Measuring ROI of Training and Development

Management and higher-ups are usually the last and too late to find out whether the employee training worked or not, and the new-ish hires are already jumping ship.

With 67% of organisations complaining about a 10%+ resignation rate before employees even formally join the ranks, it is clear that poor employee onboarding impacts employee churn.

Measuring the ROI of employee training is the logical way of learning whether your implemented training programs worked in your favour. 

Today, we selected the three most reliable methods of measuring the training ROI to help you keep people on board. We’ll explain the methodology and how they work and help you find the apt scenarios they can help you with.

What is Training ROI?

Training ROI (Return on Investment) measures how successful your investment in employee training was. 

In financial terms, it shows how much an organisation gains from creating and conducting proper employee training.

Why should you measure training ROI?

Simply put, training ROI information reveals whether the training achieved its goals.

It points to important information that could reveal your business's health, losses, and opportunities for improvement.

Here are several reasons why you should not only develop proper employee training programs but also revisit them and check if they paid off:

• Adjust your spending on employee training;
• Reshape your employee training programs;
• Find out who the top performers are;
• Discover which teams need a different approach to training and development;
• Learn what successful (and unsuccessful) training looks like.

Three Different Methods to Measure Training ROI

There are several ways to measure the success and ROI of training — today, we’ll focus on the top three most relevant and used methods:

• The Kirkpatrick Model;
• The Philips Model;
• The Brinkerhoff Model.

The Kirkpatrick Model of Training Evaluation

Also called Kirkpatrick’s Four Levels of Training Evaluation, this method is one of the most well-known and effective ways to evaluate learning and training. 

Donald L. Kirkpatrick taught at the University of Wisconsin in the U.S. and presided at the American Society for Training and Development (ASTD). He presented his course evaluation model as his Ph.D. dissertation in the fifties; since then, the Kirkpatrick Model has been updated to keep up with the times. The current iteration was formed in 2016 and is called the New World Kirkpatrick Model.

The Kirkpatrick Model easily adapts to any training style and consists of four levels:

1. Reaction — This level measures how favourable, engaging, and relevant the training was for the employees’ jobs. After training completion, learners usually get to fill out a survey so that the management can learn from employee feedback.
2. Learning — At this point, you should measure the degree to which the learners have internalised the knowledge, skills, attitude, confidence, and commitment that the training intended. Surveys, questionnaires, interviews, tests, and other kinds of assessments can be used to test the five aspects of learning; for any method, questions and grading methods need to be clear-cut to the respondents. 
3. Behaviour — Stage 3 examines how well the trainees apply what they’ve learned during training when they start working in a realistic context. First, define what successful change looks like, and then observe their work after the training is complete. 
4. Results — In the end, you should evaluate whether the training (along with the support and accountability package) has produced the desired outcomes. 

Levels 3 and 4 contain the most important data and show exactly how efficient the training was. 

The Phillips Model of Training Evaluation

Relevant authors suggest that measuring the ROI of training should be added as Level 5 in the Kirkpatrick Model — that’s how the Philips ROI Model came to life.

Jack J. Philips has built the Philips Model of Training Evaluation on the Kirkpatrick model. 

In his book “Return on Investment in Training and Performance Improvement Programs”, Philips re-examined the Kirkpatrick Model, tweaked the original four levels, and added a separate level 5 — so the Philips ROI Model looks like this:

1. Reaction — The methodology is the same, but Philips suggests that this data indicates how good the learning conditions were, rather than providing valuable ROI-related information.
2. Learning — Essentially the same as with the original Kirkpatrick Model.
3. Application & Implementation — This is where the Philips ROI Model starts to divert from the original. In addition to evaluating if the training worked or not, this model also tells why certain training strategies failed and how to improve the training.
4. Impact — Level 4 of the Kirkpatrick Model only focuses on results; the Philips ROI Model expands and takes everything that contributed to the employees’ end knowledge into account. There are factors outside the training that could have impacted the results, and this model tries to identify them.
5. Return on Investment (ROI) — The addition is a straightforward cost-benefit analysis that reveals whether the training paid off and how valuable the training investment was for the organisation.

The Philips ROI Model is criticized for providing the ROI data only after the training is completed (and money is lost). 

Brinkerhoff’s Success Case Method

Robert O. Brinkerhoff published “The Success Case Method - Find Out Quickly What’s Working And What’s Not” in 2003. 

His work is straightforward and examines the (existing) extreme cases to find out what works, what doesn’t work, and why. 

One relevant passage from Brinkerhoff’s book outlines scenarios relevant to employee retention that SCM can help with:

When the need for improvement appears, the SCM will address the answer four key questions about “a new change initiative”:

1. What is really happening? 
2. What results are being achieved?
3. What is the value of the results?
4. How can it be improved?

Birkenhoff’s Method consists of five steps:

1. Plan a Success Case Study;
2. Define what success looks like with an Impact Model;
3. Create and conduct a survey that helps find the best and the worst cases;
4. Interview and document the successful cases;
5. Communicate your conclusions, findings, and recommendations to the stakeholders.

Summary: The Differences Between The Three Methods

Here are the main differences between the Kirkpatrick Model, the Philips ROI Model, and Brinkerhoff’s Success Case Method:

• The Kirkpatrick Model shows whether the training has worked or not, without delving into outside factors or how to improve the training. 
• The Philips ROI Model considers learning conditions and outside factors that impact the success of training, adds ROI calculations, and implicitly puts more focus on “hard data” rather than subjective impressions.
• The Brinkerhoff’s SC Model examines the existing extreme cases, the best and the worst, and reveals what works (and what doesn’t), how well it works in a best-case scenario, and why.

Mercu can help you collect actionable employee feedback with a wonderfully simple, streamlined app. No matter the ROI measurement method you choose, you can use Mercu to cover all the research levels, onboard new hires, and keep them engaged!