Strategic Advice to Quantify the ROI of Your Employee Training Program

A key step you may come up against when trying to establish the value of an employee training program is to prove the Return on Investment (ROI). Benefits have to exceed costs or the training program will be cut. But how do you quantify how much an employee has learned? What dollar value can you attach to an someone learning managerial soft skills? As you really start to consider what aspects to evaluate when determining ROI, you may find it’s not as black and white as you originally thought.

“Because most learning directly affects business operations, not business finances, it is not realistically possible to convert all e-learning outcomes to monetary values,” notes Alice Waagen in her book Train the Trainer Vol. 4: Measurement and Evaluation. “In fact, it can be perfectly acceptable to report intangible measures, and then make reasonable assumptions regarding the associated organizational value.”

In other words, calculating ROI for a training program isn’t as straightforward as plugging numbers into a formula; there are more aspects to consider. In her book, Waagen details Kirkpatrick’s Four Levels of Evaluation, an industry standard for determining the success of a training program:

Level 1: Reaction. Do employees like the training? It is also worth asking, Waagen notes, how employees think they will apply what they’ve learned to their everyday work lives. This provides direct insight into how the staff feels about the training program itself and whether they see value in it.

Level 2: Learning. How much did an employee improve their skills? A good example of this type of evaluation is an exam at the end of a lesson, as it is a direct reflection of knowledge retention.

Level 3: Behavior. How much did the employee apply the knowledge they gained from the training program to their work? This one is a bit more challenging because it can only be performed through observing the employee, but Waagen suggests using an assessment that incorporates feedback from the employee’s team members and customers to measure changes in performance.

Level 4: Results. What business benefits arose as a direct result of the training? According to Waagen, this can include “quantity, quality, safety, sales, costs, profits, ROI” and other factors.

While not as easily quantifiable as a strict dollar value, Kirkpatrick’s Four Levels of Evaluation provide a more accurate assessment of the success of a training program than traditional, numbers-based ROI.  Waagen’s research unfortunately shows that companies have yet to realize this. While 97% of companies perform Level 1 evaluations, only 3% of companies perform an accurate Level 4 assessment. So truly, how can most companies prove the ROI of a training program if they’re not evaluating it properly?

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