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7/28/2019 21372659 Measuring ROI of Training
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MeasuringROI of
Training
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You can download this brilliant presentation at:
www.exploreHR.orgVisit www.exploreHR.org for more
presentations on HR management and
management skills
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Agenda
1. Measuring the Effectiveness of Training
Program
2. Measuring Return on Investment of Training
3. Enhancing the Effectiveness and ROI of
Training
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Measuring the Effectiveness of
Training Program
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TrainingNeedAnalysis
TrainingObjectives
TrainingDelivery
TrainingEvaluation
Training Process
What are
the training
needs forthis person
and/or job?
Objective
should be
measurableand
observable
Techniques
include on-
the-job-training,
action
learning, etc.
Measure
reaction,
learning,behavior,
and results
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The Four Levels of Evaluation
Level 1 - Reaction
Level 2 - Learning
Level 3 Behavior
Application
Level 4 Business
Impact
Four Levelsof Training
Effectiveness
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Test the trainees to determine if
they learned the principles,
skills, and facts they were to
learn.
Evaluate trainees reactions to
the program. Did they like the
program? Did they think it
worthwhile?
Level 1 -
Reaction
Level 2 -
Learning
The Four Levels of Evaluation
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What final results were achieved in terms of the
training objectives previously set? Did the numberof customer complaints about employee drop? Did
the reject rate improve? Was turnover reduced,
and so forth.
Ask whether the trainees behavior on the job
changed because of the training program. For
example, are employees in the stores complaint
department more courteous toward disgruntled
customers than previously?
Level 3
Behavior
Application
Level 4
BusinessImpact
The Four Levels of Evaluation
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Value ofInformation
Frequency ofUse
Difficulty ofAssessment
Level
I. Reaction
II. Learning
III. Behavior
IV. Results
The Four Levels of Evaluation
Least
valuable
Mostvaluable
Frequent
Infrequent
Easy
Difficult
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Level 1 - Reaction
Evaluate trainees
reactions to the program:
Did they like the program?Did they like the
facilitators?
Did they like the training
accommodation and
facilities?
Level 1 -Reaction
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Guidelines for Evaluating Reaction
1. Determine what you want to find out
2. Design a form that will quantify reactions
3. Encourage written comments and suggestions
4. Get 100 percent immediate response
5. Get honest response
6. Develop acceptable standards
7. Measure reactions against standards, and take
appropriate action
8. Communicate reaction as appropriate
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Please give us your frank reactions and comments. They will help us to evaluate
this program and improve future programs.
Program :
Facilitator :
1. How do you rate the subject (interest, benefit, etc)
a. Excellent
b. Very Good
c. Good
d. Fair
e. Poor
2. How do you rate the facilitator? (knowledge, ability to deliver and communicate?)
a. Excellent
b. Very Goodc. Good
d. Fair
e. Poor
3. How do you rate the facilities? (comfort, convinience, etc)
a. Excellent
b. Very Good
c. Good
d. Fair
e. Poor
4. What would have improved the program?
Sample ofReaction
Form
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Level 2 - Learning
Measuring learning means
determining one or more of
the following :
What knowledge was
learned?
What skills were
developed or improved?
What attitudes were
changed?
Level 2 -Learning
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Guidelines for Evaluating Learning
1. Use a control group if practical
2. Evaluate knowledge, skills and/or attitudes both
before and after the program
3. Use a paper-and-pencil test to measure knowledge
4. Use a performance test to measure skills
5. Get 100 percent immediate response
6. Use the results of evaluation to take appropriate
action
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Guidelines for Evaluating Learning
Experimental Group Control Group
Pre Test Score 45 46Post Test Score 55 48
Gain 10 2
Pretest and Posttest Scores on Change Management Training
Example :
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Level 3 Behavior Application
The frequency of
application of new
skills/knowledge/
attitudes (on the job)
The effectiveness of the
skills/knowledge/
attitudes (as applied on
the job)
Level 3BehaviorApplication
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Guidelines for Evaluating Learning
1. Use a control group if practical
2. Allow time for behavior change and application to take
place
3. Evaluate both before and after the program if practical
4. Survey and/or interview one or more of the following :
trainees, their immediate supervisor, their subordinates,
and others who often observe their behavior
5. Get 100 percent response or a sampling
6. Repeat the evaluation at appropriate times
7. Consider cost versus benefits
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Example of Survey to Measure Behavior Application
Understanding and Mot ivat ing
1. Trying to understand my subordinates 5 4 3 2 1
2. Listening to my subordinates 5 4 3 2 1
3. Praising good work 5 4 3 2 1
4. Talking with subordinates about
their family and personal interests
5. Asking my subordinates for their ideas 5 4 3 2 1
6. Applying "Management by Walking Around" 5 4 3 2 1
Time and energy spent after the prgram
compared to time and energy spent before
the program
5 4 3 2 1
Instruct ion:
The objective of this questionnaire is to determine the extent to which those who
attended the recent program on Leadership have applied the principles and techniques
that they learned there to the job.
