It is difficult to overstate the significance of employee training when it comes to the difference between a good and great company. One of the ways the Fortune 100 Best Companies are judged is by ensuring they ‘are committed to employee development as a top strategic priority’. According to statistics reported by Skilled Up, an average of 78 hours per working year is spent devoted to salaried worker’s training by the Fortune 100 Best Companies to Work For. It may be possible to run a profitable business without it, but depending on your mission, values and desire to sustain your company, it is in your best interest to prioritize training.
Of course, employers are keen to upskill and develop their workforce – but ultimately, they need to know what the costs will be and how the training will positively impact the business in terms of the bottom line. In short, what they are spending and what the business will get back. ROI calculations can help put a concrete figure against what often feels like an abstract concept, and helps demonstrate to employees and higher-level managers the real benefits that can come from conducting them. Calculating the ROI of employee training can be as simple a creating a formula, something that looks like this: ROI (%) = ((Monetary benefit – Training Cost)/Training Cost) x 100 Keeping track of the costs before and after training is conducted can also ensure you have a realistic idea of its’ ROI. Training costs include but aren’t limited to training facilities, time employees are not in work, promotion and delivery, whereas monetary benefits would be measured by labour savings, less turnover costs, and increased productivity.
As objectives for each company’s training sessions differ, it is difficult to apply a single measurement model for all situations. According to Dr. Louise Suckley, who works with Sheffield Business School, assessing employee engagement with training is the best way to measure ROI. She lists four tiers to try and understand this more comprehensively: