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The Importance Of Measuring Training Roi

Apr 5, 2008
Many companies spend a good fortune on training to increase productivity, enhance employee retention and reduce waste. Of course, they want to make sure that the return on investment on training pays off. Training should be measurable in order to determine effective ROI.

Companies offer training to their superiors, employees, clients and even suppliers. This can be conducted through outside training firms, an in-house training department or a combination of both. Training costs include payment of trainers, payment of participants for off-work time and expenses for travel and accommodation.

Managers and employees must drop their work hours to attend training sessions. The company is not only paying them even without rendering work, but it can also lose productivity or sales in the absence of their personnel. Moreover, the company may have to shoulder travel and lodging costs for off-site training.

When measuring training ROI, the company must measure the estimated productivity loss, hourly rate, training costs and other expenses related to the activity. An important factor in measuring training ROI is defining training goals. To measure training ROI, measure the amount of money made before and after the training, in which such an improvement should be compared with the training cost.

In many instances, there may be no measurable goals for a training session. This usually applies to trainings for managers, in which measuring the results of this type of training can be very difficult. However, if the goal of the training is to boost employee productivity, it is important to determine metrics before and after the training to determine training effectiveness. Training costs can then be compared with the profits' real improvement to determine training ROI.

For instance, the specific goal of safety training may be to reduce the rate of accidents. You ca create statistics to verify its training effectiveness. When training customers, on the other hand, a good way to determine training effectiveness is reducing service calls. Maintenance costs for a service call staff and repairs may be compared with the costs incurred for training the customers. There are some companies that are using service calls as a way of generating revenue. This is usually a short-term method of making money. If a customer is required to make service calls and send in the product for repairs, then s/he may switch to another competitor. A quality, user-friendly product is a surefire way to establish repeat business with customers.

In addition, measuring training ROI from suppliers can be done through the improvement in the quality of products and services provided for. This will lead to a quantifiable reduction of product and service problems as well as enhanced quality of the end products.

Bottom line, companies offer training in order to boost productivity which is important in order to yield more profit and ensure company success. Training investment consists of training costs and time spent by the employees from their work. Measurement of the effect on the firm's profits and real improvements before and after training and comparison with the training costs can help determine the company's return on investment.
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