Training programs are a staple in the corporate world today, and it’s always critical for the company to know if the initiative has been successful or has come up short of the desired training outcomes.
Although these drives are supported by solid data analytics, organizations often incur huge losses owing to ineffective training programs. So, as a training and development company, how do you prove that your training program has added (or will add) to a company’s growth and that the program is worth the investment?
Let’s look at some models of training effectiveness evaluation.
What Is Training Effectiveness Evaluation?
Training effectiveness evaluation is a process that makes it easier for the company/HR to evaluate the training program, find loopholes, gather feedback to see if it had the desired impact on the participating employees, and act upon the shortcomings for a smoother journey going ahead. There are several effective ways to measure training outcomes. Calculating training and development ROI is one such way. It’s a method by which you can calculate the financial benefits a company reaps by investing in a training program. It measures the impact — in terms of monetary profit — of a particular training endeavor on the company’s performance and business results. This, in turn, helps you use ROI data from your past programs to sell to future clients, and apply the learnings to better design future programs.
There are multiple ways by which you can conclusively measure training and development ROI. Let’s have a look at a few:
3 Major Ways to Calculate the Training & Development ROI
1. Phillip’s ROI model
A very popular method of calculating ROI, learning and development is by using Philip’s ROI model. How is the ROI measured here? By simply measuring the difference between the training outcomes and the cost of the training program. Here’s a pictorial representation of the 5 stages in Phillip’s ROI model:
Your project manager can incorporate the ROI in his training program report and use it to prove the value of the program to stakeholders from time to time. Here’s how you can calculate the ROI:
Step 1: Gather pre-training data relevant to the training program
Step 2: Gather post-training data pertinent to the training program from relevant and reliable sources such as participants, supervisors, etc.
Step 3: Identify which aspect of the training has precisely helped improve the participants’ performance
Step 4: Collect the data and convert it into monitory gain. Compare that with the entire program cost
Step 5: Calculate the ROI using the formula below:
ROI% = (Net Program Benefits/Program Costs) * 100
Here’s a training outcomes example: you conduct a training program for retail sales staff to improve their selling skills. You’ve incurred an overall cost of $25,000 on conducting the training program consisting of 25 participants. Now, your pre-training data show that each of your sales staff could sell 2 garments worth $20 each in one day. This rises to 4 garments per day after the completion of the training. Hence there’s a rise in productivity worth $40 ($20*2) for one employee. Hence, the total net benefit for 25 sales staff would be $1,000 ($40*25) in a day and $1,00,000 in 100 days.
Now, with the help of the above formula, we can calculate the ROI, training and development for this example:
ROI = [($1,00,000 – $25,000)/ 25,000] × 100 = 300%
Step 6: Analyze the ROI based on the result. A higher net program benefit value indicates a positive ROI. If the program cost exceeds the value of the program benefit, you need to tweak your program strategy.
Make it efficient: To evaluate if the participants can successfully implement the skillset they have acquired from the training, you can conduct assessments using tools like 360-degree feedback, where feedback is gathered from peers, direct reports and seniors. Training management software like Simply.Coach offers a repository of such useful digital tools.
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2. Impact Study
The second method to evaluate training outcomes by calculating ROI is through conducting a business impact study. “Business impact” indicates changes— in the shape of sales, marketing, customer satisfaction, staff retention, etc.—achieved through the training. Here’s a comprehensive representation of the model:
3. Supervisor Assessment
Training ROI calculators are suited for more defined jobs where you can easily fetch the metrics for the net benefits. But for jobs where it’s difficult to isolate the impact of training, you can rely upon supervisor assessment.
Here’s an example: 5 mid-level managers underwent a training program to improve their team-management skills. Let’s say that the training incurred an overall cost of $12,000. Here, the senior manager will evaluate their on-the-job performance, both before and after the training, based on certain qualities like customer service, team management, and task completion.
Now, take the results against each of the 3 qualities and convert them into tangible values needed for measuring ROI. Consider the following representative values:
Customer service: an increase by 6%
Team management: an increase by 10%
Task completion: an increase by 5%
An overall performance improvement will be: (6 + 10 + 5)/ 3 = 7%
If the average remuneration of these participants is $63,000, their average performance improvement per year in terms of finances will be 7% of $63,000 = $4,410 for one participant, and ($4,410 × 5) $22,050 for 5 trainees.
Calculate the ROI using the standard formula:
ROI% = [(22,050 – 12000)/ 12000] × 100 = 83.75%
We have already dived deep into 3 major methods of evaluating the effectiveness of training and development programs through calculating ROI. Some additional models that are as effective but not dependent on calculating ROI are as follows:
1. Kirkpatrick’s 4 levels of evaluation
Built and designed by Donald Kirkpatrick, this model is a popular method of evaluating corporate training outcomes by measuring ROI. As the name suggests, it’s a comprehensive four-stage framework consisting of the stages ‘Reaction’, ‘Learning’, ‘Behavior’, and ‘Results’. Each of these four stages has dedicated tasks that need to be accomplished. Let’s have a look:
Points to consider for each stage:
Stage 1: Feedback questions to be discussed
- Was the program content relevant and easy to understand?