Circle the answer that you consider appropriate for each question.
5 = Much more 4 = More 3 = Same 2 = Less 1 = Much less
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Level 4 Business Results
Indicate the extent to which you
think this program has
influenced each of these
measures in your work unit,department, or business unit:
Productivity
Quality
Customer Response Time
Cost Control
Employee Satisfaction
Customer Satisfaction
Other
Level 4BusinessResults
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Guidelines for Evaluating Learning
1. Use a control group if practical
2. Allow time for results to be achieved
3. Measure both before and after the program if practical4. Repeat the evaluation at appropriate times
5. Consider cost versus benefits
6. Be satisfied with evidence if proof is not possible
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Performance Indicators
HARD DATA INDICATORS
Downtime duration
Number of defect products
Sales volume
Production unit
Customer satisfaction index
Response time to orders
Number of accidents at work
Others
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Performance Indicators
SOFT DATA INDICATORS (intangible impacts)
Job satisfaction
Conducive working relationship
Effective communication
Stress rate
Quality in decision-making
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Example : Measuring Training Results
0.00
50.00
100.00
150.00
200.00Program : TQM
Training
Results after
3 months of
training, number
of defects
dropped to 80
units/day
120 units
80 units
Before training After training
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0.00
10.00
20.00
30.00
40.00
50.00
Example : Measuring Training Results
Program :
Sales Training
Results after 3
months training,
number of sales
per salesman
increase to 30
units/month.
20 units
30 units
Before training After training
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Measuring
Return on Investment of
Training
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Level 5 : Return on Investment of Training
Level 1 - Reaction
Level 2 - Learning
Level 3 Behavior
Application
Level 4
Business Impact
Level 5 Return
on Investment of
Training
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Criteria for Selecting Programs for Levels
4 and 5 Evaluation
Importance of the program in meeting the
organizations goals
Cost of the program
Visibility of the program
Size of the target audience
Extent of management interest
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Benefits of ROI of Training
Measure contribution
Set priorities
Focus on results
Alter management perceptions of training
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ROI of Training Model
CollectData
Isolate the
Effects of
Training
Convert Data
to Monetary
Values
Calculate ROI
of Training
Tabulate
Program
Costs
Identify
Intangible
Benefits
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Net Program Benefits
Program CostsX 100
Return on Investment Formula
ROI =
Examp le :
Costs per program (25 participants) $ 88,500
Benefits per program (1st year) $230,625
$ 230,625 88,500
$ 88,500
ROI = X 100
ROI = 161 %
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Collecting Data
Identify appropriate
performance indicators
Develop a collection plan
CollectData
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Example of Performance Indicators
Units produced Items sold
Work backlog
New accounts opened
Productivity Inventory turnover
Etc.
Output
Equipment downtime Overtime
Time to project
completion
Processing time Repair time
Lost time days
Etc
Time
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Example of Hard Indicators
Unit costs Variable costs
Overhead costs
Operating costs
Number of costreduction
Etc.
Cost
Scrap Waste
Rejects
Error rates
Rework Product defects
Product failure
Quality
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Example of Performance Results
Some performance results after training
program:
Scrap was reduced from 11 % to 7.4 %
Absenteeism was reduce from 7 % to 3.25 %
The annual turnover rate was reduced from 30
% to 16 %
Lost time accidents were reduced 95 %
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Isolating the Effects of Training
Methods toIsolate theEffects ofTraining
UsingControl Group
TrendLines
Participants
Estimate
Supervisors ofParticipants
Estimate
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UsingControlGroup
A control group arrangement can be
used to isolate training impact.
With this strategy, one group
receives training, while another,similar group does not receive
training.
The difference in the performance of
the two groups is attributed to the
training program.
Isolating the Effects of Training
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TrendLines
Trend lines are used to project the
values of specific output variables if
training had not been undertaken.
The projection is compared to theactual data after training, and the
difference represents the estimate
impact of training.
Isolating the Effects of Training
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Trend Lines Analysis
Jan Feb Mar Apr JulJunMay Aug
At the beginning of
May, a Sales training
Program session was
held
Volumeof
Sales
The
difference
represents
the estimate
impact of
training.
