skilled team in your training department, taking advantage of a qualified eLearning provider is a training route worth pursuing. A reliable program might include upfront costs, but the benefits of its efficiency and effectiveness will pay off.
By Tracking Training Results
Balancing the bottom line by monitoring performance, productivity, and safety records will offer an undeniable measuring tool as you calculate your ROI. Tracking the costs involved will allow you to measure your results based on what you’ve invested and what you gain.
By Saving Money
Something that will be a factor in forecasting your ROI is to determine what you will save as a result of investing in your training program. Saving payable work hours by outsourcing your training program is one way to measure the monetary value of your return. You may also notice longevity among your employees that, by limiting how many employees you train, will decrease your future training costs. Perhaps, though, one of the most valuable elements in regards to monetary savings is that of maintaining compliance and avoiding safety and legal risks.
ROI calculations are how you measure the monetary benefit of your investment. “The standard formula for computing your ROI for training is ROI (percentage) = ((Monetary benefits – Training Costs)/Training Costs) x 100. ROI may also be measured in terms of decreased per-item product cost or time.” (Source: Chron.com)
There are several paths a company can take when deciding on an employee training plan. What approach you choose to implement is a matter of conviction, what your company is comfortable with, and where your management team finds value. Some paths, however, may not contribute to measuring the distinct monetary benefits of your curriculum.
Either by increased revenue or decreased product cost and time, an LMS is a worthwhile and measurable investment to consider that will increase the monetary return in your training program.
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