All you wish to know about L&D ( ROI ) (2 Minutes series, Part 2)

Contin. from first part , as discussed Professionals uses multiple tools to assess training effectiveness and Return on Investment from L&D. The following article will throw light to the same.

Training evaluation helps to provide

             1.   Justify the cost involved in Training

              2.   Helps to select Training method

               ROI can be measured in two ways

               ROI = [Benefit/ Cost] * 100

                                Or

               Payback Period = Cost / Monthly Benefit

Cost In Training	Benefits in Trainings
1.       Design and development cost 2.       Admin cost 3.       Trainer (Delivery) cost 4.       Material cost 5.       Candidate cost ( Compromised salary and stay cost etc) 6.       Evaluation cost 7.       Sustenance cost	1.       Human resource cost reduction 2.       Enhanced productivity cost 3.       Reduced wastage cost 4.       Increased success candidates leading to lesser churn ratio

Example of the final results for a ROI analysis:

Duration of training	33 hrs
Estimated student numbers	750
Period over which benefits are calculated	12 months
Costs Design and development £40,930 Promotion £4,744 Administration £12,713 Faculty £86,250 Materials £15,000 Facilities £40,500 Students £553,156 Evaluation £872 Total cost £754,165	Benefits Labour savings £241,071 Productivity increases £675,000 Other cost savings £161,250 Other income generation £0 Total benefits £1,077,321
Return on investment	143%
Payback period	8 months

Based on the above we can calculate the amount training method we need to implement eg: E-learning is suitable to communicate knowledge related matter to large audience as the cost can be limited to Design and development cost . Skill related training has delivery team cost comes as the major cost.

References – ROI by Clive Shepherd

To be continued...

"Please feel free to write in case any clarifications required".

Regards

Vijay