Training Return on Investment (ROI)

Return on investment (ROI) is an important training outcome. Cost-benefit analysis is the process of determining the economic benefits of a training program using accounting methods that look at training costs and benefits.

There is an increased interest in measuring the ROI of training and development programs because of the need to show the results of these programs to justify funding and to increase the status of the training and development function. Most trainers and managers believe that there is a value provided by training and development activities, such as productivity or customer service improvements, cost reductions, time savings, and decreased employee turnover.

However, it is important to keep in mind that ROI is not a substitute for other program outcomes that provide data regarding the success of a program based on trainees’ reactions and whether learning and transfer of training have occurred.

Because ROI analysis can be costly, it should be limited only to certain training programs. ROI analysis is best for training programs that are focused on an operational issue (measurable identifiable outcomes are available), are linked to a companywide strategy (e.g., better customer service), are expensive, are highly visible, have management interest, are attended by many employees, and are permanent.