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4 things you need to know about the R.O.I model in training effectiveness evaluation

Training effectiveness evaluation plays a key role in improving the quality of training, enhancing resource utilization, and increasing the accountability of the training organization. To achieve this, the ROI (Return on Investment) index serves as a useful tool to evaluate training effectiveness more logically and objectively.

The ROI Model in Post-Training Effectiveness Evaluation

To overcome the limitations of the four-level model in Kirkpatrick’s training effectiveness evaluation, Jack Phillips, President of the ROI Institute – which provides measurement, analysis, and evaluation services on training impacts, developed an additional level: the evaluation by Return on Investment (ROI). Measuring with the ROI index is a useful tool to assess past investment decisions and predict future decisions.

1. Definition of the ROI model for Post-Training effectiveness evaluation

ROI (Return on Investment) is a performance metric used to evaluate the effectiveness of an investment or compare the efficiency of several different investments. ROI directly measures the return on a specific investment relative to the cost of the investment. In the context of training, the ROI index is used to evaluate the effectiveness of the training investment made by a business.

training effectiveness
         

2. Content measured when applying the ROI model in post-training evaluation

The return on investment (ROI) ratio is used to measure and evaluate the effectiveness of employee training. To assess the post-training results, the ROI model focuses on how much a company can gain from the training program, considering:

  • Course fees
  • Infrastructure costs
  • Employee wages included in the course fees
  • Measuring business improvement effectiveness (e.g., conversion rates from phone calls to orders, before and after employee training)
  • Considering the long-term financial benefits of investing in online training (e.g., 3 months, 6 months, 1 year, etc.)

3. Formula for calculating the ROI index

The formula for calculating the ROI index is: (Total benefits – Total costs) / Total costs

4. Advantages and Disadvantages of the ROI model for Post-Training evaluation

4.1 Advantages

  • ROI helps companies recognize the importance of building and developing the business and its people.
  • ROI clearly shows and specifically demonstrates the benefits gained from investing in training.
  • ROI provides companies with a comprehensive view of the training and development process, making it easier to compare different metrics.
  • The calculation method in the ROI model is straightforward.

4.2 Disadvantages

  • The ROI model does not reflect long-term vision.
  • Comparing ROI scores sometimes only provides companies with a relative result.
  • The ROI index does not help companies understand why the training effectiveness is high or low.
  • To calculate ROI accurately, additional supportive tools may be needed to improve the profitability calculation.

The ROI model is a relatively common evaluation method after training. However, the ROI index may not always provide an accurate assessment of training effectiveness, as many aspects of training are difficult to measure with specific indicators. Therefore, businesses should consider combining the ROI model with other training evaluation models, such as Kirkpatrick and CIPP, to achieve a more comprehensive result.

You can also explore other post-training evaluation models:

HRDC collection and sharing.
Source: BaseVN, HRD & VietED.

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