Effective training, like any business investment, should always provide a good return for your organization. However, many training benefits are often intangible and hard to assign a monetary value. While there are some easy ways to measure the ROI of training, calculating ROI – Return on Investment – can be highly complex and open to interpretation. If you’re looking to measure the ROI of your training programs and aren’t sure where to start, these are the top 15 training ROI metrics you should know.
What is a training ROI metric?
A metric is any number that helps track performance and progress. A Key Performance Indicator (KPI) can be considered a metric, but all not all metrics are KPIs. In the context of calculating training ROI, some metrics can be hard to calculate. Concepts such as “customer satisfaction” can be difficult to relate directly to sales. Training designed to enhance revenue can be more straightforward to measure but still require estimates that can easily be challenged by people who don’t want to pay the up-front costs associated with training.
Let’s get straight to the metrics!
Training ROI Metric 1. Trainee satisfaction
If you’re used to handing out ‘smile sheets’ after a training session, you’ll know that end-user satisfaction is one of the most commonly assessed training ROI metrics. Most people dole out the sheets without knowing much about the reasons behind capturing this type of data.
The concept was popularized by Don Kirkpatrick in the 1950s when he published a series of articles in the Journal of the ASTD that helped companies assess the effectiveness of their training. His work proved so successful that he expanded it into a book, Four Levels of Training Evaluation, commonly known as the Kirkpatrick Model.
The first of the four levels was ‘Reaction’; what was the reaction of the trainees to the training? This kick-started the practice of handing out smile sheets: companies would ask their staff questions such as:
- Was the training worthwhile?
- Would you recommend the training?
- Did you feel the training was useful?
Trainee satisfaction is a helpful ROI metric that gives you a picture of what happened during the training and helps you gauge its effectiveness.
Training ROI Metric 2. Learning
The second training ROI metric you can assess is learning. This underpins the second level of the Kirkpatrick model and aims to establish whether the training produced measurable returns. The most common approach is for the course instructor to ask participants to complete a short test or quiz before the training, and then another one afterward. Comparing the two sets of results is a valuable metric for assessing the returns offered by the training.
Training ROI Metric 3. Workplace behavior
One criticism of the first two metrics is that they don’t tell you much about whether the training is making an impact on the business or the organization. You can hand out smile sheets to your heart’s content and make everything seem wonderful; the instructor was great, the participants found the training enjoyable and worthwhile and the venue was awesome.
But so what?
People’s reactions are useful but that doesn’t mean that the training actually delivered on-the-job results.
Likewise, pre- and post-training tests can easily be used to ‘prove’ that learning took place, or justify the training. But they don’t tell you whether people actually use what they learned when they return to work!
That’s why the Kirkpatrick model level 3 evaluation studies behavior. A couple of weeks or months after the training wraps up, you can go into the workplace and see whether people are using the skills, knowledge or training that they picked up.
Workplace behavior can be assessed in a number of ways:
You might ask your middle or senior managers or supervisors to conduct observations or assessments of their staff.
You could ask the employees to observe each other and complete peer-evaluation forms.
Asking the employees to complete their own self-evaluations is another option.
This type of assessment shows you whether the training is being put to good use.
Training ROI Metric 4. Outcomes
Every training course should have a goal. It might be increasing sales, improving customer satisfaction or even reducing waste. Whatever it is, you need to measure the outcomes and compare them against the goals.
For example, if you conducted a training course designed to increase the efficiency of a particular job, you would have to measure the rate at which employees were completing their tasks and determine whether the training had met its objective.
Training ROI Metric 5. Stakeholder expectations
The Kirkpatrick model has been largely unchanged over the years, save for one updated version, the Kirkpatrick's Four Levels of Training Evaluation, authored by Don Kirkpatrick’s son James and his daughter-in-law Wendy. Strikingly, the system still measures ROE – Return on Expectations.
The stakeholders, that’s who. Depending on the type of organization, this may be senior management or C-suite execs who set the goals for the training.
Training ROI Metric 6. Sales
The most tangible ROI metric is to look at sales data from both before and after the training. The umbrella term of ‘Sales’ can encompass the following areas:
Profit of the sale
Cost of Sale
Even if the goal of the training isn’t explicitly to increase profits, you may expect to see productivity or efficiency improvements that help drive sales and increase revenue so looking at this metric makes sense.
Sales are one of the best ways to track efficiency, especially if training is heavily geared towards customer service or productivity. Unit sales and dollar figures make good metrics, but these must be appropriately balanced with other factors that can affect sales numbers such as the rollout of new products and services.
Training ROI Metric 7. Operational efficiency
Sales data doesn’t always tell the whole picture. That’s why measuring operational efficiency can be a useful metric. In a production-oriented business, you can measure workers’ efficiency metrics prior to as well as after the training. The difference between these two values can be converted to a monetary value and used to calculate ROI.
Let’s see how this looks in practice:
Imagine you’re the operations manager of a brewery with ten employees who each receive an average hourly rate of $14 per hour. You pay for a training course designed to increase the workers’ operational efficiency; the training costs $600 per person ($6,000 in total).