Trend Projection
Actual sales performance
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Participants andSupervisors of
ParticipantsEstimate of
Trainings Impact
This method rests on the assumption that
participants (and their supervisors) are
capable of estimating how much a
performance improvement is related to the
training program.
Because their actions have produced the
improvement, participants (and their
supervisors) may have very accurate input
on the issue.
They should know how much of the
change was caused by applying what they
have learned in the program.
Isolating the Effects of Training
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Participants andSupervisors of
ParticipantsEstimate of
Trainings Impact
Typical Questions to Estimate :
What percent this improvement
can be attributed to the application
of skills/techniques/knowledgegained in the training program?
What confidence do you have in
this estimate, expresses as a
percent?
What other factors contributed to
this improvement in performance?
Isolating the Effects of Training
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1 Training Program 50% 70%
2 Change in Procedures 10% 80%
3 Adjustment in Standards 10% 50%
4 Revision to Incentive Plan 20% 90%
5 Increased Management Attention 10% 50%
6 Other - -
Percent
Improvement
Caused by
Confidence
Expressed as
a Percent
Factors Which Influenced
ImprovementNo.
Isolating the Effects of Training
Example of a Participants Estimation
The conf idence percentage is mu l t ip l ied b y th e
est imate (50 % x 70 %) to p roduce a usable training
factor value of 35 %
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1 Training Program 50% 70%
2 Change in Procedures 10% 80%
3 Adjustment in Standards 10% 50%4 Revision to Incentive Plan 20% 90%
5 Increased Management Attention 10% 50%
6 Other - -
Percent
Improvement
Caused by
Confidence
Expressed as
a Percent
Factors Which Influenced
ImprovementNo.
Isolating the Effects of Training
Example of a Participants Estimation
The confidence percentage is multiplied by the estimate (50 % x 70 %) to
produce a usable training factor value of 35 %
This adjusted percentage is then multiplied by the actual amount of
improvement (post-program minus pre-program value) to isolate the portion
attributed to training
The adjusted improvement is now ready for conversion to monetary values,
and used in the return on investment
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Converting Data to Monetary Values
Converting
Data to
Monetary
Values
Steps to Convert Data to Monetary
Values
1. Focus on a unit of improvement
2. Determine a value of each unit
3. Calculate the change in performance
data
4. Determine an annual amount of change
5. Calculate the annual value of
improvement
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Steps to Convert Data to Monetary Values
An example to illustrate the steps to convert data to monetary values
1. Focus on unitimprovement
One grievance reaching step two in the
four-step grievance resolution process
Steps Illustration
2. Determine avalue of each
unit
Using internal experts, the cost of anaverage grievance was estimated to be $
6,500 when considering time and direct
costs (V = $ 6,500)
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Steps to Convert Data to Monetary Values
3. Calculate thechange in
performancedata
Six months after the program was completed,
total grievances per month reaching step two
declined by ten. Seven of the then grievance reductions were
related to the program as determined by
supervisors (isolating the effects of training)
Steps Illustration
4. Determine anannual amountfor the change
Using the six month value, seven per
month (grievance reductions), yields an
annual improvement of 84 (7 x 12 months)
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Steps to Convert Data to Monetary Values
5. Calculate theannual value ofimprovement
Annual value = 84 x $ 6,500 = $ 546,000
Steps Illustration
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Tabulatingcost of theprogram
Tabulating the costs involves
monitoring or developing all of the
related costs of the program
targeted for the ROI calculation.
Tabulating Cost of the Program
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Tabulatingcost of theprogram
Cost components that should be
included are :
The cost to design and develop
the program
The cost of all program materials
provided to each participant
The cost for facilitator
The cost of the facilities of the
training program
Tabulating Cost of the Program
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Tabulatingcost of theprogram
Cost components that should be
included are :
Travel, lodging, and meal costs
for the participants Salaries, plus employee benefits
of the participants who attend
the training
Administrative and overhead
costs of the training function,
allocated in some convenient
way
Tabulating Cost of the Program
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An Example to Illustrate ROI analysis
Weeks after
training Trained Group Control Group
1 US$ 9,723 9,6982 9,978 9,720
3 10,424 9,812
13 13,690 11,572
14 11,491 9,683
15 11,044 10,092
Average for weeks 12,075 10,449
13, 14, 15
Post Training Data
Average Weekly Sales
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An Example to Illustrate ROI analysis
Data US$
Average weekly sales
Trained Group 12,075
Control Group 10,449
Increase 1,626
Profit Contribution from Training 2 % 32.50
(Training Impacts)
Total weekly improvement 1,495
(32.5 x 46 participants)
Total annual benefit 71,760
($ 1,495 x 48 weeks)
Annualized Program Benefits
Note : 46 part ic ipants were st i l l in job af ter 3 months
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An Example to Illustrate ROI analysis
Cost US$
Facilitation fees 11,250
Program materials : $ 35 x 46 1,610
Meals : 3 days x $ 28 x 46 1,288
Participant salaries plus benefit (35 %) 12,442
Coordination and Evaluation 2,500
Total Cost 29,090
Cost Summary : An Illustration
ROI (%):
$ 71,760 - $ 29,090
$ 29,090
146 %
x 100=
=
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Enhancing Training
Effectiveness
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How Effective is Your Training Program?
