Making Training Happen – Part 3

I am often asked how an organisation can calculate the return on investment (ROI) it makes on Training and Development.

I use this formula based on one individual that can be extended based on numbers trained and salary variations.

IE% on CS – TC =ROI X EY’s

CS – Current Salary

IE% – Improvement Expected from Learning (average a 10% improvement)

TC – Training Cost (4% average of annual payroll)

ROI – multiplied by expected years of ongoing service (5 years average)

Using a Salary of €50,000 pa the formula is as follows-

€5,000(10%) – €2,000(4%) = €3,000 x 5 years = €15,000

What gets measured gets done – so it is vital to demand the expected improvement.