ROI is the abbreviation of the century as far as the training world is concerned.

It stands for 'Return on Investment' and is used to demonstrate financially how effective the learning solution has been. It was made famous by Jack Phillips who showed how it could be achieved in his book 'Return on Investment in Training and Performance Improvement Programs'.

Calculating Return on Investment

To calculate monetary ROI, identify the total financial benefit your organization draws from a learning program and then subtract from that the total investment made to develop, produce, and deliver that program. Though it's difficult to measure all of the costs associated with the program and even harder to isolate the financial benefits from the program, I find this exercise worth completing once in a while so that you can assess the types of statistics you are tracking and if they are the right ones to measure. [More regularly, you should examine what creates non-financial value.]

             (total benefit - total costs) = ____  X 100 = ROI
                             total costs

Total benefits include money saved by the organization, money made, and anything that adds directly or indirectly to the bottom line.

Total costs include the obvious and the not-so-obvious: development costs, learner's time away from doing something else, overhead of education department, physical materials, etc. (For instructor-led training this also includes program materials, meals/refreshments, facilities, cost of coordination, cost of job coverage during training, overhead of instructors, and any other cost incurred. Online events include servers, graphics, web development or CD-production, etc.)

Sounds good? Hold your horses!! To carry out ROI effectively and with any degree of accuracy takes time and effort, right from the start of any Learning & Development (L&D) programme.

Our consultants have vast experience in helping organisations work out ROI, so if you really need to know how much that learning solution has saved, or how much your company will make after the training TELL us at the start of our involvement.....it will make it much easier to put systems and measures in place to work out.