Broad and Newstrom (1992) report studies have
shown less than 30% of what is actually taught
transfers to the job in a way that enhances
performance.
Source : Broad, M., & Newstrom, J. W. (1992). Transfer of training: Action packed
strategies to ensure high payoff from training investments. Reading, MA: Addison-
Wesley.
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Source of Barriers to Training Transfer
Lack of reinforcement on the job
Interference from immediate (work) environment
Nonsupportive organizational culture
Trainees perception of impractical training programs
Separation from the inspiration or support of the trainer
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The Transfer Partnership
Trainee Trainee recognizes need fornew skills
Trainee TrainerTrainer designs and/ordelivers learning experiences
Trainee TrainerManager supports learningand application on the job
Manager
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The Transfer Matrix
Before Dur ing After
Manager
Trainer
Trainee
Time Periods
R
olePlayers
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Manager
Before Training
Build transfer of training into supervisoryperformance standards
Collect baseline performance data
Involve supervisors and trainees in needs
analysis process
Involve trainees in program planning
Brief trainees on the importance of the training
(course objective, content, process, and
application on the job) Review instructional content and materials
Plan to participate in training sessions
Encourage trainees attendance at all sessions
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Trainer
Before Training
Align the training plan with the organization'sstrategic plan
Systematically design instruction
Provide proactive opportunities
Design a peer coaching component for the
program and its follow-up activities
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Trainee
Before Training
Provide input into program planning
Actively explore training options
Participate in advance activities
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Manager
During Training
Prevent interruptions
Transfer work assignment to others
Monitor attendance and attention to training
Recognize trainee participation
Participate in transfer action planning
Review information on employee in training
Plan assessment of transfer of new skills to the
job
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Trainer
During Training
Develop application-oriented objectives
Answer the WIIFM question
Manage the unlearning process
Provide realistic work-related tasks
Give individualized feedback
Provide job performance aid
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Trainee
During Training
Maintain an ideas and application notebook
Participate actively
Form support groups
Plan for applications
Create behavioral contracts
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Manager
After Training
Plan trainees reentry
Provide opportunities to practice new skills
Have trainees participate in transfer-related
decisions
Reduce job pressures initially
Give positive reinforcement
Schedule trainee briefings for co-workers
Set mutual expectations for improvement
Arrange proactive (refresher) sessions
Provide and support the use of job aids
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Trainer
After Training
Provide follow-up support
Conduct evaluation surveys and provide
feedback
Develop and administer recognition system
Provide refresher/problem-solving sessions
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Trainee
After Training
Practice self-management
Review training content and learned skills
Develop a mentoring relationship
Maintain contact with training buddies
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References/Recommended Further Readings
1. Donald Kirkpatrick, Evaluat ing Training Programs : The FourLevels, Berrett-Koehler Publishers. You can obtain this excellent book at this link :http://www.amazon.com/Evaluating-Training-Programs-Four-
Levels/dp/1576753484/ref=sr_1_1?ie=UTF8&s=books&qid=1219800986&sr=1-1
2. Jack J. Phillips and Patricia Phillips, In Ac t ion : Measur in g
Return On Investment, American Society for Training &
Development. You can obtain this excellent book at this link : http://www.amazon.com/Action-Measuring-Return-Investment/dp/1562860089/ref=sr_1_3?ie=UTF8&s=books&qid=1219801000&sr=1-3
3. Mary Broad and John Newstrom, Trans fer of train ing : Ac t ion
Packed Strategies to Ensure High Payo ff from Training
Investments, Addison-Wesley. You can obtain this excellent book at this link :http://www.amazon.com/Transfer-Training-Action-Packed-Strategies-
Investments/dp/0738205672/ref=sr_1_1?ie=UTF8&s=books&qid=1219801069&sr=1-1
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d=1219800986&sr=1-17/28/2019 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