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Thread: Determining Training ROI

  1. #1
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    Determining Training ROI

    I keep talking about it. So here we have an exercise for you to do.

    Return On Training Investment Calculator

    Use this worksheet to help determine the return on investment for your training.

    Client: __________________________________________________ _________________

    Audience: __________________________________________________ ______________

    Business Objective:________________________________________ _________________

    Business Objective Measurement: _____________________________________________

    Performance Discrepancy: __________________________________________________ _

    Symptoms of Performance Discrepancy: ________________________________________

    Performance Discrepancy Caused by Insufficient skills: ____________________________

    Performance Discrepancy Caused by Insufficient Support: __________________________

    Performance Discrepancy Caused by Insufficient Motivation: _______________________

    Increased Sales (per year):

    R_______________ Additional sales per employee due to larger opportunities
    +R_______________ Additional sales per employee due to more wins
    + R_______________ Additional sales per employee due to ____________________
    = R_______________ Total additional sales revenue per employee
    x _______________ Number of employees trained
    = R _______________ Sales revenue produced by training
    x %_______________ Average margin (expressed as a percentage of sales)
    = R _______________ Sales Profit Produced By Training

    Increased Productivity (per year):

    %_______________ Percent increase in productivity due to increased efficiency.+ %_______________ Percent increase in productivity due to fewer resources required
    + %_______________ Percent increase in productivity due to ___________________
    = %_______________ Total percent increase in productivity
    x R_______________ R amount attached to productivity per employees (throughput)
    x _______________ Number of employees trained
    = R _______________ R Attributed to Increased Throughput Resulting From Training

    Reduced Errors (per year):

    R _______________ Average cost per error due to __________________________
    R _______________ Average cost per error due to __________________________
    R _______________ Average cost per error due to __________________________
    = R _______________ Total cost of errors
    x _______________ Number of errors avoided per employee
    x _______________ Number of employees trained
    = R _______________ Error Costs Reduced By Training

    Qualified New Opportunities (per year):

    _______________ Number of additional opportunities qualified per employee
    x R _______________ Average revenue per opportunity
    x _______________ Number of employees trained
    x %_______________ Average margin (expressed as a percentage of sales)
    = R _______________ Additional Sales Profit from New Opportunities

    Installed Base Retention (per year):

    R _______________ Average revenue per client
    x _______________ Number of clients retained per employee attributable to training
    x _______________ Number of employees trained
    x %_______________ Average margin (expressed as a percentage of sales)
    = R _______________ R Installed Base Profit Protected Through Training

    Employee Retention (per year):

    R _______________ Average cost of new employee (training and lost productivity)
    x _______________ Number of employees retained
    = R _______________ R Employee Attrition Costs Reduced By Training.

    Total Profit and Cost Savings Attributable to Training Per Year
    (From Previous Calculations)

    R _______________ R Sales Profit Produced By Training
    + R _______________ R Attributed to Increased Throughput Resulting From Training
    + R _______________ R Error Costs Reduced By Training
    + R _______________ R Additional Sales Profit from New Opportunities
    + R _______________ R Installed Base Profit Protected Through Training
    + R _______________ R Employee Attrition Costs Reduced By Training
    + R _______________ R Other Profit or Cost Savings Attributable to Training
    = R _______________ R Total Profit and Cost Savings Attributable to Training

    Return on Training Investment (ROTI)
    (From Calculations Above)

    R _______________ R Training Investment (per year if appropriate)
    R _______________ R Total Profit and Cost Savings Attributable to Training Per Year
    x ___12 months____
    = _______________ R Return On Training Investment (in months).

    Return on Training Investment Calculator

    Qualitative Return on Training Investment
    (Significant Return that is Difficult to Quantify)

    It is often difficult to quantify some important effects resulting from training. To determine the qualitative return on training investment, work from left to right; circle the relative importance (5 is high; 1 is low) of the behavior/characteristic, the estimated current performance, and the projected performance. Complete the equation and total the results.

    Projected Current Performance - Performance x Importance Behavior/Characteristic
    ______________________ ______________________ ______________________ ___________________ __________________________________________________ _________________________________________________
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in morale
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in professionalism
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in teaming and collaboration
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Growth in the learning organization
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in initiative and motivation
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in __________________________
    5 4 3 2 1 - 5 4 3 2 1 x 5 4 3 2 1 = ______ Increase in __________________________
    = ______ Qualitative Return On Training Investment

  2. #2
    Platinum Member Marq's Avatar
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    Amazing.

    I think if I had to fill this out , I would have the biggest thumb in the country.
    The cost of living hasn't affected its popularity.
    Sponsored By: http://www.honeycombhouse.com

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    Site Caretaker Dave A's Avatar
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    I was chatting to my electrical business partner the other day about something similar. I pointed out that as our company's skills base improved, so did the overhead cost and there was a point where the return as a percentage of cost actually dropped off.

    His observation was the "old" way of doing things in the trades was to keep training (cheap) apprentices. As they qualified the apprentice agreement ended, they were hoofed (generally going on to form their own business), and you kept filling up with apprentices to do the bulk of the work, essentially maximizing your profits.

    I suspect there's a lesson or two to be learnt in there somewhere.
    The trouble with opportunity is it normally comes dressed up as work.

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    Use learners - No liability to the business. No UIF, Tax or contractual obligations what so ever. Plus you get a tax rebate. And payment to train is the bonus.

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    Just for interest sake - they get the same qualification as the apprentice. Makes you think?

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