The Business of Training

When doing a Cost Benefit Analysis for training and education programs there are many factors that result in benefits and economic returns.  Some of them are: Labor Process efficiency Sales Management Time-to-fix Vendor costs Up-time Marketing costs Delivery efficiency Headcount Competitive advantage Market share OSHA  (USA or local equivalent) - work safety agency EPA (USA or local equivalent) - environmental protection agency Where are the benefits in each of these? LABOR - Typically there are efficiency improvements.  Do job better,quicker, less headcount. PROCESS EFFICIENCY - Same here; more product, less waste, quicker change-over, quicker start-ups, etc. SALES - more, higher margin, new market, customer satisfaction MANAGEMENT - fewer, can do more, better direction VENDOR COSTS - reduced through close project management, purchasing supply management better prepared DELIVERY EFFICIENCY - could be in terms of delivery type chosen (e-learn...

Back in 1999 The Jack Philips Center for Research coined the term "The ROI Process" (TM) .  It was, and still is, a comprehensive methodology for capturing ROI as well as the measurement of all aspects of the benefits of training (learning or performance) interventions.  See The Four Evaluation Levels for Training Programs for additional insight. In The ROI Process there are five levels presented.  ROI being a separate level from the traditional levels presented by Dr. Donald L. Kirkpatrick.  Dr. Kirkpatrick included ROI in level four known as Results , because ROI is one of the measures of the final business results such as increased sales, reduced costs, etc.  In my opinion, ROI is really a nice 'business' way to summarize your investment in the training intervention. However, common sense must be enlisted when, and if, you decide to establish the ROI of a learning event.  The cost of determination can exceed the benefit! The organizatio...

Cost benefit analysis is very important in The Business of Training . Always think of yourself as a business person and then a training and development person. Whenever you are asked to do a training program (training intervention) that is expected to add value to the organization it is a good idea to do a cost-to-benefit analysis. If you would like a 'fill-in-the-blanks', multi-currency, Microsoft Excel workbook with all of the cost and benefit calculations, including ROI, please send me an email request and I will forward one on to you. Put 'ROI Calculator' in email subject. Cost Benefit Analysis is an important exercise for several reasons: You can compare different ways of carrying out the program It will help justify spending the money for the program The expected benefits can be developed and incorporated into the evaluation Major areas to keep in mind for cost factors are: Labor Material Travel Lost Opportunity Vendors Marketing Delivery Wh...