ROI training Formula

What is ROI?

1. ROI or return on investment is a measure justifying all kind of investments.
2. ROI is a ratio dividing profit with investment.

Training investments definition

• All costs involved to improve the competencies of the staff.

Training income / impact definition

• All improvement recorded after the training interventions, performance after training less before training.
• Identify the key performance indicator to measure results of training
• Compute the before and after KPI ratios
• Use input output graph to measure the impact of competency improvement.

EXAMPLE - calculating the ROI.

Before training performance -   RM3,000 sales profit 

After training performance -     RM 5,000 sales profit

One year impact RM2,000 x 12  =  RM24,000

If training costs is   RM20,000, profit is RM4,000 divided by RM20,000

ROI is 20% per annum  

Difficulty in evaluating training

1. Unlike other investments, the impact and outcome in training is continuous and infinity.  The impact on staff training could be long and timeless.
2. Measuring precise training costs and investment is almost impossible.
3. Classroom training costs are easier to account but on the job training and coaching is difficult to value and demarcate.

Arriffin Mansor 012-2786282