- What did you learn from the program?
- What did you like and dislike about the program?
- Were you comfortable with the momentum and style of the program?
Stage 2: Metrics to be used to measure the outcome
- Pre- and post-training test scores
- Analysis of the applied learning projects
- Impact on performance KPIs
- Completion of the training program and corresponding certification
- Training program report and feedback from the supervisor
Stage 3: Evaluation methods to be implemented
- Self-assessment questionnaires
- Feedback from colleagues and supervisor
- Focus groups
- On-the-job monitoring
- Client feedback
Stage 4: Metrics to be measured
- Improved quality of work
- Faster project completion & better productivity
- Increased sales
- Employee retention
- Customer satisfaction index
2. Kaufman’s 5 levels of evaluation
“Kaufman’s 5 levels of evaluation” is a method that leans on Kirkpatrick’s model. It’s an attempt to revamp the methods mentioned by Donald Kirkpatrick. Let’s have a look at Kaufman’s 5 levels of evaluation:
3. Anderson’s model of learning evaluation
A widely used training outcome evaluation method is Anderson’s model of learning evaluation. This method revolves around prioritizing business strategies. The 3 stages in the Anderson model are:
4. Two-pronged evaluation
It’s a simple pre- and post-program evaluation.
Here’s an analogy: your training company has decided to launch a new off-the-shelf program. The idea is still in its nascent stage. What will be the obvious first thing to do? Conduct a thorough research on who you want to create the program for, how it will be useful to them, how you’ll make it unique, and how to pitch the program features to attract more target clients, so on and so forth—this is a pre-launch survey of the product. Once the product hits the market, you need to once again conduct an evaluation to see if it has met the expectations and requirements of the end client — kind of like feedback.
The same is applicable when you design a custom training program for a particular organization. You carry out a survey and evaluate the requirement before you develop the program. Let’s see how you would evaluate it in the pre-designing stage:
- Analyze the training materials with the participants
- Check out the effectiveness of the materials to be used by running a simulation
- Gather feedback from the participants via group discussion, etc.
- Gather feedback from managers and supervisors associated either with the participants or the training program
Armed with relevant data and information, a program manager will design the program as he deems fit. Another level of evaluation, the program outcome evaluation, will have to be conducted once the training is over. Let’s see how a post-training outcome evaluation might be conducted:
- Examine participants to ascertain whether they have been able to acquire the intended skillset and the knowledge from the training program. If yes, then assess the degree of achievement
- Gather participant experience and feedback on the program
- Identify the changes in the performance standard of the employees after attending the program and measure the same
- Gather trainer opinion about their trainees
Tips & Tricks
- Start collecting necessary data right from the beginning of the program. This helps avoid last-minute hassles.
- Make sure you measure the pre-training performance to use it as a yardstick for comparing it with post-training productivity. This helps you showcase improvement backed by data.
- Find means to highlight the impact of training. It can be achieved through multiple ways like comparing a team that has not undergone the program with the one that has received the training, highlight the differences between the pre- and post-training sales numbers, etc.
- Remember “Rome wasn’t built in a day”. Similarly, it takes time before you get any visibility on the actual result of the training. Estimate and set a time frame as to when you expect to see results for a clearer measurement.
Which Model Should You Choose?
That’s the million-dollar question! And that’s what its answer depends on too: how much do you usually charge for training programs? Your deciding factors also include timelines and the type of program on offer. Using a digital tool like a training and development ROI calculator works best when the work in hand can be quantified easily and benefits are tangible in nature. Similarly, if your goals and activities are hard to quantify, you have other tools that you can leverage to gain a qualitative idea.
Sources: Whatfix, Simplilearn, Unboxedtechnology, Kitaboo, Kodosurvey, AIHR
1. Which is the best training outcome measure?
There are several ways by which a training program organizer can measure training outcomes. Some of the most effective models are:
- Kirkpatrick’s 4 levels of evaluation
- Phillip’s ROI model
- Kaufman’s 5 levels of evaluation
- Anderson’s model of learning evaluation
- A two-pronged evaluation
2. How do you measure the effectiveness of a program?
The effectiveness of a training program can be measured using several evaluation metrics broadly categorized under two groups: learners’ outcome and process measures. Learners’ outcome is gauged to comprehend whether the training was successful in terms of increasing productivity, smooth client experience, etc. It can be measured using metrics such as test scores, course completion, job satisfaction rates, task performance, etc. Process measures see whether the participants have learned what was intended by participating in the program and if they were engaged enough in the process. The metrics used to measure this are trainer satisfaction rate, duration of training, etc. A combination of both the categories will help measure the overall effectiveness of a program.
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