HR Professional Sitting at Desk Learning the ROI of Employee Training

Measuring the ROI of Employee Training: A Beginner’s Guide

Do you know how much you spent on training programs last year?

Now, do you know if it was money well spent?

According to research, small employers (<100 employees) spent an average of $1,814 per employee last year; midsize employers (100-2,499 employees) spent an average of $1,121.

Either way, that’s a big investment. And, as with any investment, you should be able to gauge if it’s worthwhile.

That’s why it’s key to measure your return on investment (ROI) of employee training. Here’s how to get started—and why you should.

3 Reasons Why Employee Training ROI Matters

As an HR professional, you undoubtedly advocate for (and quite possibly manage) your company training program. That means you should have a vested interest in:

Measuring the impact of employee training on business outcomes

Studies show that employers with strong training programs have higher profit margins. So, whether the goal of your training initiative is to teach the workforce to use company’s systems more proficiently or improve customer service, accelerating staff’s professional growth can boost the bottom line.

Calculate the savings derived from training programs

Obviously, teaching employees how to be more productive saves money over time. And because employees want to work for companies that offer career advancement, training programs often reduce recruiting costs, too. In fact, employees who receive professional growth/career advancement opportunities have 34% higher retention rates than others.

Justify resource allocation for future training initiatives

A positive employee training ROI validates the financing of future programs, earning a piece of the company budget. After all, if customer satisfaction increases after service training, imagine what targeted sales training can do!

How to Measure ROI on Employee Training

While there are some sophisticated methods and formulas for measuring the ROI on employee training, there is also a simpler, straightforward strategy:

  • Set clear training objectives – what outcomes do you want to see as the result of the training?
  • Identify relevant metrics/KPIs – what behaviors do you hope to change through training?
  • Collect these metrics, both pre- and post- training
  • Gather post-training feedback from employees and managers, requesting a training evaluation
  • Review the financial data related to the training, including dollars spent and any measurable gains/savings

Tools for Measuring Employee Training ROI

Chances are, you already have several tools for measuring training metrics, including:

  • Your learning management systems (LMS) – Most LMS platforms include built-in tools like quizzes that measure employee mastery over the subject.  
  • Survey and assessment software – You may already have an employee survey mechanism in place, perhaps through your HR software.
  • HR analytics – Your analytics solution should be able to track some general training-influenced metrics, such as retention, absenteeism, and engagement.

Employee Training ROI Metrics & KPIs

Other than mandated compliance training, most employee training programs are goal-driven. In that event, it’s up to employers to identify specific, measurable KPIs relevant to their goals. However, these workforce metrics can often be useful, too:

  • Employee Engagement – Engaged workers are more productive, creative workers. Measuring changes in engagement levels before and after training indicates its effectiveness.
  • Employee Retention - Tracking retention rates following training initiatives can help assess the impact on turnover and employee satisfaction.  
  • Productivity - Improved productivity is one of the most significant indicators of successful training programs, although the way it’s measured varies for each operation.
  • Skills Development – Clearly, assessing changes in skill levels pre- and post- training is key.
  • Revenue Growth/Improved Margins – While it’s often difficult to directly correlate training to revenue growth and profitability, tracking these metrics does offer value.

A Blueprint for Continuous Employee Development

Measuring the ROI of your employee training program will give you data-driven insights for continuously improving your training initiatives—and that will not only benefit (and please) your employees, but ultimately boost your bottom line.

For more ideas, read our companion blog, 4 Steps to Build an Effective Training and Development Program

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