In today’s economy around the world, it is very important for organizations to measure the level of Return on Investment (ROI) on training received by their employees. That way, they can gauge to see if the desired outcomes are achieved. More importantly, the organization that do not invest in training will surely not stay ahead of the competition. But the question to pose is as follows. Has the training program succeeded in getting people qualified? Also, has the training received helped the company move ahead as far as efficiency and productivity is concerned? Next, have employees benefitted from receiving it? Last, can it be measured in a small to large scale? These are the questions to ask concerning this. This article is going to talk about training and why it is important to measure an organizations ROI with it. Also, it will talk about how ROI thinking can be incorporated into a firm's training program. And lastly, it will discuss the possibility of not taking ROI into account and how it can effect a business overall. Many people think Businesses that incorporate ROI into their training programs, tend to be the most successful. But many argue otherwise. This article will further explain why should organizations link ROI and training together.
The Need for Evaluating a Training Program under the ROI Principle
In order to see if training programs are working or not, there must be a way to evaluate the training received by employees. Fortunately, several methods have been developed in order to evaluate its effectiveness. Nevertheless, in order for an organization to see an ROI in their program, they must observe and measure training outcomes first-hand . By doing this, they can further evaluate the return investment. So, an accurate measurement is needed in order to best determine the next course of action. So by lInking training and ROI, this gives the tools and bridges this gap. The important thing to stress is ROI Principals gives the tools needed to generate evaluations in order to predict an organization's outcome. This is based on measurements and end results based on production outputs and efficiency percentages. More importantly, organizations need to see these effects first hand. That way they see that linking ROI with Training Evaluations is working together. Once a baseline has been established, then training can be tailored based on a company’s needs. In-turn this will maximize ROI. Along those lines, there are several models to choose from. However, the model that will be discussed is the Kirkpatrick/Phillips Model.
The Five Levels of Training Evaluation under the Kirkpatrick/Phillips Model
Currently, many organizations around the world are using the model mentioned above to evaluate training processes and return investments from instituted training programs. This model in particular was developed by Dr. Donald Kirkpatrick and later refined by Dr. Jack Phillips after incorporating his ROI methodology. In doing so, he was able to add the ability to forecast potential pay-offs on any training program instituted within an organization. Basically, this evaluation system is a five step process used to see how effective training programs are as well as how it will impact the organization overall. To give you a better understanding, there will be a brief description of this process.
The Five Levels of Training Evaluation is a developed model that helps determine the return investment of any type of training received from the organization. Whether the evaluation comes from a small group of people to a larger scale, the impact of this model is what helps an organizations determine the maximum return investment from training received and the possible outcomes stemming from this. As the title states, it is a simple five step process used to assign a monetary value on return investment from training outcomes.
Reaction, Satisfaction, and Planned Action
The first level of the evaluation is the Reaction, Satisfaction, and Planned Action Learning. Basically, this first step measures the participant’s reaction as well as the satisfaction with the training program. It also helps determine the participant’s plans of actions if they are going to use the training required or not into their daily activities.
The second level is called the Learning step. This particular step deals with the skills and knowledge gained from training programs. In essence, it measures aptitude levels gained from instruction. The best ways to see this process is through the use of knowledge tests, skill practices, role-playing, simulations, group evaluations, and other types of evaluation tools. Although this step is not really used in the real world, it is vital to determine if what employees learned will work. In other words, this step is critical to determine the level of comprehension by the participants so that they take something away from the training received. Please note although participants may have learned new skills, it does not mean they may utilize them in their daily tasks. This leads to the next step and that is Behavior, Application, and Implementation.
Behavior, Application, and Implementation
The Behavior, Application, and Implementation step is where it is measured to see how much the participants uses the new knowledge and skills gained from the program at the worksite. More importantly, it measures the level of it by seeing changes in behavior and possibly fruits of labor. Despite the outcome from this evaluation level, this particular step will not guarantee that a business will see positive outcomes. Thus, this brings me to the next step in the process and that is Business Impact.
This step sees the level of impact from the training received by seeing the end results in daily activities. The way to determine this is by measuring output, quality, costs and time in business activities before and after the training. Please note that the results may not immediately show. However, over time there will be a distinct difference on the old and new way of doing business. This leads to the next and final step in this process. That is the Return on Investment.
Return on Investment
This level is the last and ultimate part in the evaluation. Basically, this level gives monetary benefits on the program versus the costs associated with it. If the benefits outweigh the costs, then the program was successful. If it is the other way, then more evaluations and/or tailoring will be needed in order to make the program achieve the desired outcome. This last level usually is expressed in percentages or cost/benefits ratios. Still, many things should be taken in to consideration and the numbers should drive the company’s overall decision on keeping the program alive or not. Based on this, a company should see a change in direction, whether positive or negative, by noticing their output, costs, and time in their production. More importantly, once the desired effect has taken place, then it should be standardized throughout the organization.
Considerations of ROI
It is important for organizations to take ROI into account. A good way to notice this is by seeing the monetary value and increase in output and efficiency. But,If a cost analysis were not taken into consideration, then why should training evaluations be considered? ROIs are important in itself because training equals money gained or lost depending on the direction a company goes. This leads to the next point. When a company does not evaluate nor do they measure the effects of their training programs. They cannot measure the overall efficiency of the organization. However, when a company measures and evaluate its training programs, they are being able to tailor it to the company’s needs. This in-turn improves output efficiency by constant monitoring and tailoring the training program itself. In essence, this is what should drive the ROI of a firm. Training gives the tools for individuals to succeed. Part of succeeding is innovation and what drives innovation is imagination. Training should help firms by giving personnel the tools to succeed rather than to hinder progress. But, to determine what tools are needed in order to give the organization the chance to get a head of the competition, evaluation tools are needed in order to accomplish this. A major part of evaluation tools should be the Kirkpatrick/Phillips model because it always poses these kinds of question. They are: What will the company gain overall by instituting this training program? Will it run more efficiently? Will production output increase? Will, the quality of the product be raised? All these questions is what should drive an ROI study in the last evaluation step of the Five Levels of Training Evaluation. If all these question can be answered positively, then the evaluation has a lot to say. If any one of them does not meet the objective, then changes are needed in order to drive an organization forward. Many companies are seeing that today and are taking into account on evaluating their training programs. They all know that investing in to a solid and proven training program will ensure the success of a business entity. By using the ROI step in the model previously mentioned, decision makers have the facts needed in order to move an organization forward to the future. Since the future is not set, the ROI level helps determine the course of action to take as well as seeing other potential investments an organization can capitalized on. This will secure a place ahead of the competition.
In conclusion, this article mentioned the importance of Return on Investment (ROI) measurements on training programs within an organizations. That way, positive outcomes can be achieved. This paper also talked about the Five Levels of Training Evaluation and why it is important to measure the Return on Investment of it. Lastly, it talked about why ROI should be taken into account when evaluating a training program and how it should help decision makers make the right choice.
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McNamara, C. (n.d.). Evaluating Training and Results (ROI of Training). Retrieved from www.managementhelp.org: http://managementhelp.org/training/systematic/ROI-evaluating-training.htm
Strohauer, J. (2011, October 11). The Five Levels of Training Evaluation. Retrieved from California Department of Human Resources: http://www.calhr.ca.gov/Training/Pages/recorded-webinar-five-levels-of-training-evaluation.aspx
Villanova Univeristy. (2013). ROI Methodology. Retrieved from www.villanovau.com: http://www.villanovau.com/phillips-roi-methodology/
Bernardo D. LaFontaine (author) from Midwest City on September 05, 2015: