How to calculate return on investment for training

How to calculate return on investment on training has become very useful to modern corporations as the hostile business environment is pushing businesses into finding better and more effective ways o staying afloat.  The competition endured even by established businesses from start ups and big business is asking so much from the average CEO that none can afford to waste a dollar without carefully determining the return on investment. And being able to do this calculation is a skill now highly sought after as it help to determine beforehand if a proposed training will see the light of day.


It is true that no work force can keep producing results without a strategic plan for training and retraining. Yet, without taking some actions into consideration, cooperation might as well be wasting it dollars spent on training. Some of these factors are explained below.


At this stage, the personnel management of human resource team is to do a quick assessment o the required skills which a work force is lacking, the specific need to the organization and whether or not training will serve best in dishing out these skills. There must be an objective and measurable approach to the collection and analysis of the data that will lead to their conclusion. This will determine the design of the training and how best to maximize it benefits. The planning should ensure that work is not disrupted more than is necessary .in this planning stages some major things to consider include;

  1. What the organization need

  2. Who are the audience for the training

  3. Measurable training objective

  4. The suitable resource persons

  5. And any other logistics related to the training

The steps above very crucial to the overall cost benefit derivable from the training.


This is another very important step the calculating the return on investment on training. At this stage, each of the process of step above is calculated. This of course is not done arbitrarily; the team in charge has to run a research or a form of market survey to get the most cost effective way of running the training. It s at this point, that the monetary involvement is clearly known, that we can move up to the third stage of talking to the experts, the supervisor on the floor and every other stakeholder. The purpose of this consultation is to reevaluate the benefit of the skill the training is meant to impact on the down line and the sales figures and overall profit. Input is sought regarding which resource person is not absolutely needed for the realization of the planned objectives. Some items can be dropped and others added to achieve an all inclusive training module. This will require analysis of the collated data.


The two steps above will now lead to the final decision, which will naturally flow from the results obtained so far, from the data, consultations and best practices. It will be clear at this stage how the skills that are to come from this training will better the company. This conclusion must stem from measurable indicators and be presented in facts and figures. Weighing cost of the training and the benefits it will be obvious if the training will provide enough return on investment to merit it cost.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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