Now, let’s say that the training results in an average increase in operational efficiency of 10 percent per employee. Based on their average salary, you could calculate that each employee is generating an additional $1.40 per hour for the company. Over 100 eight-hour working days, the total additional benefit would be $11,200.
Your rough ROI calculation would be:
ROI% = ($11,200 - $6,000)/$6,000 X 100 = 86.6%.
Training ROI Metric 8. Customer service feedback
Training is often used to address feedback received via customer surveys. This area can encompass a wide range of aspects including:
Of all training ROI metrics, customer service feedback is some of the more intangible and most difficult to relate directly to sales. It is difficult to correlate individual training sessions to short-term lifts in sales and you may want to use longer-term metrics to calculate the ROI for your training efforts that result in, say, customers loyalty rising over time.
You can also link seemingly unrelated training courses to customer service feedback. For instance, training that aims to boost the efficiency of staff in handling calls should result in an improved experience for customers. This should, over time, be reflected in customer service feedback.
Training ROI Metric 9. Revenue
We’ve discussed the metrics of sales, operation efficiency and customer service feedback – but what about combining all of them? This is where the metric of revenue becomes apparent.
Increased revenue shows that sales numbers are improving, customers are satisfied with the service they are receiving and the organization is operating efficiently. Revenue can be a helpful metric for assessing the overall effectiveness of training, but care must be taken to isolate the impact of the training from unrelated factors such as economic conditions.
Popular methods for isolating program effects include:
The use of a control group
Trend line analysis of key performance data
Forecasting methods of key performance data
Estimates of program impact at a managerial level
Training ROI Metric 10. Training costs
All training – even in-house training – costs money so you should expect to see a return on your investment. Thus far, we’ve taken the price of the training costs into consideration when calculating ROI. But there are other, ‘hidden’, costs to consider too.
With the exception of e-learning courses that you ask employees to complete from home in their own time, most training takes place during working hours when employees are paid to be there.
For an accurate measurement of training costs, you’d have to factor in the lost productivity and any related costs such as hiring extra personal or paying overtime to compensate for the work usually done by employees during the time they were engaged with the training.
Training ROI Metric 11. Increased employee retention
An interesting training ROI metric to consider is the rate of retention of the staff who take part in the training. This is especially helpful when assessing the effectiveness of training programs used to train recently hired staff. Newly trained employees who feel ill-equipped for their jobs are likely to struggle or even resign within their first three months. Conversely, high retention rates suggest that the initial training program was successful.
Training ROI Metric 12. Instructor performance
If you are following a specific course evaluation model such as the Kirkpatrick Model of training evaluation or the Phillips ROI Methodology, you may ask trainees to evaluate the course instructor’s performance after the training. The Kirkpatrick model refers to this level as ‘Reaction’, while the Phillips ROI methodology calls it the ‘Reaction and Planned Action’ stage.
It is common for course instructors to hand out evaluation forms where they ask trainees to provide written feedback. This gives the company running the course an idea of how the course was received and how it might be improved moving forward.
Training ROI Metric 13. Needs and Goals
In the 1960s, Daniel Stufflebeam developed the CIPP evaluation model, often referred to as the Stufflebeam model. The acronym ‘CIPP’ stands for:
Unlike the Kirkpatrick Model that just tells you what went right or wrong with the training, the Stufflebeam model aims to show the organization how and where they can improve.
The CIPP evaluation model helps you identify what went right and wrong in a training course or program by looking at the organization's needs and its goals. Some examples of the types of questions you might ask include:
Context: To what extent did the training meet the needs of our organization?
Input: How well designed was the training?
Process: Did the training follow the correct schedule and timeframe?
Product: To what extent did the training meet the goals of our organization?
By examining the needs and goals of an organization, you can gain an insight into how to implement and monitor future training sessions.
Training ROI Metric 14. Delivery
This metric covers the following three areas, depending on your organization type:
On Time Shipments
If you deal with physical products, you could look at the timeliness of their delivery and their success rates, or return rates. If you are selling a service, you could look at the delivery rates. A higher success rate of delivery indicates that training has enhanced business efficiency and this will in turn increase profits.
Training ROI Metric 15. Custom and/or hybrid criteria
Very often, the criteria used to determine training effectiveness won’t fit neatly into one specific category. Organizations that have a wide variety of possible measurements may ask stakeholders and managers to create a custom ‘scorecard’ that contains a wide variety of expectations. This criterion may straddle the lines between two or more of the criteria mentioned above. For example:
An increase in sales and new accounts
An improvement in customer engagement and customer loyalty
A decrease in customer complaints and compliance discrepancies.
These custom and hybrid criteria can have a huge influence on the ROI calculations as training may impact one part of the criteria and not the other, leading to mixed feedback.
Training metrics are often intangible, difficult to link directly to sales and take time to put into place and show results. Skeptical stakeholders can easily undermine the necessary projections and estimates necessary to support training ROI metrics so it is important to obtain buy-in before you attempt to prove bottom-line effectiveness of your training. If you are looking for ways to conduct your own ROI evaluation, here's our guide on how to successfully measure the ROI of employee training in 6 steps.
For more tips on how to use the Kirkpatrick model to evaluate training and measure ROI, be sure to ask us for a free demo to see how we can help you achieve your goals.